Alternative dividend taxation regime from 2026 in Latvia. What does it mean for business owners and foreign investors? (video)

General

Starting from 1 January 2026, Latvian companies whose shareholders are exclusively individuals can elect a new dividend taxation model:
• 15% Corporate Income Tax (CIT) on distributed profits (instead of the standard effective 20% regime)
• 6% Personal Income Tax (PIT) withheld from dividends paid to individuals.

Although the total Latvian effective tax burden remains almost unchanged (around 25%), the structure of taxation changes significantly.

Why is this important?

For foreign shareholders, the 6% PIT may qualify as a foreign tax credit in their country of residence, potentially reducing double taxation. This makes Latvia’s dividend taxation more internationally competitive while also allocating part of the tax revenue to Latvian municipalities.

The regime is optional and is available only to companies whose shareholders are exclusively individuals. The election applies to all dividends distributed in the relevant tax period.

We’ve prepared a short overview explaining:
✅ How the current dividend taxation workshttps://youtu.be/DjMwhy0kapo?si=Bj8nXu9u5PCJ3hEU
✅ What changes from 2026
✅ Eligibility requirements
✅ Advantages and limitations of the new regime.

What impact do you think this reform will have on international investors choosing Latvia as a holding location?