Crypto license in
Latvia 2025

1. Corporate Income Tax (CIT) for CASPs (worldwide income)

• Undistributed profits: 0% CIT. Trading gains, staking/service revenues and other profits are not taxed while kept in the company.
• Distributed profits: 20% CIT (effective 25%). When profits are paid out (e.g., dividends) or treated as “deemed distributions” (non-business expenses, certain profit transfers, etc.), Latvia levies 20% on the net distribution, which equals 25% of the gross amount distributed.
• Scope: Latvia’s CIT model applies irrespective of where income is earned (EU or non-EU). What matters is whether profits are distributed. 

Why CASPs like this: You can scale EU-wide under MiCA, keep profits in Latvia to fund operations and capital buffers, and defer tax until you actually pay out.

2. Dividends & Withholding Tax (non-resident owners)

• Dividends to non-residents: 0% Latvian withholding tax in most cases, because profits are already taxed at the corporate level when distributed. An exception can apply to payments to black-listed/low-tax jurisdictions, where anti-avoidance rules may impose 20%. Always check your shareholder jurisdiction.
• Dividends to Latvian resident individuals: If dividends are paid from profits on which Latvian CIT has already been paid, the recipient individual is generally not taxed again on those dividends. (Capital-income rules apply if dividends are paid from untaxed profits.)

3. Paying Salaries to Founders & Staff (Latvia vs. outside Latvia)

Local hires based in Latvia (including local MLRO/Compliance)

• Personal Income Tax (PIT): Progressive—25.5% and 33% brackets apply; an additional 3% surcharge applies to annual income above EUR 200,000.
• Social security: Typical split ~23.59% employer and 10.50% employee (caps and solidarity-tax rules apply).
• Payroll mechanics: Latvian employer withholds PIT and social contributions monthly.

Non-resident founders/staff outside Latvia

• Salary for work performed outside Latvia is not taxed in Latvia (source-based taxation; double-tax treaty may also apply). If a non-resident physically works in Latvia, Latvian payroll/PIT rules apply for those days.

4. VAT on CASP activities

• Standard VAT rate: 21%. 
• Crypto exchange services: Following the CJEU Hedqvist ruling, exchanging crypto for fiat is treated like a VAT-exempt financial service across the EU, which Latvia follows. Ancillary/technology services (e.g., SaaS/platform fees, advisory not directly linked to exchange) can be VAT-able. Assess each revenue stream.

5. Accounting, compliance & filings

• Financial statements & CIT returns: CASPs must keep IFRS-quality books, identify any deemed distributions, and file returns reflecting the distributed-profits CIT. 
• Payroll & withholding: Register as an employer in Latvia if you hire local staff; withhold PIT/social contributions and report monthly.
• Cross-border operations: Latvia has an extensive DTT network; treaty relief plus Latvia’s “tax on distribution” model can materially reduce global leakage for non-EU owners.