Receiving money from relatives or other persons abroad

Latvian regulations set out how a taxpayer should act with regard to money received from relatives or acquaintances abroad.

The key factors are:

• the degree of relationship with the sender,
• the amount transferred, and
• the purpose / nature of the transaction.

Depending on these factors, one of three situations applies.

1) No declaration required and no PIT payable

The received money does not need to be declared and Personal Income Tax (PIT) is not payable if:

• the sender and recipient are spouses or related up to the third degree under the Civil Law (e.g., parents, brother/sister, grandparents, children, grandchildren, parents’ brother/sister, brother’s/sister’s children, etc.), and
• the transfer is made within a single household and to cover that household’s expenses.

Example: parents working abroad transfer money to their children, parents, or grandparents living in Latvia.
In this case, the received funds do not need to be declared because, in economic substance, no taxable income arises.

2) Declaration required, but no PIT payable

2.1. Money from a relative (up to 3rd degree) without a shared household

If a Latvian resident receives money by bank transfer from a relative living abroad who is related up to the third degree, but they do not share a household, the amount must be declared, but PIT is not payable.

2.2. Money from a non-relative used for education or medical treatment

If a Latvian resident receives money by bank transfer from a person living abroad who is not related up to the third degree (or there is no relationship at all — a neighbour, friend, etc.), and the recipient uses the money to cover:

• education, and/or
• medical and treatment expenses,

the amount must be declared, but PIT is not payable, provided the recipient can document that the money was used for these expenses.

Important

If the received amount in either of the above cases exceeds EUR 10,000 per year from the same person, it must be declared as PIT-exempt income by submitting the annual income tax return for the previous year, thereby informing the SRS (VID) about the origin of the funds.

3) Declaration required and PIT payable

If a Latvian resident receives more than EUR 1,425 per year by bank transfer from a person living abroad who:

• is not a spouse or a relative up to the third degree (or there is no relationship at all — neighbour, friend, etc.), and
• the funds are not used to cover medical or education expenses,

then the received amount:

• must be declared by filing the annual income tax return for the previous year, and
• PIT must be paid at 25.5% or 33% on the amount exceeding EUR 1,425.

Note / Contacts

This article is for informational purposes. For tax legislation application in a specific case, we recommend contacting our tax consultants:

• Phone: 67442838
• Phone: 26110067