Services for non-residents
What does residence permit give?
In Latvia a residence permit gives an opportunity to enter and leave the country freely, work, study, use health and public services, formalize the right for issuing visas to relatives and other persons and travel freely within the countries of the Schengen area. Residence permit in Latvia facilitates the process of obtaining visas to the USA or England. In Latvia the owner of a temporary residence permit has the right to purchase vehicles in the Republic of Latvia, to use it in the territories of other countries without paying Customs duties and to obtain the driving license that is valid in all EU countries without restriction. Detailed information about possibilities can be found on the official CIC website (http://www.pmlp.gov.lv/en).
Immigration policy changes
New and more rigid requirements to the Latvian property prices used in accordance with the Immigration Act for issuing a residence permit took effect after the amendments on 31 August 2014.
What is needed to obtain residence permit
The amendments to the Immigration Act that took effect after 31 August 2014 narrowed down a list of individuals who have the right to claim a temporary residence permit in Latvia. As for real estate transactions, now the list includes foreigners who have purchased and possess a built-up and functionally independent item of property at a cost of EUR 250 000 meeting the following requirements:
- 1 There are not, and were not, arrears in the property tax payment;
- 2 The total cost of the deal was accepted by bank transfer;
- 3 The property was purchased from the legal person registered in the Republic of Latvia, the EU countries, the EEC countries or the Swiss Confederation, being a taxpayer, according to the procedure established by tax legislation of the Republic of Latvia; or the property was purchased from the natural person being a citizen of Latvia, a non-citizen of Latvia, a citizen of the Union or a foreigner who lives in Latvia and possesses a valid residence permit issued in the Republic of Latvia;
- 4 The total cadastral value of the property was no less than 80 000 at the day of purchase. If the cadastral value is higher than the aforementioned one, the total cost of the property established by a certified real property appraiser cannot be less than EUR 250 000;
- 5 When requesting a primary residence permit the foreigner has paid five percent of the property price to the state budget;
- 6 The item of property is not an agricultural land or forest.
In Latvia the real estate property can be purchased by both citizens of Latvia and citizens of other countries. However, land deals with the participation of non-residents have some features.
In fact, to purchase the land a way of purchasing with the participation of the legal person can be used (51 percent belongs to citizens of Latvia, 49 percent belongs to foreigners buying the land).
As a result of the land reform of the Republic of Latvia, non-residents of Latvia now have a possibility to purchase the land. In this respect, these persons can become parties of the deal for purchasing real property but there are some restrictions of purchasing the property.
The non-resident of the Republic of Latvia cannot acquire the right to purchase the following lands
- Lands located in state border areas;
- Lands located on the coast of the Gulf of Riga, in the dune area of the Baltic Sea and on other territories of the protective area of public ponds or rivers with the exception of cases when in these areas there is the reorganization, according to the development plan of the city (Jurmala);
- Agricultural and forestry lands, according to the development plan of the city.
General rules about how non-residents can purchase lands including items of property (lands and buildings and constructions located there)
- 1 After concluding the contract the non-resident submits the contract and the application form, that consists of purposes of purchasing and a pattern of further use complying with the city (region) development plan, to the local Government body (the city council or parish council), the head of which (the Chairman of the city council or parish council) does not have the right to refuse to purchase the land. The refusal is acceptable only if the purpose of use is contrary to the purpose distinguished in the development plan.
- 2 The consent to purchase the land or refusal to do it must be provided for the non-resident by the head of the local Government body during 20 days from the receipt of the non-resident’s application.
- 3 In fact, to purchase the land a way of purchasing with the participation of the legal person can be used (51 percent belongs to citizens of Latvia, 49 percent belongs to foreigners buying the land).
Corporate income tax
If the non-resident of the Republic of Latvia is a legal person (it is hereinafter referred to as “the firm”) who purchased property in Latvia and wants to sell or dispose it, if the firm earns the income as a result of disposition, and if it is a resident of one of the countries listed below, than in accordance with international agreements and conventions concluded with the Republic of Latvia the firm has the right to pay income tax at the place of registration in a domicile: the USA, the UK, the Netherlands, Austria, Canada, the Czech Republic, Denmark, France, Greece, Estonia, China, Israel, Lithuania, Norway, Poland, Portugal, Finland, Spain, Switzerland, Uzbekistan, Germany, Vietnam, Sweden.
Additionally, according to international agreements for the protection of joint investments, non-residents of jurisdictions mentioned above have the right to repatriate profits derived from the disposal of real estate property from the Republic of Latvia freely and without restrictions.
Just as if the convention is concluded between Latvia and the country of the non-resident’s registration to avoid double taxation, non-residents who have paid tax in their country, the interest rate of which is lower than the interest rate in Latvia, have an opportunity to submit the statement from the respective fiscal office of the country of the registration to the respective Department of the Federal Tax Service.
The interest rate for the non-resident profiting from the disposal of real estate property in Latvia is 2 percent of the total remuneration amount.
Personal income tax
According to the Act on Personal Income Tax it is not needed to pay tax if the income is generated from selling an item of property having been possessed by the non-resident, or the natural person, for, at least, 36 months (from the day of writing down the property right in the land register).
If the income is generated from selling an item of property having been possessed by the non-resident, or the natural person, for less than 36 months, the rules for corporate tax evasion relating to non-residents are applied.