Tax Law
Overview
Latvia taxes company profit when it leaves the company rather than when it is earned. That single difference reshapes most structuring questions.
We advise on Latvian and cross-border tax: how a group is structured and where profit arises, transfer pricing policy and the documentation behind it, value added tax and withholding questions, and the substance a structure needs to withstand scrutiny.
We also act in dealings with the State Revenue Service - audits, information requests, and disputes about an assessment - and on the employment side of the bill, where payroll taxes and remuneration arrangements are often the first thing an arriving employer asks about.
What we advise on
How a group holds and finances its activity, where profit arises and how it is repatriated, and what the Latvian distribution-based charge means for the timing of the tax bill.
Setting intra-group pricing and the method behind it, and preparing the documentation that supports it - written to be read by the tax authority rather than filed and forgotten.
Registration and recovery questions, the VAT treatment of cross-border supplies and chains, and withholding on payments out of Latvia, including the relief available under the applicable treaty.
Audits and information requests from the start, the response to a draft assessment, and the objection and appeal stages that follow, with the file built in the order the later stages will need.
Where an entity or an individual is resident, what activity Latvia will treat as carried on here, and whether a structure has the people, premises and decision-making to support what it claims.
Payroll taxes and social contributions for Latvian and incoming staff, the treatment of benefits, bonuses and equity, and the reporting that goes with cross-border or remote working.
How the charge arises
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Distributed profit
The first limb of the Latvian corporate income tax base: calculated dividends, payments equivalent to dividends, and deemed dividends.
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Deemed distributed profit
The second limb. It brings in items that are not a dividend but are treated as though profit had left the company - among them non-business expenses, bad debts, excess interest payments and loans to a related person.
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Taxable person
For value added tax, any person who independently carries out an economic activity in any place, whatever its purpose or result.
Discuss your position with our team.
Tell us what you are planning and we will set out where the Latvian charge falls.