Tax on Pension: Some Latvian Pensioners Now Owe the State 0 36

Recently, she received a letter from the State Social Insurance Agency stating: "The State Social Insurance Agency (SSIA) has received information from the State Revenue Service (SRS) that you have been assigned the status of a tax non-resident of Latvia. We inform you that according to the established legal requirements, income tax for tax non-residents of Latvia must be withheld from the full amount of the pension without applying the pensioner's tax-free minimum.

In certain cases, exemptions from income tax withholding are provided — if the pension recipient has documented that the provisions of the tax convention concluded between Latvia and the state of tax residence of the pension recipient apply to them:

• The income tax must be paid only in the state of tax residence;

• The income tax must be withheld in the state paying the pension. If that state is one of the EU/EEA countries, a part of the pensioner's tax-free minimum of 500 euros applies.

We ask you to check whether any of the concluded tax agreements apply to you, and if necessary, to submit the relevant supporting documents to the SSIA in the established manner." As far as we know, similar letters have been received by other people receiving pensions from Latvia but living abroad — accordingly, this issue is relevant for many ex-Latvians. Could our competent authorities respond to a few questions in this regard:

• With which countries has Latvia concluded a tax convention?

• In which institution can a person living abroad obtain a document confirming their country of tax residence?

• If a person, for some reason, does not manage to submit the necessary documents to the SSIA in time, will it be possible to recalculate and return the overpaid tax after these documents are submitted? Reader bb.lv"

Comment from the State Revenue Service:

– Currently, tax conventions concluded by Latvia are in effect with the following countries and territories: Albania, the United States of America, the United Arab Emirates, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, the Czech Republic, Denmark, South Korea, France, Greece, Georgia, Hong Kong, Croatia, Estonia, India, Iceland, Italy, Israel, Ireland, Japan, Canada, Qatar, Kazakhstan, Cyprus, Kyrgyzstan, Kosovo, Kuwait, the People's Republic of China, the United Kingdom, Lithuania, Luxembourg, North Macedonia, Malta, Morocco, Mexico, Montenegro, Moldova, the Netherlands, Norway, Poland, Portugal, Romania, the Kingdom of Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Finland, Spain, Switzerland, Tajikistan, Turkey, Turkmenistan, Ukraine, Hungary, Uzbekistan, Germany, Vietnam, and Sweden.

The action of the convention with the Russian Federation has been suspended since May 16, 2022. A document confirming the country of tax residence can be obtained by a person living abroad from the tax administration of the respective state or another competent institution that confirms the person's residency status for the application of the tax convention.

If the total amount of the pension in the tax year does not exceed 5000 euros, a residency certificate of the established form from the country with which the agreement has been concluded is sufficient to confirm the country of tax residence.

If the total amount of the pension exceeds 5000 euros, it is necessary to submit a "Residency Certificate — Application for Tax Benefits" along with the residency certificate from their country.

If the benefits provided by the tax convention were not previously applied and tax was withheld according to the regulations of Latvia, a person can submit a "Residency Certificate — Application for Tax Refund" to the State Revenue Service (SRS) within three years from the date of payment to reclaim the overpaid tax.

The documents submitted to the SRS are reviewed, and a decision on the full or partial refund of the overpaid tax amount or on the refusal of the refund is made within a month.

For her part, as explained by the press secretary of the SSIA Iveta Dainé:

"A non-resident can submit such an application to the SRS if they are a resident of another country in the understanding of the tax convention, and the tax benefits provided by the convention were applied to them. The term 'rezidents' in the application form refers to residency not in Latvia, but in another state that is a party to the agreement.

For its part, the SSIA will do everything possible to refund the withheld income tax for the current tax year if the client documents the change in their status for the past period."