Personal Income Tax Declaration in Latvia: How to Complete and Submit

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Every year, thousands of Latvia's residents face the same question: how to properly complete and submit an income tax declaration? For some, it is an opportunity to reclaim overpaid taxes. For others, it is a mandatory procedure where missing the deadline can result in penalties. In 2026, the process of submitting a personal income declaration has changed: updated forms, new EDS access rules, and adjusted tax exempt thresholds. In this guide, we will walk through the entire process from start to finish: who must file, what documents are needed, how to complete the declaration through VID EDS, and which expenses are eligible for tax refunds. All information is based on current Latvian tax legislation and data from the State Revenue Service (VID).

Who Is Required to File an Income Tax Declaration in Latvia

Not all Latvia residents are required to file an annual income declaration. If the sole source of income is salary from a single Latvian employer, filing is generally not necessary: the employer withholds and remits income tax automatically. However, there are situations where filing is mandatory:

• Income received from abroad (salary, dividends, interest, rental income from foreign sources)
• Economic activity was conducted (self-employment, sole proprietorship)
• Income from the sale of real estate, securities, or crypto assets (capital gains)
• Two or more employers during the year
• Gifts or inheritance exceeding established thresholds
• The projected tax exempt minimum was applied, but actual income turned out higher than calculated

Even when filing is not mandatory, many people file voluntarily. Why? To reclaim overpaid income tax. Latvian law allows tax refunds for medical expenses, education, charitable donations, and contributions to pension funds. For many families, this amounts to a meaningful sum: from several dozen to several hundred euros.

Filing Deadlines for the Income Declaration in 2026

The annual income declaration for 2025 may be filed starting March 1, 2026. If the goal is to reclaim overpaid tax (justified expenses), the declaration can be submitted within 3 years. This means the 2025 declaration for a refund can be filed up to 2029. However, if filing is mandatory (foreign income, economic activity, capital gains), it must be completed by June 1, 2026. For individuals conducting economic activity, the deadline is also June 1.

An important distinction: the capital gains declaration (form DK) is filed quarterly, by the 15th of the month following the quarter. The annual income declaration (form GID) is filed once per year. These are two separate documents, and confusing them often leads to penalties.

How to File Through the VID EDS System: Step by Step Instructions

The vast majority of declarations in Latvia are filed electronically through the VID electronic declaration system EDS (eds.vid.gov.lv). The system automatically imports income data from employers, banks, and other sources, significantly simplifying the completion process.

Step 1: Log Into the EDS System

Starting January 1, 2026, logging into EDS with a username and password is no longer available for most users. Authentication now requires one of the following electronic identification methods:

• Smart-ID (qualified version)
• Electronic identification card (eID)
• Electronic signature eParaksts or eParaksts mobile
• Authentication through internet banking (available until December 31, 2026)

Exception: foreign nationals without a legal connection to Latvia who cannot obtain an eID card may still use a username and password. For everyone else, setting up one of these methods in advance is recommended. If none of these options are available, a power of attorney can be issued to another person (an accountant, a family member) who will file the declaration on the applicant's behalf. The power of attorney is processed through EDS or in person at a VID service center and does not require notarization.

Step 2: Open the Annual Declaration Section

In the EDS system, navigate to the Documents section, then select Annual Income Declaration (Gada ienākumu deklarācija). The system will offer to create a new declaration for the relevant year. Most data will be pre-populated automatically based on employer and financial institution reports.

Step 3: Verify the Auto-Populated Data

The system automatically fills in information about income earned in Latvia. However, data about foreign income, capital gains income, and justified expenses must be entered manually. Be sure to review every line: errors in auto-populated data do occur, especially when the employer changed during the year.

Step 4: Complete the Appendices

The declaration consists of several appendices. Their structure has been updated for 2026:

• Appendix D1: income earned in Latvia
• Appendix D1.1: income to which the annual tax exempt minimum and allowances do not apply (such as deposit interest, dividends). From 2026, this also includes similar foreign income
• Appendix D2: income earned abroad
• Appendix D3: justified expenses for tax refund

An important 2026 change: the appendix terminology now explicitly references crypto assets. If income from cryptocurrency transactions was earned during the year, it must be reflected in the declaration.

Step 5: Enter Justified Expenses for Tax Refund

This is the key section for those seeking to reclaim overpaid tax. Justified expenses include:

• Medical expenses: treatment, dental care, prescription medications, health insurance
• Education expenses: tuition at accredited EU educational institutions for the applicant and family members
• Charitable donations: contributions to registered charitable organizations
• Contributions to private pension funds and life insurance

For each expense type, supporting documents must be retained: receipts, invoices, contracts. VID may request them at any point within 3 years of filing the declaration.

Step 6: Submit the Declaration and Await the Result

After completing all sections, the declaration is electronically signed and submitted through EDS. The standard VID processing time is 3 months from receipt. If filed for a tax refund, the funds are transferred to the specified bank account upon approval. VID may request additional documents if needed, which extends the processing time.

Tax Exempt Minimum and Tax Allowances in 2026

In 2026, the tax exempt minimum in Latvia is 550 euros per month. This means the first 550 euros of monthly income is not subject to personal income tax. However, this minimum is projected and depends on total annual income: the higher the income, the lower the actual exempt amount. VID calculates it automatically using a formula based on aggregate annual income.

In addition to the tax exempt minimum, tax allowances exist:

• Dependent allowance: 250 euros per month for each child or other dependent
• Disability allowance: an increased tax exempt minimum depending on the disability group

Declaration for Foreign Income: What You Need to Know

For Latvia's residents receiving income from abroad, filing is mandatory. This applies to salaries from foreign employers, dividends from foreign companies, rental income from property abroad, and interest from foreign bank deposits. All such income is reported in Appendix D2 of the declaration.

Latvia has double taxation avoidance agreements with numerous countries. If tax has already been paid in another country, it can be credited in Latvia to avoid paying twice. The difference between the Latvian income tax rate and the tax paid abroad must be paid if the Latvian rate is higher.

Capital Gains Declaration: Sale of Real Estate, Securities, and Crypto Assets

Income from the sale of property, securities, or crypto assets is taxed at a capital gains rate of 20%. The capital gains declaration (form DK) is filed quarterly, by the 15th of the month following the quarter in which the income was received. For example, if real estate was sold in January 2026, the declaration must be filed by April 15, 2026.

Exemption from capital gains tax is available for the sale of a primary residence if the owner lived there for at least 12 months, and for property held for more than 60 months (5 years). For securities and crypto assets, no such exemptions exist: every transaction with a positive difference is taxable.

Accounting Service Costs for Filing Declarations

Many people prefer to delegate the declaration to a professional rather than handling it themselves. Accounting service prices in Riga and Latvia depend on the complexity of the situation:

• Simple declaration (one employer, standard deductions): 30 to 50 euros
• Declaration with foreign income: 50 to 100 euros
• Declaration with capital gains (real estate, crypto assets): 80 to 150 euros
• Full accounting service for self-employed (monthly): 100 to 300 euros

When choosing an accountant, it is worth checking for a valid license in the public registry on the VID website. A licensed accountant bears responsibility for service quality and must carry professional liability insurance. This provides protection for the client in case of errors.

Common Mistakes When Completing Declarations and How to Avoid Them

• Foreign income not reported. VID receives data from other countries' tax authorities through automatic information exchange. Concealed income will be discovered, resulting in penalties and back taxes with interest
• Quarterly capital gains declaration not filed. The annual declaration does not replace the quarterly DK form. Missing the quarterly deadline incurs a penalty even if the annual declaration is filed on time
• Justified expenses claimed without supporting documents. VID may request receipts and invoices at any time. Without documentation, the tax refund will be reversed
• Incorrect calculation of the tax exempt minimum. If the projected minimum was applied but actual income was higher, a tax underpayment results. The declaration allows correction, but the shortfall must be paid with interest
• Missed mandatory declaration deadline (June 1). Late filing incurs penalties, and systematic violations may result in fines

New Penalty Calculation Rules from 2026

Starting January 1, 2026, amendments to the Law on Taxes and Duties have established a new procedure for calculating penalties on payments made to the single tax account. Penalties accrue daily and are calculated automatically by the VID system. This is yet another reason not to delay declaration filing and tax payments: the longer the delay, the greater the penalty.

Conclusion

Filing a personal income declaration in Latvia is not merely a bureaucratic obligation but an opportunity to reclaim overpaid taxes and organize your finances. In 2026, the process has become more convenient through auto-population in the EDS system, but also more complex due to new authentication requirements and updated forms. Key takeaways: check whether filing is mandatory, gather supporting documents, complete all appendices, and submit before the deadline. For straightforward cases, the EDS system handles it well. For more complex situations (foreign income, crypto assets, capital gains), engaging a licensed accountant is advisable.

Frequently Asked Questions

When must the annual income declaration for 2025 be filed?

Filing begins March 1, 2026. If the declaration is mandatory (foreign income, economic activity, capital gains), the deadline is June 1, 2026. Voluntary filing for a tax refund can be done within 3 years.

How do I log into the EDS system in 2026 without a username and password?

Starting January 1, 2026, username and password access is available only to foreign nationals without a legal connection to Latvia. Everyone else must use Smart-ID, eID, eParaksts, or internet banking authentication (until the end of 2026). If none are available, a power of attorney can be issued to another person.

What expenses can be reclaimed through the declaration?

Justified expenses include medical expenses, education costs at accredited EU institutions, donations to registered charitable organizations, and contributions to private pension funds. Supporting documents must be retained for refund claims.

Do I need to file a declaration if I had only one employer?

Generally, no. If the sole income source was salary from one Latvian employer with standard allowances applied, filing is not mandatory. However, voluntary filing allows reclaiming overpaid tax for justified expenses.

How much does it cost to file a declaration through an accountant?

Cost depends on complexity. A simple declaration costs 30 to 50 euros. With foreign income or capital gains, 50 to 150 euros. When choosing an accountant, checking their license in the VID public registry is recommended.

How Lex&Finance Specialists Can Help With Income Declaration Filing

Lex&Finance provides accounting services in Riga and Latvia for individuals and legal entities. Our licensed accountants will help complete and file the annual income declaration, calculate justified expenses for maximum tax refund, prepare quarterly capital gains declarations, and navigate foreign income reporting. We work with the EDS system, are current with all 2026 changes, and can act under power of attorney if the client cannot access the system independently.

For entrepreneurs and self-employed individuals, we offer full accounting support: bookkeeping, VID report preparation, tax calculation, and consultation on tax burden optimization. All our accountants hold VID licenses and carry professional liability insurance policies. Contact us for a free initial consultation through our website lexfinance.lv or by phone.

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