Information about Income Tax for Individuals | Luminor
Information about Income Tax for Individuals1

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

The tax amount and the need to declare capital gains for different types of savings and investments are different. The amount of income gained from savings and investments could be found on the Current Account Statement in the Internet Bank.

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: State Treasury
Registration Number: 90000050138
Account Number: LV91TREL1060000110000
Beneficiary’s BIC code: TRELLV22

Electronic declaration system

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

  • An income tax 20% of the profit earned by selling or otherwise disposing of investment fund shares is applied. In the case of the tax period will be disposed other capital assets, tax is calculated at 20% of the total capital increase. Capital increase is defined as the difference between the disposal price of the capital assets and the cost of acquisition (including the commission that is attributable to the transaction). If the disposal results in losses, the tax does not have to be paid to the state budget. Calculation of capital growth must be made once a year, if the sales profit does not exceed 1000 EUR in the quarter. If the profit exceeds 1000 EUR, the declaration must be submitted quarterly. The tax on profits must be transferred to the State treasury account LV91TREL1060000110000. Income from capital growth should be shown in the income statement on capital growth. 
  • If income from capital growth is higher, regular declaration of capital growth and tax payment in accordance with the law “On Personal Income Tax” shall be carried out.
  • 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.
  • The tax on capital gains relates to residents of the Republic of Latvia who are not economic entities, unless law “On Personal Income Tax” provides otherwise.
  • Calculation of capital growth, declaration of income and payment of tax must be made by the client.

Index-linked Bonds

  • An income tax of 20% of interest income equivalent to that arising from the holding, sale or other disposal of bonds is applied.
  • According to the Law “On Personal Income Tax”, the bank is not obliged to inform the State Revenue Service of the interest earned on debt securities issued by other issuers and to effect automatic tax deduction.
  • If necessary, income and tax paid may be shown in appendix D1.1 "Taksācijas gadā gūtie ienākumi, kuriem piemērota samazināta nodokļa likme" of the Annual Income Statement.
  • Calculation of capital growth, declaration of income and payment of tax must be made by the client.

Debt Securities

  • Interest income from debt financing instruments is a taxable income for personal income tax.
  • The tax rate is 20%
  • The payment of the tax is the responsibility of the investor himself, who must independently declare the proceeds from transactions with securities and pay the tax.

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.

1The 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.