the personal income tax (PIT) refund rate will change from 23% to 20%; the maximum contribution limit of 10% of the annual gross salary will apply jointly to the 3rd pillar pension and unit-linked insurance plans (earlier, the 10% limit applied to each separately), as well as a aggregate limit of 4000 EUR will apply.
the tax on profit will change from 10/15% to 20%;
the minimum duration of unit-linked insurance policies qualifying for the PIT refund has been increased from 5 to 10 years .
Contributions made under 3rd pillar pension plans and unit-linked insurance policies in 2017 qualify for a 23% PIT refund and the limit for contributions is 10% of the gross salary without the aggregate amount limitation.
For unit-linked insurance contracts opened before the end of 2017, the minimum duration to qualify for the PIT refund is still 5 years.
Will affect you if: Until 31.12.2017 From 01.01.2018
PIT refund rate Example
you make contributions under a 3rd pillar pension plan and claim a PIT refund
23%
20%
Percentage limit on contributions Example
you make contributions simultaneously under a 3rd pillar pension plan and a unit-linked insurance policy and the total amount exceeds 10% of the gross salary
A separate limit of 10% of the gross salary
A joint limit with unit-linked insurance of 10% of gross salary
Aggregate limit on contributions Example
your gross annual salary exceeds 40 000 EUR and your contributions under a 3rd pillar pension plan, a unit-linked insurance policy, or both combined, exceeds 4000 EUR
-
A 4000 EUR aggregate limit jointly with unit-linked insurance
Tax on profit Example
profit is paid out upon receiving savings
10%
20%
Contributions made in 2017 qualify for a 23% PIT refund and the limit for contributions is 10% of the gross salary without the aggregate limitation.
There is still time this year to start savingst or add to existing savings under a 3rd pillar pension plan.
Will affect you if: Until 31.12.2017 From 01.01.2018
PIT refund rate Example
you make contributions under a unit-linked insurance policy and claim a PIT refund
23%
20%
Percentage limit on contributions Example
you make contributions simultaneously under a 3rd pillar pension plan and a unit-linked insurance policy and the total amount exceeds 10% of the gross salary
A separate limit of 10% of the gross salary
A joint limit with 3rd pillar pension plan of 10% of gross salary
Aggregate limit on contributions Example
your gross annual salary exceeds 40 000 EUR and your contributions under a 3rd pillar pension plan, a unit-linked insurance policy, or both combined, exceeds 4000 EUR
-
A 4000 EUR aggregate limit jointly with 3rd pillar pension plan
Tax on profit Example
profit is paid out upon receiving savings
10%
20%
Minimum duration Example
you plan to start savings under unit-linked insurance and claim PIT refund
5 years
10 years
Contributions made in 2017 qualify for a 23% PIT refund and the limit for contributions is 10% of the gross salary without the aggregate limitation.
For contracts opened before the end of 2017, the minimum duration to qualify for the PIT refund is still 5 years.
Will affect you if: Until 31.12.2017 From 01.01.2018
Tax on profit Example
profit is paid out upon receiving a term deposit
10%
20%
Will affect you if: Until 31.12.2017 From 01.01.2018
Tax on profit Example
you earn profit by selling securities
15%
20%
See your investments and the performance of your investments .
Will affect you if: Until 31.12.2017 From 01.01.2018
Contributions under 3rd pillar pension plan Example
monthly gross salary exceeds 4583 EUR
-
A payment from solidary tax at the rate of 4% for funded pension scheme participants or 10% for those who are not the funded pension scheme participants
The taxpayer has a duty, within 60 days of receiving a notice from the State Social Insurance Agency (VSAA), to provide information to the State Social Insurance Agency about the selected private pension fund, its registration number, pension plan, and the pension plan’s account number in Latvia. If the taxpayer fails to perform their duty within six months of the deadline set for providing the information, the contributions will be transferred to the special state pension budget without personification. This tax overview is provided for information only and Swedbank assumes no liability whatsoever for any expenses or losses that may be incurred should the information presented here be incomplete, inaccurate or not coincide with explanations of the State Revenue Service or other competent public authority in respect of taxation. For complete information on taxation of incomes, potential investors should consult their tax advisors on Latvian laws.
Example Gross monthly salary: 1000 EUR
Contributions under a 3rd pillar pension plan monthly: 60 EUR
Personal income tax refund:
Until 31.12.2017.
From 01.01.2018.
720 * 23% = 165,60 EUR
720 * 20% = 144 EUR
Start savings
Find out more
Example Gross monthly salary: 1000 EUR
Amount of contributions under a 3rd pillar pension plan per month: 60 EUR
Amount of contributions under a unit-linked insurance contract per month: 60 EUR
Personal income tax refund:
Until 31.12.2017.
From 01.01.2018.
for contributions under a 3rd pillar pension plan:
for contributions under unit-linked insurance contract:
Total: 165,6 + 165,6 = 331,2 EUR
A 10% limit applies jointly to contributions under the 3rd pension pillar plans and unit-linked insurance, hence the PIT refund is limited to 10% of the gross salary
the contributions are 720 + 720 = 1440 EUR but 10% of gross salary is less: 1200 EUR. Hence, the PIT refund will be from 1200 EUR:
1200 * 20% = 240 EUR
Example Gross monthly salary: 4000 EUR
Amount of contributions under a 3rd pillar pension plan per month: 400 EUR
Personal income tax refund:
Until 31.12.2017.
From 01.01.2018.
4800 * 23% = 1104 EUR
a joint aggregate limit of 4000 EUR applies, hence the PIT refund will be for not more than 4000 EUR
the contributions amount to 4 800 EUR but the limit is lower: 4,000 EUR. Hence, the PIT refund will be from 4,000 EUR:
4000 * 20% = 800 EUR
Example Savings under a 3rd pillar pension plan: 10,000 EUR including contributions by private individuals: 8000 EUR and profit: 2000 EUR
Upon payout of the savings (according to the Law on Private Pension Funds, the 3rd pillar pension capital is available from the age of 55), a tax deduction will be made and the following amount will be paid out:
Until 31.12.2017.
From 01.01.2018.
Tax on profit: 2000 * 10% = 200 EUR Tax on profit: 2000 * 20% = 400 EUR
Example Gross monthly salary: 1000 EUR
Amount of contributions under a unit-linked insurance contract per month: 60 EUR
Personal income tax refund:
Until 31.12.2017.
From 01.01.2018.
720 * 23% = 165,60 EUR 720 * 20% = 144 EUR
Example Gross monthly salary: 1000 EUR
Amount of contributions under a 3rd pillar pension plan per month: 60 EUR
Amount of contributions under a unit-linked insurance contract per month: 60 EUR
Personal income tax refund:
Until 31.12.2017.
From 01.01.2018.
for contributions under a 3rd pillar pension plan:
for contributions under unit-linked insurance contract:
Total: 165,6 + 165,6 = 331,2 EUR
A 10% limit applies jointly to contributions under the 3rd pension pillar plans and unit-linked insurance, hence the PIT refund is limited to 10% of the gross salary
the contributions are 720 + 720 = 1440 EUR but 10% of gross salary is less: 1200 EUR. Hence, the PIT refund will be from 1200 EUR:
1200 EUR: 1200 * 20% = 240 EUR
Example Gross monthly salary: 4000 EUR
Amount of contributions under a unit-linked insurance contract per month: 400 EUR
Personal income tax refund:
Until 31.12.2017.
From 01.01.2018.
4800 * 23% = 1104 EUR
a joint aggregate limit of 4000 EUR applies, hence the PIT refund will be for not more than 4000 EUR
the contributions amount to 4800 EUR but the limit is lower: 4000 EUR. Hence, the PIT refund will be from 4000 EUR:
4000 * 20% = 800 EUR
Example Savings under unit-linked insurance: 10.000 EUR
Upon payout of the savings, a tax deduction will be made and the following amount will be paid out:
Until 31.12.2017.
From 01.01.2018.
Tax on profit: 2000 * 10% = 200 EUR Tax on profit: 2000 * 20% = 400 EUR
Example
Until 31.12.2017.
From 01.01.2018.
For all unit-linked insurance contracts opened by 31.12.2017, the minimum duration to qualify for the PIT refund is 5 years. For all unit-linked insurance contracts opened from 01.01.2018, the minimum duration to qualify for the PIT refund is 10 years.
Example Term deposit principal: 10 000 EUR
Upon payout of the savings, a tax deduction will be made and the following amount will be paid out:
Until 31.12.2017.
From 01.01.2018.
Tax on profit: 100 * 10% = 10 EUR Tax on profit: 100 * 20% = 20 EUR
Example Initial investment: 10 000 EUR
Upon sale of securities, the tax on profit, which investors must declare and pay themselves:
Until 31.12.2017.
From 01.01.2018.
Tax on profit: 2000 * 15% = 300 EUR Tax on profit: 2000 * 20% = 400 EUR
Example
Until 31.12.2017.
From 01.01.2018.
The solidarity tax is not attributed to any particular person and is transferred in full to the state general budget If the gross salary exceeds 4583 EUR by 1000 EUR, then transfers to the 3rd pillar pension plan will be at 4% (for funded pension scheme participants) which equals 40 EUR, or 10% (for those who are not the funded pension scheme participants) which equals 100 EUR
