Latvia Crypto Tax Guide 2026

Overview — Crypto Taxation in Latvia

Latvia has not adopted specific cryptocurrency tax legislation. Instead, the general capital gains tax rules apply to crypto transactions, as confirmed by VID guidance. Cryptocurrency is treated as a capital asset (similar to shares and securities), and the same tax principles apply: gains are taxable at 20% on disposal, with a full exemption for assets held more than 12 months. The Latvian tax authority (VID) has issued interpretive guidance on the treatment of crypto, but the regulatory framework continues to evolve, particularly with the implementation of the EU MiCA regulation.

Capital Gains on Crypto — 20%, 0% if Held >12 Months

• Held more than 12 months: Gains from the sale of crypto held for more than 12 months are fully exempt from tax — consistent with the treatment of shares and securities.
• Held 12 months or less: Gains are subject to 20% CGT on the net gain (sale price minus acquisition cost and transaction fees).
• Calculation: Taxable gain = proceeds from disposal minus acquisition cost (including purchase price, exchange fees, and wallet costs).
• Holding period: Measured from the date of acquisition to the date of disposal. FIFO (First In, First Out) is generally used for calculating the cost basis of partial disposals.

Mining and Staking Income

• Mining: Income from cryptocurrency mining is generally treated as business income (if conducted on a regular/professional basis) or miscellaneous income. It is subject to progressive IIT rates (20–31%) rather than the flat 20% CGT rate.
• Staking: Staking rewards are treated similarly to mining — taxable as ordinary income at the time of receipt, valued at fair market value in EUR.
• Expenses: Mining and staking expenses (electricity, hardware, internet) are deductible against the income.
• Social contributions: If crypto activities constitute a business, social contributions (~34.1% combined) may apply.

Taxable Events

The following crypto transactions are generally taxable events in Latvia:

• Selling crypto for fiat currency (EUR): Taxable disposal — gain or loss must be calculated
• Exchanging one crypto for another: Taxable disposal of the original crypto (treated as a sale for fair market value, followed by acquisition of the new crypto)
• Using crypto to pay for goods or services: Taxable disposal of the crypto used for payment
• Gifting crypto: Treated as a disposal at market value. Gifts to spouses and direct line are exempt

Non-Taxable Events

• Holding crypto: No tax is due while simply holding crypto assets
• Transferring between wallets: Transfers between wallets owned by the same person are not taxable events
• Buying crypto with fiat: Acquisition of crypto is not a taxable event (no gain or loss)
• Gifts to exempt persons: Gifts to spouses, children, and direct line are exempt

VAT Treatment of Crypto

Following the European Court of Justice ruling (Hedqvist case) and EU VAT guidance:

• Exchange of crypto for fiat: Exempt from VAT (currency exchange service)
• Exchange of crypto for crypto: Likely exempt from VAT
• Mining services: May be subject to VAT if provided on a commercial basis
• Crypto payments for goods/services: No additional VAT — the underlying supply determines VAT treatment

Filing and Reporting

• Annual IIT return: Crypto gains and income must be reported on the annual personal income tax return (by 1 June).
• Record-keeping: Taxpayers must maintain records of all crypto transactions: date, type, amount, value in EUR, counterparty, and transaction fees.
• No specific crypto form: Latvia does not have a separate crypto tax form. Gains are reported under capital gains or business income sections of the standard IIT return.
• Loss offsetting: Crypto losses can offset crypto gains in the same year. Net losses can be carried forward for 5 years.

FAQs

Is the 12-month holding period exemption confirmed for crypto?

VID guidance treats crypto as capital assets comparable to securities. The general 12-month exemption for capital gains on securities is applied to crypto by analogy. However, formal legislation specifically addressing crypto is expected as part of EU MiCA implementation. Taxpayers should consult a professional for confirmation.

Do I need to register as a business for crypto trading?

If crypto trading is carried out on a regular, organised, and profit-seeking basis, it may constitute a business activity requiring registration with VID. Occasional personal trading (buying and selling for investment purposes) is generally not considered a business.

How is the cost basis calculated for partial crypto sales?

FIFO (First In, First Out) is the most commonly accepted method for calculating the cost basis of partial disposals. Taxpayers should maintain records of all acquisitions with dates, amounts, and costs. Specific identification may be possible if individual units can be tracked.

Disclaimer

This guide provides general information about Latvia cryptocurrency taxation for the 2026 tax year. Tax laws and rates may change, and the regulatory framework for crypto continues to evolve. 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.