|
Baltic Tax Card: Personal Income Tax Card in Latvia, Lithuania and Estonia 2013
PERSONAL INCOME TAX IN LATVIAStructurePersonal income tax is imposed on income acquired by a natural person, and it consists of: 1) salary tax calculated from the income acquired by the employee and is paid by the employer; 2) fixed income tax regarding income from economic activity; 3) tax for income from economic activity where it is not the object of the enterprise income tax, and tax from other sources of income; 4) tax for income from capital, including tax from increase of capital; 5) licence fees for the performance of separate types of economic activities; and 6) the parts of the micro-enterprise tax in accordance with the Micro-enterprise Tax Law.
TaxpayersPersonal income tax is paid by natural persons:
Taxable objectsPersonal income tax is applied to the domestic tax payer’s amount of the taxable income of the taxation period. The object of the salary tax shall be the monthly taxable income of the tax payer. The part of a micro-enterprise income shall be imposed with the tax in accordance with the Micro-enterprise Tax Law. The taxable income of the foreign taxpayer (non-resident) is employment income, income from professional activities, income from the professional activities of artists, sportsmen or trainers, income from the performance of duties in a council or board of directors of a capital company etc. For more information please contact Gencs Valters Law Firm.
Tax rate in LatviaThe tax rate is 24% from the annual taxable income, from monthly taxable income and income of economic activity. To get more information on reduced tax rates, please contact Gencs Valters Law Firm.
Tax is calculated and paid into the budget:
The payer pays the tax in conformity with the declaration in accordance with summary procedures. Advance payments of the tax are made during the taxation year.
For a natural person – non-resident, with the acquisition of the status of a resident, the final tax shall be the tax calculated and paid into the budget.
Tax declarationsThe calculation of tax and payment of tax into the budget shall be performed by the payer. Tax shall be calculated for the total amount of the annual taxable income and not later than within 15 days from the day of the submission of the declaration, a payer shall pay the amount of the calculated tax into the budget. If the amount of the calculated tax exceeds LVL 450 (Eur 640), the payer may pay it into the budget in three payments – up to 16 June, 16 July and 16 August paying in each time one third of the amount. The State Revenue Service verifies the reliability and correctness of the data presented in the declaration, performs control of the payment of personal income tax and completeness and correctness of the income and expenditure.
Tax reliefThe payer has the right to not submit the declaration if: 1.) the payer during the taxation year in the Republic of Latvia has received income, from which tax has been deducted at the place of payment, 2.) if the total amount of non-taxable income received by him does not exceed four time the amount of the non-taxable minimum specified for the taxation year, 3.) payer does not need to indicate in the declaration income acquired in accordance with PIT Law,
A foreign taxpayer (non-resident) does not have to submit the declaration, except in the cases where the non-resident: 1) receives the income established in PIT Law, as well as receives income from employer who is not a resident of Latvia or who does not have a permanent representation in Latvia, or receives the income from commercial companies, which are not residents of the Republic of Latvia; 2) receives the income referred to in PIT Law from natural persons who are not referred to in PIT Law; 3) receives the income for which tax has not been withheld in place of payment; or 4) being a resident of another Member State of the European Union or a European Economic Area state, in the taxation year has acquired more than 75 per cent of his total income in Latvia and wishes to apply in the taxation year the non-taxable minimum in accordance with PIT Law, the tax relief in accordance with PIT Law and the eligible expenditures in accordance with PIT Law.
The relief for the declaration of income is not applicable to payers obtaining income from economic activity.
Budgetary CompetenceThe amounts of the tax are included into the budget of the local government of the tax payer’s place of residence and into the State basic budget according to the allocation specified in the Annual State Budget Law.
Taxation treatiesIn Republic of Latvia are in force and are applied Taxation treaties with more than 50 countries.
PERSONAL INCOME TAX IN LITHUANIA
StructurePersonal income tax is imposed on income acquired by a natural person, and it consists of: 1) income from employment; 2) business income (self-employed income); 3) gains from transfer of property; 4) rent and royalties; 5) interest; 6) dividends; 7) pensions, scholarships and grants, benefits, awards and gambling winnings; 8) insurance indemnities and payments from pension funds; 9) other income.
TaxpayersPersonal income tax is paid by natural persons:
Taxable objectsPersonal income tax is applied to the domestic tax payer’s amount of the taxable income of the taxation period. The object of the salary tax shall be the monthly taxable income of the tax payer. The taxable income of the foreign taxpayer (non-resident) is employment income, income from professional activities, income from the professional activities of artists, sportsmen or trainers, royalties etc. For more information please contact Gencs Valters Law Firm.
Tax rate in LithuaniaThe tax rate is 15% (dividends – 20%). In certain cases income tax rate 5% applies. To get more information on reduced tax rates, please contact Gencs Valters Law Firm.
Tax is calculated and paid into the budget:
Income tax from A class income must be withheld and paid to the budget before the 15th day of a respective month if the last portion of income was paid out before the 15th day of this month; or before the last day of a respective month if the last portion of income was paid before the last day of this month.
Income tax from B class income must be computed and paid to the budget:
Tax declarationsMonthly tax declarations in respect of A class income must be submitted by tax withholding person by the 15th day of the following month. Annual tax declarations in respect of A class income must be submitted by tax withholding person by the 15th February of the following calendar year.
A Lithuanian tax resident who received A or B class income must submit annual tax declaration by the 1st May of the following calendar year. A non-tax resident must submit income tax declaration in 25 days after receiving the income. Additionally, a non-tax resident may submit annual tax declaration by the 1st May of the following calendar year.
The State Taxes Inspection verifies the reliability and correctness of the data presented in the declaration, performs control of the payment of personal income tax and completeness and correctness of the income and expenditure.
Tax reliefThe tax payer has a right to not submit the annual tax declaration if he/she: 1.) is not going to use the right to deduct annual tax exempt amount or additional tax exempt amount, and 2.) is not going to use the right to deduct expenses from income, and 3.) during the taxable period received only A class income which is related to employment relations. The mentioned conditions are applicable to cases established in PIT Law.
Budgetary CompetenceThe amounts of the tax are included into the State basic budget according to the allocation specified in the Annual State Budget Law. Tax payers have a right to allocate up to 2% of the personal income tax to specified recipients.
Taxation treatiesIn Republic of Lithuania are in force and are applied Taxation treaties with 48 countries.
PERSONAL INCOME TAX IN ESTONIA
StructurePersonal income tax is imposed on income acquired by a natural person, and it includes: 1) income from employment; 2) business income (self-employed income); 3) gains from transfer of property; 4) rent and royalties; 5) interest; 6) dividends; 7) pensions, scholarships and grants, benefits, awards and gambling winnings; 8) insurance indemnities and payments from pension funds; 9) income of a legal person located in a low tax rate territory.
TaxpayersPersonal income tax is paid by natural persons:
Taxable objectsIn Estonia from the residents income tax is charged:
The basic exemption deductible from the income during a period of taxation (a calendar year) is 1728 EUR. Additionally it is possible to deduct additional 1 728 EUR granted to a parent starting from the second child aged 17 or less. Also it is possible to make deductions on housing loan interest, training expenses, gifts, donations, insurance premiums and acquisition of pension fund units etc. Deduction is limited to 1 920 EUR and amount deducted cannot exceed 50% of the taxable income.
In Estonia from non-residents the income tax is charged:
Withheld unemployment insurance premiums shall be deducted from the income during a period of taxation. In certain cases non-residents can make also deductions allowed for residents. For more information (also about deductions) please contact Gencs Valters Law Firm.
Tax rate in EstoniaThe tax rate is 21% from personal income. In certain cases income tax rate 10% applies. To get more information on reduced tax rates, please contact Gencs Valters Law Firm.
Tax is calculated and paid into the bank account of Tax and Customs Board:Taxes related to salary and other employment payments of the payer are withheld and paid by the employer (even if employer is non-resident) monthly.
Rest of the personal income tax generally is paid after submission of tax declaration (annually) and receiving respecting tax notice from Tax and Customs Board (Tax and Customs Board calculates the payable tax amount and sends tax notice to payer). Due date of the tax payment in general is July 1 of the following year after the taxable period (calendar year). A sole proprietor who derived business income during a previous period of taxation is required to make advance payments of income tax during the period of taxation. The size of an advance payment is one-quarter of the total amount of income tax calculated on the business income derived by the person during the previous period of taxation. Advance payments shall be made into the bank account of the Tax and Customs Board in equal amounts by the fifteenth day of the third month of each quarter, starting from the quarter following the due date for submitting the income tax return. Advance payments need not be paid if the quarterly payment does not exceed 64 EUR. A taxpayer who derives business income is not required to make advance payments of income tax during the first period of taxation.
Tax declarationsResident and non-resident natural persons shall submit an income tax return to the regional structural unit of the Tax and Customs Board concerning the income of a period of taxation not later than by 31 March of the year following the period of taxation.
It is possible to submit an income tax return through the e-service of the Tax and Customs Board as of 15 February of the year following the period of taxation.
Regarding non-residents, in the case of transfer of an immovable, the income tax return shall be submitted after receiving the gains. If payments for a transferred immovable are made by instalment, a tax return concerning the agreed transaction price is also submitted within one month after receiving the first instalment.
A non-resident who derives business income which is subject to taxation in Estonia is required to submit an income tax return concerning business income within six months following the period of taxation. If engagement in business is terminated before the end of the period of taxation, the income tax return shall be submitted within two months following the termination of activities.
A natural person who has not been resident during the whole period of taxation shall submit an income tax return concerning only income received during the period when the person was resident and may make deductions for the same period of time.
A resident natural person who received income which, pursuant to respective law or an international agreement is exempt from income tax in Estonia is required to declare such income.
The Tax and Customs Board shall complete the income tax return concerning the income of a resident natural person during a period of taxation and the deductions on the basis of the data at the disposal of the Tax and Customs Board and make the pre-completed tax return available to the taxpayer through the e-service and at the regional structural unit of the Tax and Customs Board as of 15 February of the year following the period of taxation. If the taxpayer uses the pre-completed tax return, he or she is required to verify the correctness of the data contained in the tax return and submit an amended and supplemented tax return in event of incorrectness or deficiency of the data.
Tax reliefThe following persons are not required to submit an income tax return: 2) resident natural person whose only income was pension (from Estonia or EU); 3) resident natural person whose only income was compensation for work accident or occupational disease if this compensation did not exceed 768 EUR or if income tax has been already declared and withheld from the compensation; 4) non-residents, if income tax from payments is withheld (in general from payments for non-residents the income tax is withheld and paid by the payer);
Budgetary Competence11,4 per cent of the taxable income of a resident natural person is received by the local government of the taxpayer's residence. Rest of the income tax and income tax paid by a non-resident is received by the state.
Taxation treatiesIn Republic of Estonia are in force and are applied Taxation treaties with more than 50 countries.
|
For questions, please, contact Valters Gencs, attorney at law at info@gencs.eu
The material contained here is not to be construed as legal advice or opinion.