Tax filing campaign of 2018 is taking place and authorities don’t have much time. Two parliamentary committees and the Ministry of Finance have revealed their views on the matter this week. Latvians may owe the state tax on their gains from crypto transactions very soon.
Some lawmakers admonished to their colleagues and constituents that cryptocurrencies are not considered a legal proposal in the Baltic state and come with speculative bubbles and financial pyramids. Members of the Financial and Capital Markets Committee, nevertheless, noted that cryptos can “function as a means of exchange”.
The Ministry of Finance claimed that the Latvian government is thinking comprehensive cryptocurrency regulations. The Prime-Minister`s working group stated by Māris Kučinskis has been directed to prepare the proposals. It is going to study market risks, but also evaluate potential benefits associated with cryptocurrencies.
Cryptos are being strongly criticised by the Latvian politicians for failing to perform one or more of the functions of fiat money – means of payment, medium of exchange, unit of account, and store of value. The “means of exchange” labeling now gives Latvian officials a possibility to tax cryptocurrency transactions. Maybe if they think about VAT, a “means of payment” status will also be attributed. No tax is presently due on crypto purchases of goods and services in Latvia.
There is no Latvian law to regulate cryptocurrencies like Bitcoin but authorities in Riga say revenues from crypto trading are subject to personal and corporate income tax. The country has a flat income tax rate of 23%. Incomes from dividends and interest are taxed at 10%. 15% tax is due on capital gains from shares, real estate, and intellectual property. The standard rate of Value Added Tax is 21%. Financial transactions are released from VAT. Tax returns in Latvia are filed between March 1 and June 1 of the year following the taxation year.