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If you are not a tax resident of Latvia and receive interest income from Latvia, Withholding Tax (WHT) may be deducted before the interest is paid to you. The payer withholds the tax at source, so you receive the interest after tax rather than paying that tax separately later. Your rate depends mainly on your country of tax residence and whether you have provided a valid Tax Residency Certificate.

How Withholding Tax Works

Latvian law may treat certain interest received by non-residents as taxable income. The current Latvian domestic tax rate for capital income, including interest, is 25.5%. Withholding at source is also common in other countries for cross-border payments such as interest, dividends, royalties and similar income.

How Your Rate Is Determined

The applicable rate depends on your tax residence and the documentation you provide. Latvia has double-taxation treaties with many countries. These treaties allocate taxing rights and help prevent the same income from being taxed twice without appropriate relief. If the relevant treaty and its conditions apply, the treaty rate may replace Latvia's domestic rate.

If You Do Not Provide a Certificate

Without a valid Tax Residency Certificate that supports treaty relief, the applicable Latvian domestic rate is generally used. For taxable interest income, that rate is currently 25.5%.

For example, if you earn EUR 100 in interest, EUR 25.50 would be withheld and you would receive EUR 74.50 after Latvian WHT.

Entering a country of residence in your account is not official proof of tax residence. Treaty relief requires appropriate supporting documentation.

If You Provide a Certificate

A Tax Residency Certificate is an official document issued or confirmed by the competent tax authority in your country of residence. It confirms that you were a tax resident of that country for a specified period and must be valid for the period to which the interest payment relates.

Once a valid certificate is available and the treaty requirements are met, a reduced rate may apply. Depending on the treaty and the circumstances, this may be 5% or 10%; some treaties provide other rates, exemptions or additional conditions. Latvia's State Revenue Service sets the procedure for claiming treaty relief on the basis of residence documents.

A certificate therefore does not guarantee the same reduced rate for everyone. It proves your tax residence so that the relevant treaty can be considered.

Why Tax Residence Matters

Tax residence determines which country's tax rules and which treaty may apply. It is not necessarily the same as nationality or citizenship. For example, you may be a citizen of one country but a tax resident of another because you live and work there.

Keeping your tax-residence information current and providing a valid certificate helps ensure that the correct WHT rate is applied to your interest payments.

Important Information

Tax rules and double-taxation treaties vary by country and individual circumstances. This article provides general information only and is not individual tax advice. If you are unsure about your obligations, consult a qualified tax adviser or your local tax authority.