Guide to Property Taxes in Latvia

Non-resident individuals are generally subject to Latvian taxation on income derived from Latvian sources, including income and taxable gains arising from real estate situated in Latvia. Married individuals are generally taxed separately.

Non-residents may have more limited access to personal allowances and deductions than Latvian residents. However, qualifying residents of an EU or EEA Member State may be entitled to certain allowances where at least 75% of their total income is subject to Latvian income tax, subject to the applicable conditions.

Income Tax

Latvia applies progressive personal income tax rates.

For 2026, taxable income is generally subject to:

• 25.5% on annual income up to €105,300; and

• 33% on the portion of annual income exceeding €105,300.

An additional 3% tax applies to annual income exceeding €200,000, subject to the rules governing the calculation of the additional tax.

Rental Income

A non-resident individual deriving rental income from Latvian real estate may generally be taxed under the ordinary personal income tax regime or, where the applicable conditions are satisfied, use the simplified rental-income regime.

Under the ordinary regime, net taxable rental income is generally subject to the progressive personal income tax rates of 25.5% and 33%. Qualifying expenses associated with earning the rental income may be deducted according to the applicable rules.

Alternatively, an individual who does not register a full economic activity may elect to use the simplified rental-income regime. Under this method, rental income is generally subject to a 10% tax rate.

Under the 10% regime, ordinary rental expenses are generally not deductible, with the principal exception of qualifying real estate tax payments attributable to the property.

The simplified regime therefore provides a substantially simpler calculation but taxes rental receipts largely on a gross basis.

Corporate Rental Income

Latvia operates a distributed-profit corporate income tax system.

Corporate profits, including profits generated from rental activity, are generally not subject to corporate income tax when earned and retained within the company. Instead, corporate income tax is generally triggered when profits are distributed as dividends or treated as deemed distributions.

The standard corporate tax is calculated at 20% of the grossed-up taxable amount, which corresponds to an effective 25% tax on the net amount distributed.

Qualifying business expenses associated with operating and maintaining rental property may generally reduce accounting profit, while non-business expenses can themselves give rise to corporate income tax under Latvia's distributed-profit system.

Accordingly, it is misleading to describe Latvian corporate rental income simply as being subject to an annual 20% corporate income tax on net rental profits.

Capital Gains

Capital gains realized by an individual from the disposal of Latvian real estate are generally subject to 25.5% personal income tax.

The taxable capital gain is broadly calculated as the difference between the property's disposal price and its qualifying acquisition cost, taking into account eligible investment and improvement expenditure.

Certain disposals of real estate may qualify for an exemption, including under rules relating to the length of ownership, the taxpayer's declared residence and ownership of a sole property, provided the relevant statutory conditions are satisfied.

Non-residents disposing of Latvian real estate may also be subject to withholding or filing requirements depending on the circumstances of the transaction.

Property Buying and Selling Taxes/Costs in Latvia

Property Holding Tax

Real Estate Tax

Owners of real estate in Latvia are generally subject to an annual Real Estate Tax (RET) imposed by the municipality in which the property is located.

The tax is calculated on the property's cadastral value, rather than its market or purchase price. Municipalities generally have authority to establish Real Estate Tax rates within a range of 0.2% to 3% of cadastral value, subject to the conditions established by Latvian law.

For qualifying residential properties that are not used for business purposes, progressive rates generally apply:

• 0.2% on cadastral value up to €56,915;

• 0.4% on the portion between €56,915 and €106,715; and

• 0.6% on the portion exceeding €106,715.

Land and certain buildings are generally subject to a 1.5% rate on cadastral value.

Higher rates of up to 3% may apply in certain circumstances, including properties that are not properly maintained or other situations specified under municipal rules.

The precise annual liability therefore depends on the property's cadastral value, classification, use and the municipality in which it is situated.

Real Estate Tax paid in connection with income-producing property may generally be taken into account as a deductible expense under the applicable rental-income tax regime. In particular, qualifying Real Estate Tax may also be deductible when calculating taxable rental income under Latvia's simplified 10% rental regime.