Income Tax in Latvia (iedzīvotāju ienākuma nodoklis, IIN)

Personal income tax is a national tax collected by the State Revenue Service (Valsts ieņēmumu dienests, VID). You are a Latvian tax resident if your permanent place of residence is in Latvia or you stay in Latvia for 183 days or more in any 12-month period that starts or ends in the tax year. Residents are taxed on their worldwide income; non-residents only on income from Latvia. For most employees the tax is withheld from each salary, so many people never need to file a return.

Rates and allowances (2026)

• Progressive rates: 25.5% on annual income up to €105,300 and 33% on the part above it. An additional 3% applies to annual income above €200,000.
• Salary tax: your employer withholds 25.5% each month. The 33% part is settled in your annual return.
• Capital income (dividends, interest, capital gains): 25.5%.
• Non-taxable minimum: a fixed €550 a month for everyone (2026; it was €510 in 2025 and is set at €570 for 2027). Pensioners: €1,000 a month.
• Dependant relief: €250 a month for each dependant, such as a child (2026).
• Social insurance contributions come on top: 10.50% for employees, plus 23.59% paid by the employer (2026). On income above €105,300 a year they become a solidarity tax.

Payroll tax book and annual return

• Payroll tax book (algas nodokļa grāmatiņa): an electronic record in the VID online system (EDS). Give it to your main employer, who then applies the non-taxable minimum and your dependant relief.
• Mandatory annual return (gada ienākumu deklarācija): file from 1 March to 1 June for the previous year if, for example, you had business or rental income, foreign income (salary already taxed in another EU country is an exception), dividends or capital gains, tax-free income above €10,000 in total, or income that needs the 33% top-up. If your income exceeded €105,300, the period is 1 April to 1 July.
• Voluntary return for a refund: claim back tax on eligible expenses: medical and dental care and education (including Latvian language courses) for yourself and family members, children's hobby education, and your own donations. Together these count up to €600 a year. Contributions to private pension funds and savings life insurance have their own limit: 10% of taxable income, at most €4,000. You can file up to three years back.

Local taxes and VAT

• Municipalities set real estate tax (nekustamā īpašuma nodoklis) at 0.2–3% of the cadastral value and send the bill by 15 February.
• The standard VAT rate is 21%.

Common pitfalls for newcomers

• The non-taxable minimum and reliefs are applied where your payroll tax book is registered. Check in EDS that it is with your main employer, especially when you change jobs.
• Renting out a flat is taxable (10% on rental income) and must be declared, even if you are an employee.
• As a resident you must declare income earned abroad in your annual return, unless it is salary already taxed in another EU country.
• Keep receipts and e-receipts for eligible expenses. Refunds are only possible with payment documents.

Official guidance: VID: income tax rates, VID: mandatory annual return, VID: voluntary return and eligible expenses, VID: real estate tax, VID: VAT rates