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Changes to legislation of Personal Income Tax in 2015.

January 29, 2015   •  16:45

1. The general personal income tax rate from 1 January 2015 is 23 %. (2014, 24 %).

2. In order to avoid future tax inequality with respect to persons receiving a pension under Latvian law, and persons receiving old-age pension in accordance with foreign laws and regulations, the law "On Personal Income Tax" stipulates that the general non-taxable minimum of 75 euros will be applied until the recipient will reach Latvian retirement age.

3. Personal income tax relief for dependents will also apply to children under 19 years of age who are studying and working in summer holidays and receiving taxable income. The new relief will allow children, (pupils - up to 19 years of age), who are working in summer time to apply two kinds of relief;  (for parents - to maintain the tax deduction for dependent persons (165 euro), and for a child to apply  the non-taxable minimum (75 euros) during the summer holidays to generate additional income for the family budget.

4. Clarification of the law "On Personal Income Tax", regarding deemed to be income of the Board Member. If the monthly turnover of a company reaches the amount of 5 minimum monthly salaries (1,800 euro in 2015), then the deemed income of all board members is at least a minimum wage of EUR 360 if company does not have any members of staff or board members who receive at least the minimum wage income. The Company shall pay PIT and social taxes related to the deemed income of board members.  It is envisaged that this rule will not be applied to the calendar year in which a corporation registered in the Company Register, (which it is brought into operation).

5. If the employer’s gift to the employee in the fiscal year does not exceed 14.23 euro then it will not be subject to personal income tax.

6. The Law "On personal income tax" includes rules relating to the determination of income from real estate that has been invested in the equity of a company. Personal Income Tax on capital gain is payable on the disposal date of the shares in a company.