Tax changes as of 1 January 2025

On 6 September a version of tax amendments was made public by the MoF, which has been agreed with the social partners and will go to the parliament. The rumour says that this will become the law.

The expected amendments are as follows

Minimum monthly wage:

• 2024: EUR 700

• 2025: EUR 740

• 2026: EUR 780

• 2027: EUR 820

• 2028: EUR 860

Fixed monthly tax-free minimum - for all from 1.1.2025:

• 2025: EUR 510 (pensioners: EUR 650)

• 2026: EUR 550

• 2027: EUR 570

Personal income tax rates:

• 25.5% - for all income up to EUR 105,300 p.a.;

• 33% - above EUR 105 300 p.a.;

• an additional 3% rate (to be applied through the annual PIT return) will apply to all income of Latvian residents above EUR 200 000;

• 10% PIT rate for rental income stays.

There is not much media coverage that the new rates will apply to all income, including salaries, interest, dividends, royalties, capital gains, etc. The exemption to dividends from companies will stay except 3% to the income above EUR 200k p.a.

1% of Tier 2 pensions will be redirected to Tier 1.

The other changes the MoF presentation provides (only the most important ones):

• an increase of the tax relief for collective agreements up to EUR 700 p.a.;

• simplification of the mico-business tax - it is not explained here further;

• transport usage tax will increase +10%;

• company car tax will increase +10% as of 2027;

• lottery tax will increase from 10% to 15% as of 2027;

• gambling tax will increase +20% as of 2027;

• the natural resources tax on coal and coke will increase;

• revision of the excise tax on fuel, petroleum products, non-alcoholic beverages with sugar up to 8 gr., alcohol, tobacco products;

I understand from the MoF presentation that it does not intend to touch on any other issues (VAT, CIT, solidarity tax, etc.). Here are all the Baltic tax rates for 2024.