Do you think getting your income tax refund in Latvia is very hard and not worth the hassle? Good news! Latvia most probably owes you a few hundred euros, and you can file the annual tax return online in just 5 minutes (true story)! 🤑 In this article, you’ll learn if you qualify for income tax refund and how to get your tax refund in Latvia easily.
DISCLAIMER: I’m not a financial advisor (yet! 🔥) and the following is not a substitute for independent professional advice. Use the following guide only if you’re not required by law to file your annual income tax return in Latvia.
You’re most commonly required by law to file your annual tax return in Latvia if you:
- Are self-employed
- Rent out your real estate
- Earn income from dividends (and other income taxed at 10%)
- Earn income abroad Latvia (and Latvia is your tax residence)
Read more about less common personal taxation cases here.
If it turns out that you are required by law to file your annual tax return in Latvia, then stop reading this guide now and consult a tax consultant!
Ping me if you need a tax consultant.
Eligibility For Income Tax Refund In Latvia
You’re eligible for income tax refund in Latvia if you are employed by a Latvian organization (both for-profit and non-profit) that pays the full monthly flat rate income tax on your behalf. Microenterprise and (solely) dividend/capital gains taxpayers are NOT eligible for income tax refunds.
If you’re eligible, you’ll get 23% income tax refund. Paid €100 for the dentist or professional training (not only higher education)? That’s a €23 tax refund for you – cash!
Types Of Expenses That Increase Your Tax Refund In Latvia
Typically, tax refund happens when your employer withholds too much of your income tax in Latvia on your behalf (this is thankfully calculated automatically). In this case, you don’t have to list any expenses or upload receipts – the tax refund will already be calculated.
The following expenses get you an income tax refund:
- Higher education and professional training in EEA countries (not only Latvia)
- Expenses for medical treatment
- Donations to public service organizations and political parties
- Contributions to EEA private pension funds (filed automatically)
- Health insurance premium contributions (filed automatically). Read my experience with this investment contract here.
You can list these expenses on your tax return and get a 23% income tax refund (that is if you haven’t thrown out the receipts). If you haven’t saved any receipts for the mentioned expenses, it is never too late to start.
Don’t get too excited, because there is a cap on the maximum tax refund (calculated automatically).
Instructions For Getting Income Tax Refund In Latvia
Step 1: Log onto Electronic Declaration System (EDS)
EDS is (still) available only in the Latvian language. If you don’t speak Latvian, Google Chrome Translate to English function works surprisingly well.
Use the slider to switch between the two languages in the guide!
If you’re logging onto EDS for the first time, enter your email and phone number to finish setting up your account.
Step 2: Open Annual Income Declaration
Step 3: Choose the Year for which you’ll get the tax refund and click Prepare
You can file tax refunds in 2018 not only for 2017 but also for 2014, 2015, and 2016 (and you should!).
Step 4: Click Continue
Step 5: Double check that you have to submit the form voluntarily, then tick the Voluntary box and Continue.
Again, if it turns out that you have to submit the form mandatory, stop reading this guide now and get a tax consultant!
Step 6: If you have the listed expenses, tick the boxes 1 2 3; else click Continue
1 – Medical treatment and education in Latvia
2 – Donations for public benefit organizations and political parties
3 – Contributions to EEA private pension funds and health insurance premiums
EDIT: It turns out that the order of boxes might change for you (thanks, Mikus Losans). Don’t touch the boxes I didn’t touch.
Step 7: Click Prepare
Note: If you don’t have any eligible expenses listed previously, then skip to Step 10.
[Optional] Step 8: Click D4 and list medical treatment and education in Latvia expenses
Add yourself as the person you’re reporting expenses for, upload expense documents (receipts, invoices, transactions etc.) and file expenses. FYI “Medical treatment” (6) does not include dentists and surgeries. Dentists and surgeries go under (8).
[Optional] Step 9: Click D and list your donations to public service organizations (08) and political parties (08.1)
Contributions to EEA private pension funds and health insurance premium contributions are listed automatically and cannot be altered (read my experience with health insurance investment contract here).
Step 10: Check First-time Document, then Scroll Down, start planning how you’ll spend the tax refund for the year (optional), enter your Bank Account and click Check and Save
Step 11: Click Submit
Step 12: Make sure that tax returns for years 2014, 2015, 2016 are submitted as well, if not – go to Step 1 and repeat for all!
Even if you don’t have any expenses that qualify for a tax refund, file the tax return to get back the income tax your employer has overpaid on your behalf.
Step 13: Start planning how you’ll spend your tax refund! 🤑
Tax refund typically is paid to your bank account in about a month but it can take up to 3 months (there’s a law for that).
That’s it! It wasn’t that hard, was it? 😎
Finance gurus will tell you: pay at least 50% of your (unplanned, I’d say?) tax refund to the highest-interest loan you have (if any). If you don’t have any loans, then save at least 50% of the tax refund.
How was it? Share your experience in the comments below!