Running your business

Natural Gas Tariffs 

The largest gas provider in Latvia is state-owned ‘AS Latvijas Gāze”, which offers fixed gas prices depending on consumption. For households with consumption up to 25 000 m3, please see the table below (the particular tariff is recalculated twice a year – 1st of January and 1st of July). This is from 01.01.2022. till 30.06.2022.

Consumption Cost per m3
Up to 250 m3 0.0647755 EUR
250 m3 to 500 m3 0.0343255 EUR
From 500 m3 to 25 000 m3 0.052036 EUR

Since April 2017, the gas market has been open for any private supplier, so currently, there are around 30 gas providers. The full list of gas traders in Latvia is available here.

Water Tariffs

According to the Regulator of Public Utilities (April 26, 2018), effective from June 1, 2020, water supply and drainage service rates in Riga are as follows. You can follow the changes here:

Service Measurement
 unit
Price
not incl.
VAT EUR
Price
incl.
VAT* EUR
Water supply 1 m3 0.85 1.03
Drainage 1 m3 0.74 0.89
Combined 1 m3 1.59 1.92

Electricity Tariffs

Latvia had already liberalised its market for non-household consumers in 2007, and there is no fixed price for institutional end-consumers. Hence, the electricity price is subject to an agreement with an energy producer, depending on the particular demands.

However, in general, electricity costs are made up of four components. The first component is the tariff of Latvian electricity transmission and distribution operator ‘AS Sadales Tikls’, which is incorporated within the leading Latvian electricity production company Latvenergo. The tariff price varies based on the electricity consumption. More information can be found at the ‘AS Sadales Tikls’ website.

The second component is the mandatory procurement component. It consists of two parts – the fixed capacity component and the variable part. From January 1, 2022, the variable one is 0.10472 €/kWh without VAT. The fixed component depends on the electricity capacity. You can find more information about it here:

Please note that a precise estimate can only be made by contacting the relevant electricity company directly, and you have to indicate requirements. From January 2015, the energy market in Latvia is opened for private traders to increase rivalry. You can find out about the largest energy providers here.

Green electricity

Latvia is one of the greenest countries in Europe. The power of our nature allows us to generate electricity from renewable sources – water, biomass, solar and wind. This allows Latvia to rank among the TOP 3 European Union countries in the field of green energy generation and consumption. (Source: Eurostat 2020). Can green energy be used in your field as well? Definitely! More info here

Guarantee of Origin (GO) is an electronic document, that proves the origin of the generated electricity (used energy source and technology). GOs are uniquely identifiable, transferable, and therefore tradable and used (by cancellation) to provide information of supplied energy to the end-consumer. 

The exchange and trading of GOs in Europe is enabled by "Association of Issuing Bodies" (AIB), an association of voluntary Issuing Bodies in Europe which makes it possible to declare to the end-user that the electricity consumed originates from solar panels in Spain or a hydro station in Latvia, Sweden or other country. For electricity that equals one MWh generated and injected into the grid corresponds to one GO that has an expiration of 12 months after the end of the production period. In Latvia Domain the production period is set to one month.

More information on how to receive it, fees and statistics, click here.

Taxation

The Taxes and Duties Act, as amended, determines Latvia’s general taxation principles. Specific taxes are assessed according to one of the special tax laws, such as the VAT Act or the Corporate Income Tax Act. If there is a conflict between the general principles and special rules, the latter prevails.

Under the Taxes and Duties Act, duties are imposed by either the state or municipalities. The state is entitled to impose duties on several different items, including vehicles, court applications, notary applications, gambling, changes to identification data, reservation of land in rural areas, dealings in vouchers and bills of exchange, immigration services, business licences/permits, registration of security interests, applications for patents, trademarks, or plant protection certificates. Municipalities have the right to apply for reliefs in respect of payments that are payable to local government budgets, in line with business-support principles, including the real estate tax.

Main business taxes in Latvia

Personal income tax Differential 20%, 23% and 31%
Employer's national social insurance contributions 23.59%
Employee's national social insurance contributions 11%
VAT The standard rate of VAT is 21%. The      reduced rate is 12%
CIT 0% rate is applied to reinvested profit

The Act divides companies into four categories based on defined criteria. If two out of three criteria are met for two consecutive years, the entity must be reclassified into the relevant category:

  Net revenue (EUR)  Total balance sheet (EUR) Average number of employees in financial year
Micro company < 700 000 < 350 000 < 10
Small company < 8 million < 4 million < 50
Medium company < 40 million < 20 million < 250
Large company > 40 million > 20 million < 250

Annual financial reporting

Commercial companies, cooperative companies, European economic interest groupings, European cooperative societies and European commercial companies registered in Latvia must prepare their annual accounts in accordance with the Annual Accounts and Consolidated Annual Accounts Act. Sole traders as well as farming and fishing enterprises must prepare their annual accounts in accordance with the Act if their revenue exceeds € 300 000 in the last year.

Annual accounts consist of a financial statement and a management report. Companies classified as small may elect not to prepare a cash flow statement and a statement of changes in equity. The Act also defines certain exemptions for required disclosures. 

A management report must provide information about the company’s development, financial results and position, as well as the main risks and uncertainties it faces.

Annual accounts must be audited by a certified auditor under the Certified Auditors Act if the company is large or medium or if its transferable securities are traded on a regulated market. A statutory audit must also be performed for small companies if one of the following conditions is met:

  1. it exceeds two of the following criteria for two consecutive years: total balance sheet of € 800 000; net revenue of € 1.6 million; an average of 50 employees in the financial year;
  2. it is the parent in a group of companies;
  3. it is a public person’s company or its subsidiary or a public-private capital company within the meaning of the Management of Public Persons’ Shares and Companies Act; or it elects to recognise certain financial statement items in accordance with IFRS.

Companies must submit their annual accounts together with a certified auditor’s report (if any) to the State Revenue Service within one month of the accounts being approved, and within four months of the end of the financial year (for medium and large companies – within seven months of the end of the financial year). In general, the financial year coincides with the calendar year, however companies are free to choose other starting and end points for their financial year.

Real estate acquisition and restrictions

Latvian legislation provides no restrictions on the acquisition or transfer of ownership rights to real estate in cities for citizens of Latvia, citizens of EU member states, and companies in which more than 50% of equity is owned by citizens of Latvia, citizens of EU member states, or natural or legal persons from countries with which Latvia has entered into international agreements on the promotion and protection of investments. Foreign nationals from third countries are subject to restrictions on the acquisition of land in state border zones, specially protected areas, natural-resource extraction areas, and agricultural or forest land.

Regulations of competition, mergers and acquisitions

Foreign and local companies commencing business or involved in reorganization (merger or acquisition) must comply with the corresponding provisions of the Competition Law, the Commercial Law, and the Law on Corporate Income Tax. Since Latvia acceded to the EU in 2004, the Competition Law and the national competition authority – the Competition Council – have operated in accordance with EU regulations on mergers and acquisitions.

The protection and development of competition in Latvia is the responsibility of the Competition Council, whose main tasks are to:

  • Monitor observance of the prohibition against the abuse of dominant positions and prohibited agreements by market participants;
  • Monitor observance of the Advertising Law;
  • Examine submitted notifications regarding agreements between market participants and take decisions in respect of them;
  • Restrict market concentration.

The Competition Council has the right to:

  • Carry out market supervision;
  • Conduct investigations of competition violations;
  • Provide opinions regarding the conformity of market participants’ activities;
  • Submit pleadings, applications, and complaints to courts.

Most important changes in taxes in 2022

  • From 2022, there is no tax for employer's coverage of additional medical and catering expenses up to 480 EUR per year and remote work up to 30 EUR per month.
  • Taxes for authors: Turnover up to 25 000 EUR is 25%, but over 25 000 EUR – 40%
  • Excise duty increased for tobacco products and alcohol.
  • VAT lowered for printing services. 
 
 

  Downloads

 
Rödl: Taxes in the Baltics
 
Taxation fact sheet 2022

 

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