Value Added Tax (Latvian – Pievienotās vērtības nodoklis, PVN). The standard rate is 21%. The reduced rate of 12% applies to medicines, certain foodstuffs, passenger transport, educational literature and periodicals, hotel accommodation, wood fuel, district heating, and property management services. Exports of goods outside the EU are zero-rated (0%); imports from outside the EU are generally subject to import VAT, charged together with customs duties.
Personal income tax (Latvian – Iedzīvotāju ienākuma nodoklis). Since 2018, Latvia applies a progressive rate, and the brackets have been updated for 2026: 25.5% on annual income up to EUR 105,300, and 33% on the portion above that. An additional 3% applies to the portion of total annual income (from all sources, including dividends and capital gains) exceeding EUR 200,000. Dividends and other capital income — bank interest, life insurance payouts, investment fund income — are taxed at a flat 25.5%, replacing the older split arrangement (10% inhabitant tax / 20% corporate income tax on dividends) that applied before 2018.
Mandatory state social insurance contributions (Latvian – Valsts sociālās apdrošināšanas obligātās iemaksas, VSAOI). The combined rate is 34.09% of the employee's gross salary: 10.50% is withheld from the employee, and 23.59% is paid by the employer on top. This split is unchanged for 2026.
Solidarity tax (Latvian – Solidaritātes nodoklis). Once annual income exceeds the social-contribution cap — EUR 105,300 for 2026 — contributions above that threshold continue at the same 10.50%/23.59% split, but are classified as solidarity tax rather than standard social contributions. Separately, the additional 3% personal income tax described above kicks in on total annual income over EUR 200,000, so very high earners face a top marginal rate of roughly 36%.
Property tax (Latvian – Nekustamā īpašuma nodoklis). The rate ranges from 0.2% to 1.5% of the cadastral value of the property and can rise to 3% for neglected or abandoned buildings. Exact local rates and any reliefs (for example, for a sole home) are set by each municipality, so it's worth checking with the relevant local council.
Vehicle operation tax (Latvian – Transportlīdzekļa ekspluatācijas nodoklis). Levied annually on vehicles owned by private individuals; older vehicles and those with higher emissions are generally taxed at higher rates.
Customs tax (Latvian – Muitas nodoklis). Applies to goods imported into Latvia from outside the European Union, at rates set under the EU's Common Customs Tariff.
Excise tax (Latvian – Akcīzes nodoklis). Levied on alcoholic beverages, tobacco products, petroleum products, natural gas, soft drinks and coffee, and liquids used in electronic cigarettes. Rates are reviewed periodically, typically upward; current rates are published at vid.gov.lv/en/excise-duty-rates.
Since 2018, Latvia has applied the progressive principle to personal income tax: the more you earn, the higher the rate on the top portion of your income, so higher earners pay a larger share in tax while lower earners pay less. For 2026, under the law "On Personal Income Tax," the brackets are:
25.5% on annual income up to EUR 105,300 (roughly EUR 8,775 per month before tax);
33% on the portion of annual income above EUR 105,300;
an additional 3% on the portion of total annual income above EUR 200,000.
The standard non-taxable minimum is EUR 550 per month for most taxpayers, rising to EUR 1,000 per month for pensioners. The exact non-taxable amount is differentiated based on your total annual income and is recalculated once you file your annual income declaration. A separate non-taxable allowance for dependants also applies — since this figure is adjusted periodically, it's best confirmed directly in your account at eds.vid.gov.lv.
Useful official information on taxes is available at vid.gov.lv.
In most cases, all taxes on your salary are calculated and paid by your employer (unless your contract says otherwise), so you receive the net amount in your bank account. You can check exactly what was withheld from your pay via your account at eds.vid.gov.lv/login/. Once a year, you also have the right to a refund of any overpaid personal income tax that results from the differentiated non-taxable minimum — to claim it, you need to submit your annual income declaration. More details are available at vid.gov.lv.
This is general information rather than individual tax advice — residency status, sources of income, and family circumstances can all affect how these rules apply to you, so it's worth checking your specific situation with VID or a tax advisor.
