Dividend Tax in Latvia
Currently only European Union and EEA companies are exempt of withholding tax receiving dividends, but paying dividends to other countries withholding tax is applied, either 10% or 5% rate. Starting from year 2013 withholding tax in Latvia will be exempt to dividends from non-residents, except for companies which are from low tax countries. Starting from year 2013, January 1st, corporate income tax will be exempt to Latvian resident to non-resident paid dividends and from non-resident received dividends. However, dividends which Latvian companies will pay to companies from low tax countries, withholding tax will be applied and it will be 15% instead of 10% which is now.
Under the law “On Corporate Income Tax” for dividends it is obligated to apply corporate income tax, that applies to dividends that are received from:
- The Latvia’s companies and if these companies are applying corporate income tax discounts;
- Offshore companies (not including the European Economic Area (EEA) countries) and these companies have 25% or less from capital and voting right to Latvian taxpayers; and
- Other offshore companies from low tax countries without any obligations.
Dividends are applied with corporate income tax, but only those which are paid from offshore companies from low tax countries without any obligations.
Under the law „On Personal Income Tax” persons will be applied with income tax for recieving dividends in the end of taxation period.