On amendments in Latvia as of 1.1.2025.
The main changes are related to PIT and there was already a blog about it. But everything else was not yet collected in one place. I will try to correct this omission (sorry, but it will be long).
Ch-ch-ch-ch-changes
Turn and face the strange
David Bowie
PIT
There was a separate blog about the draft personal income tax changes - as predicted, it has all materialized in the law.
Pensions
The dogs barked, but the caravan moved on. From January 1, 2025 to December 31, 2028, 1% of pension contribution rates has been transferred from the 2nd pension pillar to the state unfunded pension scheme (pension pillar 1).
Minimum wage
The amendments provide that in 2025 the minimum monthly wage within normal working hours is EUR 740.
VSAOI
The amendments to the law on the social security contributions provide that the special tax regime of the transitional period for royalty recipients has been extended until December 31, 2027. The maximum amount of the VSAOI and the voluntary contribution object has been increased to EUR 105,300 for the next three years (from 2025 to 2027).
VAT
Relatively extensive amendments have been adopted related to VAT, which you can read more about in the September Tax Bulletin. In short, the amendments to the VAT law address the following issues:
to exclude the current deadline set in the VAT Law for applying the reduced VAT rate of 12% to food supplies (fresh fruits, berries and vegetables, etc.), thus turning the temporary norm into an indefinite one;
on the right not to register in the VAT register (EUR 50k threshold) - with the amendments, unfortunately, no solution was found for those who work with Booking, etc., which I wrote about;
place of provision of services for virtual cultural and sports events;
place of provision of services for electronically provided services;
application of VAT exemption for certain services;
acquisition of goods in the EU territory in relation to supplies to the armed forces;
0% VAT for diplomats and consular officers;
0% VAT for the export of goods for humanitarian aid and charity purposes;
the conditions that must be met in order to register in the SRS VAT register as a fiscal representative have been added to the VAT Law;
the conditions for obtaining a permit for the application of a special VAT regime for import of goods have been supplemented;
a special VAT regime for used goods, works of art, etc. (including in the trade of used cars);
luxury cars;
the right of suppliers from other EU Member States and third countries not to register in the VAT register.
Excise duty
The amendments provide for:
changes in excise duty rates and application starting from 01.01.2025, as well as in 2025, 2026 and 2027:
increase excise duty rates on petroleum products and natural gas used as fuel or heating fuel;
abolish the excise duty exemption for petroleum products used in electricity generation, setting the tax rate as for petroleum products used as heating fuel;
increase the excise duty rate on non-alcoholic beverages;
increase excise duty rates on alcoholic beverages;
increase excise tax rates on tobacco products;
set a fuel limit of no more than 200 liters for commercial vehicles entering from a third country in standard tanks.
E-invoices
On 1.1.2025, the relevant amendments to the Accounting Law came into force, which was already covered in a separate blog.
MUN
The micro-business tax law specifies several details.
If a MUN payer de-registers and registers economic activity in the usual manner, he/she cannot register for the MUN regime again in the same year.
An opportunity has been introduced as of 1.1.2026 to register as a MUN payer for 1 or more quarters.
If a MUN payer has no turnover for 2 consecutive years, he/she loses the status of a MUN taxpayer with the following month.
DRN
The amendments to the natural resources tax law provide for an increase in tax rates for coal, coke and lignite.
TEN and UVTN
The amendments to the car taxes law provide for an increase in all TEN rates by 10% starting from 2025, setting the TEN payment deadline as January 31 of the year following the calendar year, and increasing UVTN rates by 10% starting from 2027.
New SRS Law
It will enter into force on 1.1.2026, making the law as short and easy to understand as possible. The main changes are regarding the transfer of the functions and tasks of the SRS Internal Security Department to KNAB - anti-corruption office (as of 1.1.2025), as well as the establishment of the Tax and Customs Police and the institutional jurisdiction (subordination) of its functions to the Ministry of Finance. More details on this can be found in the November Tax Bulletin. Other related laws have also been amended, and a new Tax and Customs Police Law will enter into force on 1.1.2026.
Taxes and Fees
There are 4 different laws on amendments here.
The most recent of them were considered in the parliament in the 1st reading on January 9th - more details about them will be in the January Tax Bulletin.
The others were adopted respectively on 24 October (effective from 20.11.2024 - on TAP and insolvency issues - the amendments will ensure the fulfillment of Latvia's obligations towards the EU, ensuring compliance of national regulation with the Directive on Restructuring and Insolvency and mutually aligning it with the regulation of the Insolvency Law),
adopted on 31 October (effective from 1.1.2026, in connection with the new SRS Law, as explained above) and
on 4 December - these amendments are described in more detail in the October Tax Bulletin, but it is worth listing the most significant of them here:
On providing information to the SRS on cash deposits made by individuals:
it is envisaged that credit institutions and payment service providers will provide the SRS with information on:
cash amounts of 7,000 euros or more deposited into the payment account of clients - individuals who are residents of Latvia; and for
clients whose total debit or credit turnover of demand deposit accounts and payment accounts for the previous year is 15,000 euros or more;
Regarding non-cash payments:
the taxpayer is obliged to ensure the possibility of paying for services and transactions carried out in retail trade also in non-cash if the turnover of the previous reporting year at the taxpayer's legal address or its structural unit, or at a vending machine whose installation address does not coincide with the taxpayer's legal address or its structural unit, exceeds 50,000 euros;
Regarding the area of commercial passenger (taxi) transportation:
regulations have been established regarding the SRS's right to suspend the taxpayer's economic activity if the carrier carries out commercial transportation by taxi or car and violates the terms of service provision of the website or mobile application and does not ensure the sending of data to the SRS;
a natural or legal person who carries out commercial passenger transport by taxi or car may be deprived of the right to use the particular vehicle in commercial passenger transport by taxi and car for a period of up to two years or without it, or by depriving the right to carry out commercial passenger transport by taxi and car for a period of up to two years or without it;
The same additions are included in relation to the performance of unauthorized transactions if the taxpayer's economic activity has been suspended and in relation to non-compliance with the requirements for the use of electronic devices and equipment for recording payments;
A legal person may also be liable for evasion of payment of taxes and similar payments,
Regarding measures in the construction sector:
to lower the threshold for the introduction of EDLUS from 350,000 euros to 170,000 euros, as it has been established that even in construction works whose value is less than 350,000 euros, it is necessary to use EDLUS in order to reduce the number of undeclared working hours at the construction site;
and with 1.1.2026. reduce the reliability range of the EDLUS database data from 20% to 15%, which means that EDLUS data on the working hours of a person employed on a construction site within a calendar month may differ by no more than 15% from the actually counted working hours used to calculate wages for work on a construction site.
Annual Reports Law
On 17 October 2024, amendments to the Annual Reports and Consolidated Annual Reports Law entered into force, within which the threshold values of the size criteria for micro-enterprises, small, medium-sized and large enterprises (balance sheet total and net turnover) have been adjusted. In accordance with the adoption of amendments to the Accounting Directive 2013/34/EU, they are increased by 25%.
New Solidarity Contribution Law
It entered into force on 1.1.2025. The solidarity contributions will apply to the period from 2025 to 2027. The increase in contributions will be possible directly by making solidarity contributions to the state budget, or indirectly, by significantly increasing lending volumes and thus also economic activity and the budget revenue. The solidarity contribution base is determined by net interest income, or the difference between interest income and interest expenses of credit institutions. Similar to Lithuania, the contribution rate is 60% of the net interest income of the payment period, which significantly exceeds the average annual net interest income before the rapid increase in the Euribor rate. At the same time, a discount model is also offered, tied to the growth rate of credit institutions' lending. The discount can reach even 100% of the contribution payable, if the credit institution's lending volumes increase significantly.
Gambling and lotteries
Amendments to the relevant tax law provide for rate increases from 1.1.2025. In turn, the amendments to the Gambling and Lottery Law provide, among other things, that quarterly reports will no longer have to be submitted to the SRS, but only to the Lottery and Gambling Supervisory Inspectorate.