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Latvia: Proposed amendments to individual income tax law

Proposals include introduction of two-tiered progressive individual income tax rates

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October 28, 2024

The Latvian government on October 11, 2024, published draft amendments to the individual (personal) income tax law that aim to enhance the competitiveness of the workforce in the Baltic region, reduce the tax burden on low and middle-income employees, and simplify the application of individual income tax.

Proposed changes include:

  • Introduction of two-tiered progressive individual income tax rates
  • Fixed individual income tax rates increase for certain types of income
  • Additional 3% individual income tax rate for income exceeding €200,000 annually
  • Fixed non-taxable minimum
  • Increased non-taxable minimum for pensioners
  • Expanded list of non-taxable benefits
  • Increased non-taxable limits for benefits and gifts
  • Tax exemptions for competition awards and lottery winnings
  • Exemptions for certain state support payments
  • Extended transitional period for recipients of royalties to register economic activity

Read an October 2024 report prepared by the KPMG member firm in Latvia

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