Starting from January 1, 2018 profits of Latvian residents individuals and companies is subject to new dividend taxation regime, introduced by the Latvian Law on Corporate income tax of July 28, 2017 and relevant changes in the Latvian law On personal income tax.
The law provides that dividends for Latvia tax residents individuals is exempt if before either corporate income tax is paid by the Latvian company, or dividends are being subject abroad to either personal income tax or corporate income tax.
It
is presumes that in case dividend payment is done from EU or EEA company, the
dividends is paid, even the effective tax rate abroad is zero. As example, Latvian resident receiving
dividends from Cyprus, where there are zero tax paid in Cyprus, will not be
subject to dividend taxation in Latvia. This standing is confirmed by recent ruling
by the State Revenue Service in explaining taxation of profits received after
January 1, 2018.
To find out more about Tax reform in Latvia, Lithuania or Estonia contact our Latvian tax attorney Valters Gencs at info@gencs.eu
T: +37167240090
F: +37167240091