From April 1, 2026, the procedure for withholding income tax (IIN) will change for many recipients of Latvian pensions living abroad. And this, let us remind you, is 25.5%, by which pensions for seniors may decrease.
What has been the situation so far? A tax-exempt minimum of 500 euros has been applied to the pensions of most non-residents, from which tax was withheld. However, starting April 1, the procedure for tax deduction and the application of benefits will change for some pensioners.
The State Social Insurance Agency (SSA, VSAA) is urging seniors to timely confirm their status as tax non-residents of a specific country to avoid unnecessary deductions and maintain the right to the tax-exempt minimum – for those who are entitled to it.
What has changed and why is it important?
Thus, the SSA is addressing pension recipients who are officially recognized as tax NON-residents of Latvia.
To enable the agency to correctly calculate the tax, pensioners must CONFIRM their tax residency (the country where they live and pay taxes).
If the SSA does not have the documents at its disposal or they have expired, tax may be withheld from the ENTIRE amount of the pension without considering the tax-exempt minimum.
In what cases will tax be withheld from the entire amount of the pension?
Latvia will withhold tax from the entire amount (without applying the tax-exempt minimum) if:
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the VSAA does not have information about your country of residence (you have not submitted documents);
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the validity of previously submitted documents has expired (depending on the amount of the pension, they are valid for 12 months or 5 years);
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you live in a country that is not part of the EU/EEA, and according to the agreement/convention with Latvia, the country paying the pension (Latvia) must withhold tax, as the tax-exempt minimum does not apply to these pensions.
Two groups of countries based on types of tax treaties. And Russia
Below is the distribution of countries into two groups based on international tax conventions with Latvia. This determines which country has the right to withhold income tax from your Latvian old-age pension. (Data from the SRS).
Group 1: Tax is paid in the country of residence
If you reside in one of these countries and have timely submitted documents to the VSAA, tax will not be withheld in Latvia. Tax is paid in your current country of residence according to local legislation:
Austria, Azerbaijan, Armenia, Belarus, Hungary, Greece, Georgia, Ireland, Italy, Kazakhstan, Kyrgyzstan, USA, France, Croatia, Sweden, Estonia, South Korea, Japan.
Group 2: Tax is paid in the country that pays the pension (Latvia)
If you reside in one of these countries, tax is withheld by Latvia. The withholding procedure depends on whether the country is part of the EU/EEA (whether the 500 euro benefit applies).
Albania, Belgium, Bulgaria, United Kingdom, Vietnam, Germany, Hong Kong, Denmark, Israel, India, Iceland, Spain, Canada, Qatar, Cyprus, China, Kosovo, Kuwait, Lithuania, Luxembourg, North Macedonia, Malta, Morocco, Mexico, Moldova, Netherlands, Norway, UAE, Poland, Portugal, Romania, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Tajikistan, Turkmenistan, Turkey, Uzbekistan, Ukraine, Finland, Czech Republic, Montenegro, Switzerland.
Regarding the Russian Federation, the situation is special:
The agreement has been suspended since May 16, 2022, in accordance with the amendments of May 12, 2022, to the Law "On the Agreement between the Government of the Republic of Latvia and the Government of the Russian Federation on the Prevention of Double Taxation and Evasion of Tax Payments regarding Income and Capital Taxes and the Protocol thereto" from the Latvian side.
According to official information from Latvia, the treaty is considered to have lost its force (denounced) as of January 1, 2024. This means that tax benefits under this treaty no longer apply.
What to do to avoid losing a significant part of your pension? Read about it in the most informed Latvian newspaper "Today WEEK", which will be published on March 25.
