Information about Income Tax for Individuals | Luminor

Information about Income Tax

According to the law On Personal Income Tax income form savings and investments is a subject to income tax. Here you can find information about the way how income tax is applied to each type of savings and investments.

Tax amount and obligation to declare capital gains depends not only on the type of savings or investment product, but also on whether investor is using investment account regime.

Consultations

You can receive a free support from the State Revenue Service tax advisors for the annual income statement and declaration of income at the Stave Revenue Service office, by calling +371 80 009 070 or via e-mail vid.konsultanti@vid.gov.lv.

Requisites for Income Tax payments

Beneficiary: Valsts Kase
Registration Number: 90000050138
Account Number: LV91TREL1060000110000
Beneficiary’s BIC code: TRELLV22

Electronic declaration system

Standard regime or investment account regime

  Using investment account regime Using standard regime
Tax calculation Done when amount withdrawn from the investment account exceeds total amount of funds deposited Done when income is derived from each financial instrument sales transaction
Income declaration With annual income declaration Using declaration on capital gain income form (DK), depending on the total income gained during the quarter
Declaration submission term From 1 March to 1 June of the year following the taxation year
 
If income for taxation year exceeds 62 800 euro – From 1 April to 1 July
♦ If the total income from transactions with capital assets during the quarter exceeds 1,000 euro, the declaration must be submitted once a quarter by the 15th date of the month that follows the quarter in which income from capital gains was gained
♦ If the total income from transactions with capital assets during the quarter does not exceed 1,000 euro, the declaration must be submitted by the 15 January of the following year
♦ A foreign taxpayer must submit the declaration on income from capital gains by the 15th date of the month that follows of the month of gaining income
Due date of tax payment < EUR 640 - within 15 days following the due date of filing set by the law
 
> EUR 640 – in three instalments (by 16 June, 16 July, 16 August), paying each time one third of the tax amount
Within 15 days following the due date of filing set by the law

Savings Account

  • The tax rate amounts to 20% of the paid accrued interest.
  • The tax is deducted automatically by the Bank upon the accrued interest payment and credited to the state budget. 
  • The customer may see the paid tax amount in the account statement.

Term Deposit

  • The tax rate amounts to 20% of the paid accrued interest.
  • The tax is deducted automatically by the Bank upon the interest payment, i.e. at maturity or once in every month/ quarter and credited to the state budget.
  • The customer may see the paid tax amount in the account statement.
  • Should the deposit be terminated before maturity the accrued interest in not paid and the paid interest is withheld (in such case, including the tax amount). The Customer may get the tax refund by filling out the annual tax return with the State Revenue Service.

Investment Funds

  • Profit earned from trades in investment funds is a taxable income for personal income tax
  • The tax rate is 20%
  • Investor is solely responsible for calculation of capital growth, declaration of income and payment of tax
  • The Fund's shareholders who acquired the shares by the end of 2009 may use the discount stipulated by law On Personal Income Tax – to calculate the tax from the result of the disposal of funds for a period that is proportional to the time period from 2010
Example: The customer bought the funds in January 2009 for EUR 1,000 and sold for EUR 1900 in January 2018. Earned profit + 900 EUR. The client has owned funds for 9 years or 108 months. Capital growth tax is payable only for the profit of the last 8 years (2010-2017). Taxable income = (EUR 900: 108 months) × 96 months = 800 EUR, tax 20% of 800 EUR = 160 EUR.

Index-linked Bonds

  • Profit earned from trades in index-linked bonds is a taxable income for personal income tax
  • The tax rate is 20%
  • Investor is solely responsible for calculation of capital growth, declaration of income and payment of tax

Debt Securities

  • Profit earned from trades in debt securities is a taxable income for personal income tax
  • The tax rate is 20%
  • Investor is solely responsible for calculation of capital growth, declaration of income and payment of tax
  • Income from Latvian or other European Union Member State or European Economic Area states, state and local government securities is non-taxable income

3rd Pension Pillar

  • Upon payment of 3rd pension pillar capital, on a profit gained form investment (a positive difference between the paid savings amount and paid insurance premiums) a 20% capital income tax will be applied and automatically deducted during capital pay out. 
  • Upon payment of 3rd pension pillar capital, on payments made by employer a 23% Personal income tax will be applied and automatically deducted during capital pay out.

Savings Life Insurance

Upon payment of savings life insurance capital, on a profit gained form investment (a positive difference between the paid savings amount and paid insurance premiums) a 20% capital income tax will be applied and automatically deducted during capital pay out.

The information provided hereof is for informative purposes only and Luminor Bank AS Latvian branch waives any responsibility for expenses or loss, which may incur in case it does not tally with explanations provided by the State Revenue Service or another competent authority. To obtain additional information on taxation of income from deposits and investments Luminor Bank AS Latvian branch recommends that you consult the State Revenue Service or your personal tax advisor.