Peculiarities of taxation of Ukrainians in Latvia

One of the important aspects of the life of citizens residing in a foreign country is the taxation of their income and property by local legislation.

For Ukrainians living or working in Latvia, understanding the country’s taxation system is a key aspect of their financial planning and interaction with local tax authorities.

According to Latvian legislation, there are several conditions for determining a natural person as a tax resident of Latvia:

• Stay in Latvia for more than 183 days per calendar year;
• Having a registered place of residence in Latvia;
• Latvian citizens working abroad with an employer registered in Latvia.

We draw your attention to the fact that receiving dividends is not considered employment and cannot be used by a person as proof of the country’s residency status.

Basic principles and types of taxation in Latvia

Taxation in Latvia is based on laws and regulations that determine tax rates, the reporting system, and other tax obligations of citizens.

The main types of taxes applied to citizens include:

• Personal income tax (PIT) is one of the main taxes paid by Latvian citizens from their income. Taxable income includes salary, interest on bank deposits, dividends, and other types of income.
• Personal income tax (PIT) – applies to certain categories of income, such as income from transactions with securities, real estate, and other assets. Tax rates may vary depending on income and other factors.
• Real estate tax – applies to citizens who own real estate in Latvia. This tax is calculated according to the assessed value of the property and the rates set by the local tax authorities.

Ukrainian immigrants working in Latvian companies are taxed on the same terms as local employees. At the same time, the minimum wage in Latvia is 500 euros.

At the same time, they pay two types of taxes: social tax (VSAOI) and personal income tax (IIN).

• Social tax is 34.09% or 30.02%, depending on the age of the employee, of which 10.5% or 9.25% is paid by the employee and the rest by the employer.
• Personal income tax is 23%, but Ukrainians can take advantage of the minimum tax rate of 20%. In addition, they are entitled to a tax-free minimum of €250 and an income tax exemption of €250 for each dependent minor child.

Tax credits and exemptions

Ukrainians living in Latvia may be entitled to various tax benefits and tax exemptions in certain cases.

For example, there are special tax conditions for the disabled, pensioners, and other social categories.

Double taxation and international agreements

Because Ukrainians can have income both in Latvia and in Ukraine, questions may arise regarding double taxation.

To avoid this problem, double tax agreements have been concluded between Ukraine and Latvia, which regulate the procedure for taxation of the incomes of Ukrainians residing in Latvia.

So, taxation in Latvia is a complex process based on the country’s legislation and international agreements.

To effectively manage their finances, it is important for Ukrainians living in Latvia to understand the main aspects of the taxation system and to use available tax benefits and exemptions.

In addition, it is important to know about international agreements for the avoidance of double taxation to ensure maximum efficiency in the management of personal finances.