In recent years, more and more residents of Latvia have started investing in stocks, bonds, funds, P2P platforms, and other financial instruments. However, alongside potential profits, it is important not to overlook another key aspect — investment taxes in Latvia. A lack of understanding of how taxes are applied can significantly reduce real returns and lead to unpleasant surprises when it comes time to declare income.

Investment tax is not a single specific payment — it is a general term referring to taxes that must be paid on income generated from investments. In this article, we explain in simple terms what capital gains tax is, how interest and dividend income are taxed, how investment income is declared, what tax rates apply, and whether it may be more advantageous to invest as a private individual or through a company.

What Investment Income Is Taxed in Latvia?

In Latvia, income earned by individuals from investments is subject to personal income tax (PIT). As of January 1, 2025, the personal income tax rate applied to capital gains is 25.5%.

The main taxable income categories include:

• Capital gains (for example, selling shares at a profit)

• Dividends

• Interest income (from deposits, bonds, loan securities, crypto assets, etc.)

Capital gains arise when a financial instrument is sold for a higher price than it was purchased. Dividends and interest, on the other hand, are income received regularly without selling the underlying asset.

In simple terms, tax on investment returns is applied when real income is generated — when you sell an asset at a profit or receive a payout (dividends or interest).

Capital Gains Tax

How Is Capital Gains Tax Calculated?

The basic principle is straightforward:

Sale price – purchase price – transaction costs = capital gain

The 25.5% tax rate is then applied to the capital gain.

Example

An investor purchases shares for €1,000 and later sells them for €1,300.

Capital gain: €300
Tax (25.5%): €76.50
Net profit after tax: €223.50

It is important to note that tax must only be paid once the gain is realized (when the asset is sold). As long as a security increases in value but has not been sold, no tax obligation arises.

Capital Losses and Taxes

Capital losses can be used to reduce the amount of tax payable.

Example

Profit from one transaction: €1,000
Loss from another transaction: €400
Taxable capital gain: €600

Tax (25.5%): €153

Offsetting losses against capital gains allows investors to optimize their tax burden, but it requires accurate transaction records and proper documentation.

Investment Account Regime – Tax Deferral

The investment account regime allows investors to defer paying tax until the amount withdrawn from the account exceeds the total amount deposited.

Example

Amount deposited: €10,000
Account value grows to: €13,000

As long as withdrawals do not exceed €10,000, no tax must be paid.

If €12,000 is withdrawn:

Taxable income: €2,000
Tax (25.5%): €510

This system can be beneficial for investors who regularly reinvest profits.

Dividend Tax in Latvia

Personal income tax in Latvia applies to dividend income received by both residents and non-residents.

However, unlike capital gains, dividend tax does not have to be paid by individuals if the distributing company has already paid corporate income tax (CIT).

Tax treatment may differ depending on whether dividends are paid by a Latvian or foreign company.

Dividends from a Latvian Company

In Latvia, companies pay corporate income tax (20%) when profits are distributed as dividends. If this tax has been paid, individuals do not need to pay additional personal income tax.

Example

A Latvian company distributes €8,000 in dividends.

The company has already paid €2,000 in corporate tax on the total profit of €10,000.

The individual receives €8,000 net, and no additional 25.5% tax applies.

Dividends from a Foreign Company

If dividends are received from a foreign company (for example, a US or EU-listed company), tax is usually withheld in the country where the company is located.

In Latvia, this income must still be declared and is subject to 25.5% personal income tax. However, under double taxation treaties, the tax already paid abroad can be credited.

Example

Dividends received: €1,000
Tax withheld abroad (15%): €150

Latvian tax calculation:
25.5% of €1,000 = €255

Additional tax payable in Latvia:
€105 (255 – 150)

If the tax withheld abroad exceeds the Latvian tax rate, the difference is not refunded.

Tax on Interest Income

Interest income (from deposits, bonds, and loan securities) is taxed at the 25.5% personal income tax rate.

If the payer is a Latvian bank or financial institution, tax is typically withheld automatically at the time of payment.

If the income is received through foreign platforms, the investor is responsible for declaring the income and paying the tax.

Crypto Taxes in Latvia

The tax regime for crypto assets generally follows the same principle as capital gains.

Profit from selling or exchanging crypto assets is subject to 25.5% personal income tax.

How to Declare Investment Income to the State Revenue Service

Investment income is declared electronically using the EDS system of the State Revenue Service (VID).

The process typically includes several steps.

1. Prepare a Summary of Transactions

Before declaring income, you will need:

• annual reports from brokers or platforms

• information about purchase and sale prices

• data on taxes withheld abroad (if applicable)

• calculated capital gains or dividend/interest income

If multiple platforms are used (for example, a bank and foreign brokers), the data must be consolidated.

2. Log into the VID EDS System

Within the EDS system, select the appropriate declaration:

• Capital Gains Declaration – if securities or crypto assets were sold at a profit

• Annual Income Declaration – if declaring interest or foreign dividends

3. Enter the Calculations

For capital gains, you must indicate:

• type of asset

• purchase date and price

• sale date and price

• calculated capital gain

• tax payable (25.5%)

If losses occurred, they should be included within the same reporting period to reduce taxable income.

4. Paying the Tax

After submitting the declaration, the EDS system calculates the amount payable.

The tax must be transferred to the State Revenue Service account within the specified deadline.

Example

Total capital gain during the quarter: €2,000

Tax payable (25.5%): €510

5. Declaring Foreign Income

If income is received through foreign brokers or platforms:

• tax is usually not withheld in Latvia

• 25.5% tax must be calculated on the gross income

• foreign tax already paid must be reported

• tax credit rules must be applied

A common mistake is declaring only the net amount received, rather than the gross income. Latvian tax is calculated on the gross amount, after which foreign tax already paid can be credited.

Timely and accurate declaration of investment income helps avoid penalties and late payment interest.

Declaring Investment Income from the TWINO Platform

Investors who invest through platforms such as TWINO typically need a report of the interest income received during the year for tax declaration purposes.

The platform provides transaction and income reports that investors can use when preparing information for the VID EDS system. These reports help determine the total interest income received and calculate any personal income tax payable.

Before submitting a declaration, it is recommended to review the platform’s report and ensure that all income has been correctly recorded.

How Often Must Capital Gains Declarations Be Submitted?

The frequency of capital gains declarations depends on the amount of income earned.

• If quarterly capital gains exceed €1,000, the declaration must be submitted for that quarter by the 15th of the following month.

• If quarterly capital gains do not exceed €1,000, the declaration can be submitted once per year by January 15 of the following year.

The tax must be paid by the same deadline as the declaration.

If the investment account regime is used, capital gains do not have to be declared for every transaction — only withdrawals exceeding deposits must be declared.

Stay Updated

Investing is one of the most effective ways to build long-term financial security. Make informed decisions, choose an investment approach that suits you, and remember to declare investment income and pay taxes within the required deadlines.

Please also note that the information in this article reflects the situation as of March 2026. Investment tax rules, rates, and regulations in Latvia may change over time. Investors should follow updates published in official sources such as Likumi.lv and Vid.gov.lv.

Email: [email protected]
Address: Pērses iela 2A, Riga, LV-1011, Latvia

This material is for informational purposes and is not individual investment advice.