What is the effective tax rate for Digital Nomad Visa holders in Latvia?

DN Visa holders who register as Latvian taxpayers with the State Revenue Service (VID) pay a flat 15% personal income tax rate on their earnings. This compares very favourably to Latvia's standard progressive rates (25.5%–33%). You must proactively register to use this rate — it is not automatic.

How does Latvia's Microenterprise Tax work?

The MET is a simplified tax regime for businesses and freelancers with annual revenue under €40,000. You pay 25% of total revenue — this single payment covers personal income tax, social contributions, and business tax. It eliminates the need for complex payroll accounting and is popular with small freelancers and sole traders.

How does Latvia's corporate tax compare to Estonia's?

They are very similar — both Latvia and Estonia use a 0%-on-retained-profits model, taxing only on distribution at 20%. Latvia's system has slightly different mechanics for deemed distributions, but the fundamental advantage of tax-free reinvestment is shared by both Baltic neighbors.

Is it easy to open a bank account in Latvia as a new expat?

It's manageable but requires preparation. Since Latvia tightened AML regulations, banks require proof of income source and thorough documentation. Citadele Banka is generally considered most expat-friendly. Bring your personalised identity code, passport, proof of address in Latvia, and documentation of your income. Revolut and Wise work immediately for daily spending while you complete the bank account process.

Does Latvia have a wealth or inheritance tax?

No wealth tax in Latvia. Inheritance is subject to standard PIT rates when beneficiaries receive assets, though there are exemptions for direct family members (spouse, children, parents). Always consult a Latvian tax advisor for estate planning in your specific situation.

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Rankings Compare Blog

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🇱🇻 Latvia

Cost of Living

25.5% / 33%

Standard PIT Rate

Progressive; plus allowance

15% flat

DN Visa Tax Rate

For registered nomad visa holders

€550/mo

Non-Taxable Allowance

€6,600/year

20% on distribution

Corporate Tax

0% on retained profits

21%

VAT Rate

Reduced rate 13% from 2026

25% of revenue

Microenterprise Tax

For turnover under €40,000

Last updated: March 2026

Overview🏙️Riga 🏖️Jūrmala

🛂Visa 🏥Healthcare 💰Finance 🏠Housing 💼Working 🌆Daily Life ✈️Moving 📚Education 🌅Lifestyle 📈Investing

Overview

Latvia's standard personal income tax is progressive: 25.5% on income up to €105,300/year and 33% above that threshold, with a €550/month (€6,600/year) non-taxable allowance. Digital Nomad Visa holders who register as Latvian taxpayers benefit from a landmark 15% flat rate. Corporate tax is 20% on distributed profits (0% on retained/reinvested). Social contributions total ~35% of gross salary split between employer and employee. The Microenterprise Tax (MET) at 25% of revenue is available for turnover under €40,000/year, covering all social and income taxes. VAT is 21% standard (reduced rate raised from 12% to 13% in 2026). Latvia is notably cheaper to live in than most EU states: groceries, dining, and transport all run 40–50% below Germany or the Netherlands.

Key Takeaways

Standard PIT: 25.5% on annual income up to €105,300; 33% above €105,300
0% corporate tax on retained and reinvested profits
Single person monthly budget in Riga: €1,200–€1,600 including rent
Major banks: SEB Latvia, Swedbank Latvia, Citadele Banka, Rietumu Banka

Personal Income Tax — Progressive Rates + DN Visa Flat Rate

Latvia uses a two-tier progressive PIT system. The key advantage for expats on the Digital Nomad Visa is a 15% flat rate — one of the most attractive in the EU for mobile professionals.

Standard PIT: 25.5% on annual income up to €105,300; 33% above €105,300
Additional 3% surcharge on income exceeding €200,000
Non-taxable allowance: €550/month (€6,600/year) for all residents
Digital Nomad Visa holders: 15% flat rate if registered as Latvian taxpayers with VID
All income types covered: employment, self-employment, rental, dividends, capital gains at 25.5%
Rental income taxed at flat 10% rate after eligible deductions
Latvia has tax treaties with 60+ countries to prevent double taxation
Tax year: calendar year; filing deadline typically 1 June

Corporate Tax — 0% on Retained Profits

Like Estonia, Latvia taxes corporate profits only upon distribution — not on retained/reinvested earnings. This makes Latvian companies highly efficient for growth-phase businesses.

0% corporate tax on retained and reinvested profits
20% CIT on distributed profits (dividends, deemed distributions)
No withholding tax on interest and royalty payments to EU companies (under EU directives)
Latvian companies can be registered online; minimum share capital €1 for SIA (private limited)
Microenterprise Tax (MET): 25% flat on turnover below €40,000/year — covers PIT and social contributions
VAT registration required above €40,000 annual turnover
Annual filing via the Electronic Declaration System (EDS) — entirely digital

Cost of Living — Among EU's Best Value

Latvia consistently ranks as one of the most affordable EU member states. Riga is significantly cheaper than Baltic peers Tallinn and Vilnius for many categories, and dramatically cheaper than Western European capitals.

Single person monthly budget in Riga: €1,200–€1,600 including rent
Single person in Jūrmala (off-season): €1,000–€1,500
Rent 1BR Riga city centre: €600–€800/month
Groceries: €200–€280/month for a single person
Restaurant lunch: €6–€10; dinner for two: €25–€50
Beer in a bar: €2.50–€4; coffee: €2–€3.50
Monthly public transport pass: €50 in Riga
Latvia is 40–50% cheaper than Germany or Netherlands on an overall cost basis

Banking & Financial Services

Latvia has undergone significant banking sector reform since 2018 (following money-laundering scandals). The sector is now well-regulated, modern, and heavily digital. Opening a bank account as a non-citizen requires some documentation but is manageable with the right preparation.

Major banks: SEB Latvia, Swedbank Latvia, Citadele Banka, Rietumu Banka
Citadele is often recommended as most expat-friendly for non-residents and new residents
Account opening: requires personalised identity code (personas kods), passport, proof of address
Online banking standard: most Latvians bank entirely online
Fintech alternatives: Revolut and Wise widely used while awaiting local account
Baltic digital nomads often use Wise, Revolut, or their home-country accounts for day-to-day spending
Strict AML (anti-money-laundering) compliance: be prepared to explain income sources thoroughly

Disclaimer: The information on this page is for general informational purposes only and does not constitute financial, tax, legal, or investment advice. Tax rates, regulations, and investment rules change frequently. Always verify data with official sources and consult qualified professionals before making decisions. Read full disclaimer

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