Special PIT regime for royalties extended

The period during which the special Personal Income Tax (PIT) regime may be applied to royalties has been extended until 31 December 2027.

Royalty recipients may postpone registering economic activity until this deadline and continue paying PIT under the existing procedure.

Taxation of royalties depends on the payer of the income (a collective management organisation or another payer).

Payer: Collective Management Organisation (CMO)

In Latvia, CMOs operate based on permits issued by the Ministry of Culture. The list of organisations and their purposes is available on the Ministry of Culture’s website.

If royalties are paid by a CMO:

PIT is withheld at 25.5%, applying standard expense deductions of 25% or 50%;
if total royalties paid by CMOs during the year exceed EUR 105,300, the recipient must file an annual income tax return and recalculate tax by applying the progressive 33% PIT rate;
for royalties paid in this way, mandatory state social insurance contributions (MSSIC / VSAOI) are not applied.

Payer: Any other person or organisation

If the royalty recipient has not registered economic activity, the transitional PIT payment procedure set out in the transitional provisions of the law “On Personal Income Tax” remains applicable until 31 December 2027.

Royalty recipients whose payer is not a CMO may choose not to register with the State Revenue Service (SRS / VID) as performers of economic activity. In that case:

PIT and social contributions (VSAOI) are paid by the payer of the income;
a 25% rate applies to the income;
no actual or deemed expenses, and no other PIT allowances, are applied to such royalties;
the payer submits a notification to the SRS on amounts paid to the individual using income type code 1061 by the 15th day of the following month and pays the tax by the 23rd day;
if royalties were paid by multiple payers and the total annual amount exceeds EUR 50,000, or royalties were received from abroad, the recipient must submit the royalty recipient’s declaration in SRS EDS by 28 February of the following year and pay the tax by 23 June.

Registered performer of economic activity

If the royalty recipient is registered as a performer of economic activity, taxes are calculated and paid by the recipient. In this case:

the payer submits an SRS notification by 1 February of the following year using income type code 2007, without withholding tax.

The recipient may choose to pay taxes:

under the general regime (PIT + VSAOI), keeping monthly income/expense records and submitting reports in SRS EDS quarterly;
as a Microenterprise Tax payer, without keeping income/expense records, but calculating and paying the combined tax quarterly at 25%;
by using an Economic Activity Income (EAI / SDI) account, available to Microenterprise Tax payers — in this case, tax payment is automated, and the process is handled jointly by the bank and the SRS.

Minimum VSAOI on royalties

A self-employed royalty recipient who does not qualify for statutory exceptions (where minimum VSAOI is not payable) and is not employed must submit an attestation in SRS EDS (“Self-employed attestation on planned income”) confirming that planned income in 2027 will not reach:

EUR 740 per month, or
EUR 8,880 per year.

Otherwise, within 3 months after the end of the quarter, the State Social Insurance Agency calculates the minimum VSAOI and notifies the author via EDS.

Note / Contacts

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

Phone: 67442838
Phone: 26110067