Latvia: amendments to Individual Income Tax Law proposedJuly 31, 2013
On 25 July 2013, draft amendments to the Individual Income Tax Law were announced during the State Secretaries’ meeting.
Income from disposal of immovable property
The amendments are aimed at, inter alia, relaxing the conditions under which income from the disposal of immovable property is exempt.
Currently, such income is exempt if the property has been owned for more than 60 months, and if, for a period of at least 12 months prior to the disposal, it had been the vendor’s registered principal place of abode.
Under the proposal, income from the disposal of immovable property would also be exempt if the property has been owned for more than 60 months and, during the 60 months preceding the disposal, it had been the vendor’s only immovable property.
Moreover, income from the disposal of immovable property would be exempt if such an income were to be reinvested into a similar immovable property within 12 months following the disposal of immovable property, subject to further conditions.
Lump-sum taxation regime
In addition, the amendments would terminate the lump-sum taxation regime, which is currently available to self-employed sole proprietors registered as carrying on a business (but not a profession), with no employees and annual business income not exceeding LVL10,000.
To become law, the draft amendments must be approved by the Cabinet of Ministers and adopted by the Parliament.
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