Latvia is a small country in Eastern Europe, it is one of the Baltic countries. It still does not have an even legal framework for the regulation of cryptocurrencies - only taxation system in the form of bylaws. At the same time Latvia has several succesful Fintech businesses operating in the country.
Country overview
#110
LatviaCountry stats
Rating Points
109
This indicator describes the overall rating of a given jurisdiction on several parameters according to cryptocurrency operations - market volume, crypto regulation, business climate, taxation framework.
Crypto Penetration
1.3%
Estimated percentage of crypto users out of the country's total population based on public data.
Legal Entities
0
Number of crypto companies registered in the country based on regulator data if available or other types of public data.
Regulation Points
40
An overall assessment of the granularity of crypto regulation in a given country. A high score is also given to countries where cryptocurrency transactions are highly regulated.
Amount of crypto users
23 400
Total amount of crypto users out of the country's total population based on public data.
Taxation points
27
This figure, according to our analysts' calculations, indicates the overall level of tax burden for cryptocurrency transactions in a given country. The higher the indicator, the lower the burden.
Market volume points
0
A rough estimate of this jurisdiction's retail crypto market relative to the rest of the world. The higher the indicator, the higher the market potential.
Status of crypto
Legally allowed
General status of cryptocurrency regulation in this jurisdiction.
Crypto payments
No regulation
The legal status of cryptocurrency payments for goods and services in a given country based on information from regulators, public data and feedback from our community.
Security Level
Moderate danger
The overall level of security in a given country based on open data.
Crypto Salaries
No regulation
The legal status of cryptocurrency salaries to employers in a given country based on information from regulators, public data and feedback from our community.
Business Climate
Bad
Overall assessment of the friendliness of this country for crypto-business. This indicator takes into account the cost of obtaining a license and the attitude towards crypto entities in the country.
Stablecoin Regulation
No info
This indicator is evaluating the regulation of stablecoins in a given country. Complex regulation means that it is possible to issue steiblcoins and obtain a license for this activity. Basic regulation means that the issuance of stablecoins is possible, but not all legal aspects are defined in the law. Standard regulation means that there is a legal practice of steylcoin circulation in a given country.
Bad Factors
No
This section describes the unfavorable economic factors for crypto-business in a given country. These are countries that are under sanctions or on the FATF grey list and other factors.
Types of licenses
No licenses exist
Good
Medium
Bad
Latvia has a moderate danger security level according to our rating. Jurisdiction has 62.7 points (from 100) for safety level in Numbeo crime rating (1). Homicide level (2) is 3.6 per 100,000 inhabitants a year.
In November 2017, Latvia amended (3) its anti-money laundering legislation and introduced monitoring requirements for virtual currency service providers, including providers of virtual currency exchange services. This legislation didn’t include any regulation for crypto payments.
As a part of implementation of MiCA framework in Latvia local government has cleared some crypto regulations including taxation and crypto payments. Based on the guide published in January 2024 (4) crypto payments are regulated as a barter transactions for tax purposes.
We do not have reliable information about the payment of wages in cryptocurrencies in Latvia. If you have this information, please contact us. Probably it’s possible to pay crypto to latvian residents from foreign company and these transactions will be qualified as a barter exchange.
In 2020, the chief local financial regulator, the Financial and Capital Market Commission, urged investors to “be particularly vigilant, as cryptocurrencies operate in an infrastructure that is currently characterized by lower regulation than in the financial and capital markets.”
Notable initiatives: In 2019, the Economic Ministry of Latvia introduced two blockchain-based pilot projects. The first one should strengthen the supervisory capacity of the State Revenue Service and reduce the shadow economy through the implementation of a blockchain-based cash register. The second would ease the process of acquiring limited liability company status by using blockchain systems in the Enterprise Registry.
Latest crypto regulations in Latvia as a part of MiCA implementation were adopted by Local Tax Authority (VID) in January 2024. Although we still have no information about licenses for VASPs in Latvia, according to the aforementioned tax service guide, local businesses can perform operations with cryptocurrencies. In addition, Lithuanian and Estonian crypto exchanges operate in Riga. Finally, Latvian residents can sell cryptocurrency and declare income from its sale.
The headline PIT rate is 31% and the Headline CIT rate is 20% (payable only when profits are distributed) based on PWC taxsummaries (5). CGT tax for individual crypto sales has 20% rate based on VID guide.