Latvia's tax system has a reputation for being simple, and in practice it is. There is one headline rate, one allowance and one online portal. What trips people up is not the rate: it is knowing the day you become a tax resident, and not finding the 2024 tables that still circulate online.
The figures below are for 2026. If you read an older source, check the year.
What is the income tax in Latvia in 2026?
Since the 2025 reform, personal income tax (iedzīvotāju ienākuma nodoklis, IIN) on wages and most income is 25.5% up to 105,300 euros of annual income and 33% above that, with an extra 3% on the part of annual income above 200,000 euros. Capital income and gains are taxed at 25.5%. The old 20% and 23% wage rates are gone.
On top come social contributions. The employee pays 10.5% of gross salary, and the employer pays 23.59% on top of the gross, giving total contributions of 34.09% (Ministry of Finance, 2026). The self-employed pay 31.07% in the standard scheme (see self-employed in Latvia).
There is a monthly allowance. The non-taxable minimum (neapliekamais minimums) is 550 euros a month in 2026, or 6,600 euros a year. It was 510 euros a month in 2025. A dependant gives 250 euros a month in 2026. Pensioners get a separate allowance of 12,000 euros a year on pensions.
When do you become a tax resident in Latvia?
The Law on Taxes and Duties, article 14, gives three criteria and any one is enough: your declared place of residence is in Latvia; you stay 183 days or more in any 12-month period; or you are a Latvian citizen employed abroad by the Latvian state. So the Latvia tax residency 183 days test is only one of three: declaring your address makes you resident, even before 183 days (see residence in Latvia for EU citizens).
As a resident you are taxed on your worldwide income. If two countries both consider you resident, the tax treaty decides, looking first at your permanent home and then at your centre of vital interests. The VID lists 61 conventions in force, so check that your country appears and read the relevant article before your first return.
How do you handle your tax as an employee?
Your employer withholds tax every month, but only one thing needs your action: the allowance.
- Log in to the EDS (Elektroniskās deklarēšanas sistēma, eds.vid.gov.lv) with an accepted means; see digital ID in Latvia.
- Give your main employer your electronic tax book (algas nodokļa grāmatiņa). That employer applies the 550 euro monthly allowance, and only one employer can do it.
- Keep proof of deductible costs, such as medical care or study, which accumulate in the EDS during the year.
Unsure whether you count as resident on a given date, or which treaty article covers your pension or rent? Moovy can lay out your case, list what to ask and prepare your questions for an accountant or the VID.
Do you have to file a return in Latvia?
It depends. A compulsory annual return (gada ienākumu deklarācija) is due from 1 March to 1 June if all tax was not withheld at source, which includes foreign income outside the EU, rental income and self-employment. If your annual income exceeds 105,300 euros the window is 1 April to 1 July. Pay any balance by 23 June, or 23 July for the higher-income window. If the tax due is above 640 euros, you can pay in three instalments.
A voluntary return from 1 March lets you reclaim overpaid tax, up to three years back (in 2026: 2025, 2024 and 2023). Failing to file a compulsory return means the VID's own calculation applies, and unpaid tax carries a late payment fee, which since 2026 is recalculated on the 1st and 15th of each month.
Is there a special tax regime for new arrivals?
No general one. The Personal Income Tax Law has no regime for new residents. Two narrow cases exist. The holder of a long-stay remote-work visa (not an EU citizen) may elect a 15% rate on remote-work income from an employer or business in an OECD country, for 365 days from becoming resident. And a returning member of the Latvian diaspora, after at least 36 months abroad, has a special rule for a foreign pension.
If you read about a "digital nomad tax break", it is the first of these, and it is not open to EU citizens, who do not need a visa in the first place.
What about property tax and other local charges?
If you buy a home, expect the annual real estate tax (nekustamā īpašuma nodoklis). Each municipality sets its rate between 0.2% and 3% of cadastral value; rates above 1.5% apply only to badly kept buildings. Without a municipal decision, housing is taxed at 0.2% up to 56,915 euros, 0.4% from 56,915 to 106,715 euros and 0.6% above, and land and non-residential premises at 1.5%. Notices arrive before 15 February, payable on 31 March, 15 May, 15 August and 15 November. Ask your municipality for the rate that applies to you. See also buying property in Latvia.
Which mistakes cost new residents money?
- Thinking you are resident only after 183 days. A declared address is enough.
- Leaving without declaring your departure. While your residence is declared in Latvia you remain resident under the law. Declare the new address abroad and file a final return.
- Using two employers for the allowance. Only one can; the balance appears in the annual return.
- Forgetting foreign income. Residents declare worldwide income, and income from non-EU countries goes into the annual return.
- Trusting 2024 figures. The 2025 reform changed the rates.
For the bigger budget picture, see cost of living in Latvia, and for pensions see retiring in Latvia.
How does income tax in Latvia work on a payslip?
The order of the calculation is the same every month. Your employer first takes the employee's 10.5% social contributions from the gross salary. From what remains, it deducts the 550 euro allowance if it holds your electronic tax book, plus 250 euros for each dependant you have declared. Income tax at 25.5% applies to the rest. The employer's own 23.59% comes on top of your gross and does not appear in your net pay. The annual return then settles the year, for instance if you had two employers, deductible costs or income above 105,300 euros.
What income tax in Latvia applies to capital and rental income?
Capital income and gains are taxed at 25.5% in 2026, according to the VID's table of rates. Rental income is reported in the annual return, and income from outside the EU must appear there too. If you have income taxed abroad, the tax treaty with your country decides which state taxes which income and how the other credits it. Latvia's convention with Switzerland is in force since 18 December 2002 and with the UK since 30 December 1996, as modified by the OECD multilateral convention.
Can non-resident EU citizens claim the Latvian allowance?
Yes, in one case. A non-resident EU or EEA citizen who earns more than 75% of total annual income in Latvia may file an annual return and obtain the allowance and deductions like a resident. The rule is for the EU and EEA, so it does not cover British taxpayers. This helps cross-border workers who live in another country.
What are the deadlines to remember?
- 1 March: the annual return opens.
- 1 June: deadline for the compulsory return (1 July for annual income above 105,300 euros).
- 23 June: payment of the balance (23 July for the higher window).
- 15 February: property tax notices arrive.
- 31 March, 15 May, 15 August, 15 November: property tax instalments.
Before your first return, and certainly if you have income from abroad or a pension, ask a Latvian tax adviser or accountant to look at your situation: the date you became resident and the treaty with your country are where most mistakes happen. If you plan to work for yourself, see self-employed in Latvia. The amounts above are those of 2026 and change with each budget.