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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on 1 January and ends on 31 December of the same year.
Accounting Standards
Since 1 January 2005, all consolidated accounts must be drawn up in conformity with European accounting standards IAS/IFRS.
Accounting Regulation Bodies
Ministry of Finance, Accounting Policy
Accounting Reports
A company's accounts must clearly reflect its operations and its financial results and give a precise and faithful picture of its financial situation.

Amounts are given in Latvian currency. The documents are in Latvian. If a member of a company is not a natural person or a legal entity of the country (registered company), it is possible, with the agreement of the parties concerned, to use a second language, that the auditors deem to be acceptable. The accounting documents and the supporting documents that accompany them must remain on Latvian territory. Any accounting entry must be supported by an appropriate document.

The accounting year spreads over 12 months. It corresponds to the civil year, but the shareholders can choose other dates. Companies that form a group must have identical accounting years. This year can be modified, but the modification must be justified and explained in the notes attached to the annual report.

A company's financial statements must include a balance sheet, a profit and loss account, notes to the accounts and an annual report.

Publication Requirements
In the event that the company exceeds two of the criteria listed below, the annual reports must be audited by a certified auditor or by a firm of certified (sworn) auditors, duly elected by the shareholders:
- Total assets: EUR 356,000;
- Net turnover: EUR 711,000;
- Average number of employees in the reporting year: 25

Moreover, the European Directive of 19 July 2002 obliges all European companies listed on the Stock Exchange to establish their consolidated annual accounts on the basis of IAS/IFRS.

Professional Accountancy Bodies
LACA , Latvian Association of Certified Auditors
Certification and Auditing
If two of the indicators below go over the indicated amounts, the annual report must be examined by an auditor or by an officially designated accounting audit body, chosen by the shareholders:
- total capital: EUR 170,000
- net turnover: EUR 340,000
- average number of workers during the accounting year: 25.
You can contact an external auditor in the list below:
KPMG, Deloitte, Ernst & Young, PricewaterhouseCoopers and Leinonen.
Accounting News
LACA News

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Tax Rates

Consumption Taxes

Nature of the Tax
Value added tax (VAT) - Pievienotas Vertibas Nodokli  (PVN in Latvian).
Tax Rate
21%
Reduced Tax Rate
Latvia apply a reduced VAT rate of 12% on certain categories of goods and services, including foodstuffs, water supplies, medical products, medical equipment for disabled persons, books, newspapers, hotel accommodation…
Educational services, medical services, cultural services, lotteries and gambling, financial services provided by banks and insurance companies, gifts and donations for humanitarian aims are exempt from VAT.
Other Consumption Taxes
Excise duty is imposed on oil products, alcoholic and non-alcoholic beverages, tobacco products and coffee. More detailed information on excise duties in the EU is available concerning alcoholic beverages, energy products and electricity, tobacco products.

Learn more about Service Providers in Latvia on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
15%
Capital Gains Taxation
Capital gains are taxable as ordinary income.
Main Allowable Deductions and Tax Credits
Deductions are possible for depreciation; dividends; payment to foreign affiliates; payments to company directors and managers; revenue from sale of real estate in Latvia; rental of real estate etc. For further information about tax deductions in Latvia, please visit VID.
Other Corporate Taxes
Other corporate taxes include: real estate tax, natural resource tax, lottery and gambling tax, car and motorcycle tax, electricity tax, stamp duty, local duties, social security contributions. For further information about other company taxes, consult VID.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Latvia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 7.0 28.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 264.0 260.0 175.0 207.0
Total Share of Taxes (% of Profit) 36.6 40.5 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Personal income tax 3 flat rates : 24% for employment income (including on operating activities), 15% on capital gains and 10% on other income from capital.
Allowable Deductions and Tax Credits
Are exempt:
- income from investments in private pension funds and insurance indemnities,
- gain on the sale of personal property.

Moreover, individuals may deduct from the income reported on their tax returns:
- Donations to acceptable charitable organizations
- Medical expenses
- Expenses for professional education
- Contributions to private pension funds and to life insurance schemes

Special Expatriate Tax Regime
Expats are responsible for tax in Latvia according to their residence for tax purposes.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the conventions signed
Withholding Taxes
Dividends: 0/15%, Interest: 0/10%, Royalties: 10%

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Sources of Fiscal Information

Tax Authorities
State Revenue Service of Latvia
Other Domestic Resources
Investment and Development Agency of Latvia
Consult Taxation trends in the European Union.

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Learn more about Taxes and Accounting in Latvia on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
Consult the Patent Office of the Republic of Latvia. The application for the grant or registration of a patent can be done in the language of the country, in English, in Russian or in German. These applications have to be addressed to the patents office in Latvia, either directly or through the intermediary of a legal representative. The related law of patents was voted in 1993 and as for trademarks, the law was passed in the same year.
Latvian law is very similar to French Law but the protection of intellectual property rights will be consolidated in the near future.
Regional Organizations
In Latvia there are several non-governmental organizations which defend intellectual property, such as, for example, the association LIVA .
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Law 30 March 1995
20 years, renewable for a period not exceeding 5 years
Trademark
 
Law on trademarks and indications of geographical origin 16 June 1999
10 years, renewable for a consecutive period of 10 years Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Law on the protection of Designs and Industrial Models 4 May 1993
5 years, renewable for two consecutive 5-year periods  
Copyright
 
Law on copyright 6 April 2000
Came into force on 11 May 2000. The text of the law
WIPO Copyright Treaty
Industrial Models
 
Law on the protection of Designs and Industrial Models 4 May 1993
Text of the law
 

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Legal Framework

Independence of Justice
The Constitution of the country provides for an independent judiciary and the government generally respects this freedom. But judicial reforms are slow and prone to corruption.
Equal Treatment of Nationals and Foreigners
Foreign nationals can expect an impartial trial from the country’s judicial system.
The Language of Justice
The judicial language in the country is Latvian.
Recourse to an Interpreter
Having an interpreter is possible.
Sources of the Law and Legal Similarities
The main source of the law in the country is the constitution of 1922 (amended in 1998); the legal system is based on a civil law system. Latvia being a member of the European Union (it joined the EU in May 2004), the national law in the country has to comply with the conditions of the Community legislation.
Checking National Laws Online
Latvian laws on line (website in Latvian)

Learn more about Lawyers and Legal in Latvia on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
LVS, Latvian Standardization Organization
Integration in the International Standards Network
The Latvian standardization organization (LVS) is member of European Committee for Standardization (CEN), of European Committee for Electrotechnical Standardization (CENELEC), of International Organization for Standardization (ISO), of International Electrotechnical Commission (IEC), of European Telecommunications Standards Institute (ETSI) and of International Telecommunication Union (ITU).
Classification of Standards
To get further information about terminology and standards in Latvia, you can visit the LVS Latvian Standards website.
Online Consultation of Standards
Catalog of Latvian Standards
Certification Organizations
LATAK The Latvian National Accreditation Bureau

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Business Practices

General Information
Worldbiz, Worldwide Business, choose Latvia
Opening Hours and Days
Offices: open from 9 am to 6 pm (Monday to Friday). They close on Saturday and Sunday.
Shops: open from 10 am to 7 pm (Monday to Friday). On Saturday, shops open from 10 am to 5 pm. Shops sometimes also open on Sunday.
Banks: open from 10 am to 2 pm and from 3 pm to 5 pm (Monday to Friday). They close on Saturday and Sunday.
Administrations: open from 10 am to 5 pm (Monday to Friday). They close on Saturday and Sunday.
Supermarkets: open from 8 am to 10 pm (or even midnight) all week.
Some groceries and pharmacies stay open 24/24.
 

Public Holidays

New Year's Day 1 January
Good Friday Friday before Easter Sunday
Easter Monday Easter Monday
Labor Day 1 May
The Republic of Latvia joined the European Union 4 May
LIGO holiday (summer solstice) 23 June
Feast of St John (JANI) 24 June
Proclamation of the Republic, national day 18 November
Christmas Day 25 December
St Sylvester 31 December
 
 

Periods When Companies Usually Close

Christmas and New Year's Day A week before New Year's Day.
 

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Last Updates: October 2014