Reference
Following the approval of the Budget for 2015 and effective
1 January 2015
interest (including income analogous to interest and income connected with interest) paid to non-resident individuals is exempt if it constitutes income from publicly traded financial instruments.
As a result, the standard rates of withholding tax applicable on income paid on Latvian securities are as follows (the changes compared to the rates published in our Announcement A14011, dated 21 January 2014, are highlighted in bold):
Government bonds:
- Non-resident legal entities - 0% (15% for entities resident in tax-haven countries);
- Latvian legal entities - 0% (interest is included in the taxable corporate income subject to a 15% corporate income tax);
- Non- resident individuals - 0% (15% for residents of tax-haven countries);
- Latvian individuals - 0%.
Corporate bonds:
- Non-resident legal entities - 0% (15% for entities resident in tax-haven countries; 5% where a payer is a Latvian registered bank and the recipient is entity resident of tax-haven country);
- Latvian legal entities - 0% (interest is included in the taxable corporate income subject to a 15% corporate income tax);
- Non-resident individuals - 0% if it constitutes interest from publicly traded financial instruments, if not 10% (in any case 15% for residents of tax-haven countries);
- Latvian individuals - 10%.
Equities:
- Non-resident legal entities - 0% (15% for entities resident in tax-haven countries or 30% in cases of extraordinary dividends);
- Latvian legal entities - 0%;
- Non-resident individuals - 10% (15% for residents of tax-haven countries);
- Latvian individuals - 10%.
Impact on customers
Customers are reminded that, with Clearstream Banking1 as the nominee for Latvian securities, income may, by default, be paid gross based on its status and residency. Despite such possibility, customers must ensure that all securities are held by final beneficial owners eligible for tax exemption according to the above list and, in order to comply with the Latvian standard withholding tax rates, should disclose all beneficial owners that are not eligible for tax exemption.
Details of the disclosure procedure are available in our Announcements A13129, dated 19 August 2013.
Further information
For further information, please contact the Clearstream Banking Tax Help Desk or Clearstream Banking Client Services or your Relationship Officer.
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1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500, and Clearstream Banking S.A., registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Trade and Companies Register under number B-9248.