To make Latvia more competitive in the digital finance sector, on April 10, 2025, the Saeima adopted amendments to the Personal Income Tax Law in the final reading. These changes significantly ease the tax regime for foreign companies trading in crypto assets.
Key Changes
Going forward, personal income tax will not apply to foreign companies (non-residents) that are registered as crypto asset service providers within the European Union and earn income from the disposal of publicly traded crypto assets in Latvia.
Why Is This Important?
Previously, such companies were automatically subject to a 3% withholding tax, which could only be reclaimed through a complex refund procedure. This created an administrative burden and discouraged potential investors and entrepreneurs from starting operations in Latvia. The new amendments remove this barrier, reducing bureaucracy and encouraging new participants to enter the market.
Positive Impact on the Business Environment
These changes are a step toward the goal of making Latvia one of the leading crypto asset hubs in Europe. Potential benefits include:
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Attracting international industry players;
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Creating new, well-paid jobs;
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Boosting foreign investment inflows and increasing tax revenues.
Effective Date and Evaluation
The tax relief will apply for three years—from January 1, 2025 to December 31, 2027. The Ministry of Economics will be responsible for evaluating the results of this measure and providing further recommendations after the designated period.
The new regulation reflects Latvia’s ambition to become an open and modern crypto-economy center, offering a favorable environment for companies focused on the future of digital finance.
©INNOVATOR 22.04.2025.
