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Landlord Taxes in Latvia: What Investors Should Keep in Mind

30-09-2025

Investing in real estate seems simple and transparent, but many beginner investors face a situation where the actual rental yield turns out lower than expected. The main reason is unaccounted taxes and related expenses.

Below, we’ll look at two scenarios: renting out property as an individual or as a legal entity.

1. Taxes for Individuals

Personal Income Tax on Rental Income
  • An individual renting out an apartment is required to pay personal income tax.
  • If the landlord is registered with the tax authorities as a rental income taxpayer, a reduced rate of 10% of rental income (without expense deductions) applies.
  • If the simplified regime is not chosen, the standard progressive rate applies:
  • 25.5% on income up to €105,300 per year
  • 33% on income over €105,300 per year
  • An additional 3% applies to the portion of income exceeding €200,000 per year.
  • In this case, expense deductions are allowed, such as utilities, repairs, depreciation, and other rental-related costs.
  • The tax return is filed once a year.
Property Tax (NĪN)
  • Mandatory for all owners.
  • The rate depends on the cadastral value of the property and ranges from 0.2% to 1.5% per year (on average €100–€1,000 annually).
Additional Expenses (usually covered by the tenant):
  • Utilities and building maintenance
  • Property insurance (optional)
  • Repair costs not caused by the tenant

2. Taxes for Legal Entities

Corporate Income Tax
  • Companies in Latvia are exempt from profit tax until dividends are distributed.
  • Rental income can be directed towards operating expenses and business development without paying tax.
  • When dividends are paid, a total tax of 25% applies (10% on profit + 15% on dividends).
  • When purchasing new property (including commercial), VAT is included in the price — beneficial for companies registered as VAT payers.
VAT (Value-Added Tax)
  • Residential rental is VAT-exempt.
  • Exception: If annual rental income exceeds €50,000, a private landlord must register as a VAT payer (21%).
  • For commercial property rentals (offices, shops) or if the landlord is a company renting residential property — VAT at 21% may apply.
Property Tax (NĪN)
  • Companies must also pay property tax at a rate of 1.5% of the cadastral value.
Administration and Accounting
  • For individuals: rental contracts must be registered, and an annual tax return submitted (can be done independently or with an accountant).
  • For companies: full accounting is required, including balance sheets, records, and tax distribution.

Conclusion

  • For long-term residential rentals, renting out as an individual is usually more advantageous due to the flat 10% tax rate and lower VAT risks.
  • For managing larger portfolios or when reinvesting profits, a legal entity may be the better option.
Mercury Group has been operating in the Latvian real estate market for over 25 years. Only we offer access to all luxury residential and commercial properties in Latvia, including a closed database of rental and sale properties.
We will personally guide you through every stage of the transaction, help you find the perfect property, handle the purchase and sale transaction or lease agreement, and provide post-sale management.

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