Dynamic deposit

• The tax rate is 20 % of interest income earned.
• The law requires that the tax be withheld on the day of earning the income i.e. when the interest is paid out by the bank, starting with 1 Jan 2010 irrespective of the date of the contract.
• Swedbank will withhold the tax automatically upon payout of interest upon deposit maturity and will transfer it to the government budget.

• The tax rate is 20 % of interest income earned.
• The law requires that the tax be withheld on the day of earning the income i.e. when the interest is paid out by the bank, starting with 1 Jan 2010 irrespective of the date of the contract.
• Swedbank will withhold the tax automatically upon payout of interest upon deposit maturity and will transfer it to the government budget.

• The tax rate is 20 % of interest income earned.
• The law requires that the tax be withheld on the day of earning the income i.e. when the interest is paid out by the bank, starting with 1 Jan 2010.
• Swedbank will withhold the tax automatically upon payout of interest - i.e. once a quarter or at any other time when funds are paid out - and will transfer it to the government budget.

• The tax rate is 20 % of interest income earned.
• The law requires that the tax be withheld on the day of earning the income i.e. when the interest is paid out by the bank, starting with 1 Jan 2010.
• Swedbank will withhold the tax automatically upon payout of interest - i.e. once a year - and will transfer it to the government budget.

• The default tax rate is 20%. The Personal Income Tax Law currently stipulates a number of exceptions when dividends are exempt from personal income tax in Latvia. For example:
  • - profit earned after 1 January 2018 and paid out in dividends in Latvia if corporate income tax has already been paid for that profit;
  • - dividends paid out abroad if the income tax has already been paid in the respective foreign country (this must be a provable fact to qualify for tax exemption in Latvia. Regarding dividends paid out in other EU member countries or in EEA countries, it is automatically assumed that the income tax has been paid and no additional proof is required.
• The law requires that the tax be withheld from dividends for publicly traded stocks on the day of earning the income i.e. when the dividend is paid out, starting with 1 January 2010.
• Tax, if applicable, on such dividends will be withheld automatically by Swedbank upon transfer of dividends to its customers.
• From other dividends: responsibility for withholding tax from dividends paid out by a Latvian company lies with that company. Whereas payment of the tax on dividends paid out by a foreign company is the responsibility of the recipient of the dividends.

• The tax rate is 20% of the income.
• Income from life insurance policies with savings arises when the difference between cash surrender value (in case of early termination of insurance contract) or the sum paid upon maturity of the insurance contract and the insurance premiums paid is positive.
• The tax will automatically be withheld by the insurer on the day of earning the income i.e. when the interest is paid out, and transferred to the government budget, starting with 1 Jan 2010.

• The tax rate is 20%.
• Law states that from 1 Jan 2010 income earned from investment of contributions to private pension funds is also taxable.
• The tax will be withheld automatically by Swedbank Atklātais Pensiju Fonds upon disbursement of the supplementary pension capital.

• The law requires that tax is payable on capital gain i.e. on income from disposal of capital assets like investment fund units.
• The tax rate is 20 %.
• The capital gain is determined as a difference between the disposal (e.g. selling) price and acquisition value of the capital asset. The capital asset acquisition value also includes the cost of acquiring and holding securities, as well as other expenses related to acquisition of the capital asset as laid down by law.
• In case of disposal of investment fund units acquired on or before 31 December 2009, the taxable income is determined by deducting the unit acquisition value from the unit disposal value, divided by the number of months when the units were held and multiplying the number of months passed from 1 January 2010 to the month of sale (including).

• Example:

  • In April 2009, a customer acquires investment fund units for EUR 1,000 (including 15 EUR unit purchase fee).
  • In March 2018, the fund units are sold for EUR 1,500.
  • The unit holding costs were EUR 7 during this period.

  • The customer must pay the personal income tax on income from capital gain:

    (1 500 - 1000 - 15 - 7) / 107*x 98** = 478 / 107 x 98 x 20 % = 87.56 EUR

    * the number of months when the units were owned by the customer
    ** the number of months during which the fund units were owned by a customer after 1 January 2010

• The capital gain will be calculated, tax liability will be declared and the tax will be paid by customers themselves. The tax return concerning capital gain must be filed with the State Revenue Service:
  • once a quarter - by the 15th date of the month following the quarter in which the income has been earned if the total income from capital gain exceed EUR 1000,
  • once a year - by 15 January of the year following the taxation year if the income per quarter does not exceed EUR 1000.
• If the capital gain, calculated during the year of earning income from capital gain (the taxation year), from disposal of one capital asset is negative, while being positive from disposal of other capital asset, then the loss incurred may be offset against the positive capital gain. In order to offset losses within the taxation year that have not been offset during the taxation year, the annual capital gain income clarification tax return can be filed starting from 1 March of the post-taxation year.
• The tax return form and information on how to fill it out is available in the Cabinet Regulations No. 662 of 30 October 2018 “Regulations on Personal Income Tax Returns and the Procedure of Filling in the Returns”.

From 1 January 2010, income earned by individuals from disposal of capital assets like as equity and ETF units is also taxable. In law, such income is referred to as capital gain and represents a type of income from capital. In light of the fact that equities and ETF units are some of the most common types of securities in customer transactions, we have also included information on taxation of capital gain from such securities:

• The rate of tax on capital gain is 20 %.
• The capital gain is determined as a difference between the disposal (e.g. selling) price and acquisition value of the capital asset (e.g. equities). The capital asset acquisition value also includes the cost of acquiring and holding the capital asset, as well as other expenses related to acquisition of the capital asset as laid down by law.
• The day when the individual (the taxpayer) receives money is considered as the day of earning income.
• Income earned and loss suffered during a taxation year from disposal of capital assets, if several capital assets have been disposed of during the taxation year, may be summed up: If capital gain from disposal of one capital asset is negative, but from disposal of other capital asset - positive, then the incurred loss during the taxation year may be offset against the positive capital gain. If the calculated capital gain (if there has been only one capital asset disposal transaction) or the sum of capital asset disposal income and loss is negative, then it is disregarded for tax calculation purposes.
• If the capital gain calculated or the sum of it is negative for the taxation year, then the incurred loss may not be offset against a capital gain in the following taxation years or against other types of income in the taxation year.
• The capital gain will be calculated, tax liability will be declared and the tax will be paid by customers themselves. The tax return concerning capital gain must be filed with the State Revenue Service:
  • once a quarter - by the 15th date of the month following the quarter in which the income has been earned if the total income from capital gain exceeds EUR 1000,
  • once a year - by 15 January of the year following the taxation year if the income per quarter does not exceed EUR 1000.
• If the capital gain, calculated during the year of earning income from capital gain (the taxation year), from disposal of one capital asset is negative, while being positive from disposal of other capital asset, then the loss incurred by be offset against the positive capital gain. In order to offset losses within the taxation year that have not been offset during the taxation year, the annual capital gain income clarification tax return can be filed starting from 1 March of the post-taxation year.
• The tax return form and information on how to fill it out is available in the Cabinet Regulations No. 662 of 30 October 2018 “Regulations on Personal Income Tax Returns and the Procedure of Filling in the Returns”.

• Interest income earned on debt instruments (e.g. coupon payments) and income essentially equivalent to interest (i.e. income from disposal of debt securities) also represents income liable to personal income tax since 1 January 2010.
• The tax rate is 20%.
• The tax exemption provided for in the law is income (both interest income or coupons and income from disposal) from Latvian or other European Union members state’s or European Economic Area country’s government and municipal securities. Such income is not taxable income for individuals in Latvia.
• Responsibility for withholding the income tax from income paid lies with the payer of income. However, in cases when interest income is paid in a foreign country, it is a responsibility of the recipient of income to pay the applicable tax in Latvia.

A new type of income from capital - income from investment account - is laid down in the Personal Income Tax Law since 1 January 2018. The investment account is a solution particularly suitable for more active investors which makes it easier to calculate the income tax, to declare payment of taxes from income earned from capital assets which are financial instruments and transactions with such capital assets.

• The rate of tax on income from investment account is 20%.
• An account may be used as an investment account if the Account Register (the State Revenue Service) has been notified of opening the account with such a status. If the investment service provider does not ensure provision of information to the Account Register, then the payer must notify the State Revenue Service of the investment account status being assigned to the account no later than by the end of the taxation year. Swedbank sends a notification to the Account Register regarding investment accounts opened at Swedbank.
• Income from the investment account is determined as the excess of amount of money paid out from the investment account over the amount of money paid into the investment account, reduced by:
  1. dividends and interest income earned within the investment account and any accounts linked to it (they are paid into the investment account and the linked accounts) if personal income tax has already been withheld from that income, and by dividends that are exempt from the personal income tax pursuant to Section 9 of the Personal Income Tax Law;
  2. income from Latvian or other European Union members state’s or European Economic Area country’s government or municipal securities.
• Income from investment account must be calculated and declared, and the tax must be paid by customers themselves. The bank provides the possibility to receive the investment account extract which the customer uses for income calculation and, if necessary, submit to the State Revenue Service. Income from investment account is to be declared in the annual tax return and only if such income has been earned during the reporting year. The tax return form and information on how to fill it out is available in the Cabinet Regulations No. 662 of 30 October 2018 “Regulations on Personal Income Tax Returns and the Procedure of Filling in the Returns”.