Changes in Latvia's Tax Policy Hope to Attract Crypto Companies
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Loading... - Alira Evans
- 31 Mar 2025
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Latvia is poised to make significant changes to its tax policy in a bid to attract cryptocurrency companies. Over the next three years, foreign taxpayers may be exempt from the 3% tax rate on income derived from cryptocurrency transactions. While the legislation has been initiated by the Ministry of Economics and approved by the Cabinet of Ministers, it still requires approval from the Saeima (Parliament) before it can take effect.
If approved, the new regulations will be in place from January 1, 2025, to December 31, 2027. Minister for Economics Viktors Valainis expressed optimism about the changes, stating, “With this step, we are creating an innovative and competitive business environment in the cryptocurrency sector. I am confident that these changes will not only attract international cryptocurrency service providers but also create new, well-paying jobs and boost our economic growth.”
The removal of the 3% tax on non-resident cryptocurrency income is expected to draw several cryptocurrency companies to Latvia, potentially creating at least 100 jobs in the sector by the end of 2027. The projected tax revenue from salaries alone is anticipated to exceed €7 million.
To assess the effectiveness of these proposed amendments, the draft law mandates the Ministry of Economics to submit a report to the Cabinet of Ministers by July 31, 2027. This report will evaluate the impact of the regulatory framework on the development of Latvia’s cryptocurrency market, tax revenue, attracted investments, and newly created jobs for non-resident cryptocurrency service providers.
Currently, the 3% personal income tax on income from the sale of publicly traded cryptocurrency, introduced in 2019, has hindered Latvia’s competitiveness compared to neighboring countries. According to the Ministry of Finance, Spain is the only other EU country with a similar tax rate. This tax has deterred non-resident cryptocurrency service providers from obtaining operational licenses in Latvia, as it results in double taxation. Specifically, all cryptocurrency transactions with foreign clients conducted from Latvia are subject to the 3% tax on transaction value, in addition to the applicable capital gains tax in the provider’s home country.
In recent years, Latvia has been actively working to attract cryptocurrency service providers and position itself as an appealing destination for companies seeking an EU license for cryptocurrency operations. Under the Cryptocurrency Services Law, which will take effect in 2024, providers must apply to the Bank of Latvia for a license. The Bank of Latvia will serve as the supervisory authority for these providers. Starting December 30, 2024, licensed providers will be permitted to operate across the EU without needing additional permits in each member state.
As Latvia seeks to enhance its standing in the cryptocurrency sector, these tax policy changes could play a crucial role in fostering a more favorable environment for both local and international businesses.
