Latvia Capital Gains Tax Guide 2026

Overview — Capital Gains Taxation in Latvia

Latvia treats capital gains as ordinary income subject to personal income tax (IIT). The standard CGT rate is 20% for most asset classes. However, significant exemptions apply — notably the 12-month holding period exemption for shares and securities, and the full exemption for primary residence sales. Latvia's capital gains regime is relatively straightforward, with a single flat rate and clear exemption thresholds.

Capital Gains on Shares — 0% if Held >12 Months

Capital gains from the sale of shares, bonds, and other securities are treated as follows:

• Held more than 12 months: Fully exempt from tax. No capital gains tax is due, regardless of the gain amount.
• Held 12 months or less: Taxed at the 20% CGT rate (flat rate, not progressive IIT rates).
• Calculation: Taxable gain = sale price minus acquisition cost (plus directly related transaction expenses).
• Holding period: Measured from the acquisition date to the disposal date. For inherited shares, the holding period of the deceased is generally carried over.

Capital Gains on Real Estate

Capital gains from the sale of real estate are subject to specific rules:

• Primary residence: Gains from the sale of the main residence are fully exempt regardless of the holding period. This applies to the taxpayer's primary home where they have been registered as a resident.
• Secondary property — held more than 5 years: Exempt from CGT
• Secondary property — held 5 years or less: Taxable at 20% on the gain
• Calculation: Taxable gain = sale price (minus acquisition cost, improvement costs, and transaction expenses).

Other Capital Gains

• Cryptocurrency: Treated as capital assets. Gains are subject to 20% CGT. The 12-month exemption for securities does not currently apply to crypto (gains are taxable regardless of holding period).
• Personal property: Gains from the sale of personal property (vehicles, jewellery, art) are generally exempt unless the property is held for business purposes or the sale constitutes a business activity.
• Business assets: Gains from the sale of business assets are included in business income and taxed at progressive IIT rates (20–31%).

Loss Offsetting

Capital losses on asset sales can be offset against capital gains in the same tax year. Net capital losses can be carried forward for 5 years and offset against future capital gains. Losses cannot be offset against other types of income (employment, business, rental) or carried back to prior years. The loss offset rules apply to each asset class separately.

Corporate Capital Gains

For companies, capital gains are included in the standard CIT framework. Gains from the sale of shares are exempt if the holding is ≥10% and held for ≥12 months (participation exemption). Other capital gains are subject to CIT at distribution (0% retained, 20/80 effective on distributed).

FAQs

Is there really zero tax on shares held more than 12 months?

Yes, Latvian tax law provides a full exemption for capital gains on securities held for more than 12 months. This applies to shares, bonds, ETFs, and other financial instruments traded on regulated markets. There is no limit on the gain amount.

Does the 12-month rule apply to non-residents?

Non-residents are generally not subject to Latvia CGT on securities gains, as the gains are considered foreign-source income for non-residents. However, non-residents with a permanent establishment in Latvia may be affected. Tax treaty provisions may also apply.

Can I deduct acquisition costs when calculating my capital gain?

Yes, the taxable gain is calculated as the difference between the sale price and the acquisition cost, plus direct transaction costs (broker fees, legal fees, registration costs). Improvement costs for real estate are also deductible.

Disclaimer

This guide provides general information about Latvia capital gains tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Latvian tax advisor (nodokļu konsultants) or VID directly for advice specific to your situation. InvestmentKit does not provide tax advice.