Latvia operates within the confines of the European Union’s regulatory and tax framework..
The State Revenue Service (Valsts ienEemumu dienests, VID) treats cryptocurrency as a capital asset for tax purposes. Gains arising from the disposal of crypto assets are subject to capital gains tax at a rate of 20% under the Law on Personal Income Tax, specifically Section 11.9, as confirmed by VID guidance published in 2020.
Latvia also participates in the EU’s MiCA (Markets in Crypto-Assets) framework, which has applied since 2024 and governs the regulation of crypto-asset service providers across the bloc.
Capital Gains Tax Rules
Capital gains tax on cryptocurrency in Latvia is explicitly enacted under Section 11.9 of the Law on Personal Income Tax, supplemented by VID guidance issued in 2020. The 20% CGT rate applies to net gains arising from the disposal of crypto assets, including sales for fiat currency and exchanges of one cryptocurrency for another. Both types of disposal are treated as realisation events that crystallise a taxable gain or loss.
How CGT is Calculated
The gain subject to CGT is computed as the difference between the disposal proceeds (the market value of fiat or cryptocurrency received) and the acquisition cost of the asset disposed of. Latvia does not apply a general long-term holding discount equivalent to the 50% CGT discount available in Australia.
The 20% rate applies regardless of the holding period for individual investors, though the distinction between capital and business income may turn on factors including frequency and holding duration.
Where a disposal results in a loss, the loss can be used to offset gains from other crypto disposals within the same tax year. The treatment of capital losses carried forward to future years under the Latvian CGT framework should be confirmed with a VID-registered tax adviser, as specific rules for crypto loss carry-forward have not been separately published in the available guidance.
Record Keeping
Taxpayers are required to maintain records sufficient to support their CGT calculations, including the acquisition date and cost, the disposal date and proceeds, and the method used to match acquisition lots to disposals. Records should be retained for at least five years, consistent with general Latvian tax record-keeping obligations. Given that crypto-to-crypto exchanges are taxable events, records must be kept for every transaction, not just conversions to fiat currency.
Income Tax Rules
Where the VID determines that a taxpayer’s cryptocurrency activity constitutes a business rather than personal investment, the proceeds are reclassified as business income and subjected to the progressive personal income tax rates under the Law on Personal Income Tax. The lower rate of 20% applies to annual income up to a specified threshold; income above the threshold is taxed at 23%. For corporate entities, crypto business income is taxed under the standard Latvian corporate income tax framework.
The determination of whether activity crosses the threshold from investment to business depends on factors including the frequency and volume of trades, the systematic nature of the activity, the use of professional tools or advisers, and whether the individual holds themselves out as a crypto trader. The VID has not published a bright-line test, so taxpayers with high-frequency activity should seek advance confirmation of their classification.
Cryptocurrency received as payment for employment or services constitutes employment or self-employment income at the market value of the crypto at the time of receipt. Social insurance contributions may apply in addition to income tax where the recipient is self-employed. This income is valued in euros at the prevailing exchange rate on the date of receipt.
Mining and Staking Treatment
Mining
Mining income in Latvia is treated as business income subject to personal or corporate income tax and social contributions. The VID’s 2020 guidance makes clear that mining is not a passive investment activity; it is a productive commercial activity that generates income on receipt of the mined tokens. The market value of cryptocurrency received through mining is included in gross income at the time it is received, using the euro market value at that date.
Business expenses directly attributable to mining, including electricity costs, hardware depreciation, and facilities expenses, are deductible against mining income under general Latvian business expense rules. Miners operating as sole traders must also account for social contributions on their net mining income. Any subsequent disposal of mined cryptocurrency at a gain triggers a further tax event, assessed as capital gains tax on the difference between the disposal proceeds and the market value at the time of mining (which becomes the acquisition cost for CGT purposes).
Staking
As of 2026, the VID has not published specific guidance on the taxation of staking rewards. Applying the principles established in the 2020 guidance, staking rewards would likely be treated as income at the market value of the rewarded tokens on receipt, consistent with the treatment of mining income. If staking is conducted in an organised and regular manner, it may be classified as business income subject to progressive income tax rates.
The subsequent disposal of staked tokens would give rise to a CGT event, with the base cost calculated by reference to the value at which they were brought into income on receipt. Latvia has also not issued specific laws on whether staking rewards from DeFi protocols are treated differently from rewards earned through a centralised exchange, and taxpayers in this space are advised to apply conservative principles and seek VID clarification.
NFT Taxation
NFTs have not been specifically addressed in Latvian tax legislation as of 2026.
However, the VID’s general treatment of crypto assets as capital assets under the Law on Personal Income Tax would apply to NFTs held as investments. A disposal of an investment-grade NFT for proceeds exceeding the acquisition cost would generate a capital gain subject to 20% CGT.
Where an individual or entity creates and sells NFTs commercially, the income from those sales constitutes business income subject to income tax at the applicable rate. The distinction between an investor disposing of an NFT and a creator selling their work is therefore significant for tax purposes. Creators who regularly produce and sell NFTs are likely to be treated as conducting a business, with the proceeds constituting revenue income rather than a capital gain.
VAT implications for NFT transactions have not been specifically addressed by the VID. Under the general EU VAT framework, the supply of NFTs may constitute a supply of electronically supplied services, which could attract Latvian VAT. As of 2025, Latvia has not issued specific VAT guidance on NFT transactions, and businesses operating in this space should seek specialist VAT advice.
Reporting Requirements
Latvian residents are required to file an annual personal income tax return declaring all taxable income, including capital gains from crypto disposals and any business income from crypto activities. The annual return is filed with the VID, which operates an online filing system. Capital gains from crypto disposals are reported in the capital gains section of the return, with total gains and losses for the year disclosed.
All amounts must be converted to euros for reporting purposes. Cryptocurrency values are converted using the market exchange rate prevailing on the date of each transaction. Taxpayers are responsible for maintaining records to support this conversion and should retain screenshots or exported data from exchanges showing transaction prices and timestamps.
The VID has access to information reported by EU-registered crypto-asset service providers under the DAC8 directive, which requires automatic exchange of information on crypto transactions between EU tax authorities from 2026.
Additionally, international information exchange under the OECD Crypto-Asset Reporting Framework (CARF) is being implemented progressively. Latvian taxpayers should treat crypto transaction data as visible to the tax authority through these channels and ensure their declarations are complete and accurate.
Records must be retained for at least five years from the end of the relevant tax year. This should include exchange transaction histories, wallet addresses, transfer records, and any third-party valuations used to establish market value at the date of transactions.
Penalties
The VID administers a penalty regime for non-compliance with tax obligations under the Law on Taxes and Duties. Failure to file a tax return on time, underpayment of tax, and deliberate underreporting of income are all subject to financial penalties. Late payment of tax attracts an interest surcharge calculated on a daily basis on the outstanding amount.
Penalties for deliberate concealment or fraudulent underreporting are materially higher than those for negligent errors, and the VID has the power to conduct audits covering multiple years where systemic non-compliance is identified. Given the VID’s increasing access to crypto transaction data through DAC8 and CARF, the risk of detection for non-compliant taxpayers is growing.
Voluntary disclosure prior to the commencement of a VID audit or enforcement action typically results in reduced penalties. Taxpayers who identify errors in previous returns or who have omitted crypto income are encouraged to file amended returns promptly and pay any outstanding tax with accrued interest.
Proactive engagement with the VID is treated more favourably than compliance arising only as a result of investigation.
