Banks & Finances Latvia

In Latvia, there are about two dozen banks in operation, including both local banks and branches of foreign financial institutions. For foreign citizens wishing to open an account, the following banks are considered the most accommodating:

Swedbank

One of the largest banks in Latvia, serving over a million private clients. It offers a wide range of services: current accounts, plastic cards, loans, deposits, insurance, and investment products. Internet banking and a mobile app are available for all types of accounts. Opening and servicing a checking account is free with active use.

SEB Banka

A major bank with an extensive network of branches and ATMs. It provides services for current and savings accounts, lending, investment products, and insurance. Internet banking and a mobile app are available in several languages, including English and Russian, which makes it easier for foreigners to use.

Citadele Banka

The bank offers a wide range of services for private and corporate clients. It is known for its innovative approach, including the possibility of remote account opening through a mobile app. Services are provided in several languages, facilitating interaction for foreign clients.

Luminor Bank

Formed by the merger of DNB and Nordea banks in the Baltic countries. It offers standard banking services, including current accounts, loans, and investment products. It has experience working with foreign clients and provides services in English.

BlueOrange Bank

Specializes in serving international clients, offering personalized banking solutions. It provides services in multiple languages and has experience working with foreign citizens.

Note that in recent years, some foreign citizens have encountered difficulties opening accounts in Latvian banks due to strengthened measures to prevent money laundering and terrorism financing. Therefore, it is recommended to contact the chosen bank in advance to clarify all requirements and conditions.

Overall, the aforementioned banks have a positive reputation in working with foreign clients and offer a wide range of services that meet international standards.

Opening a bank account in Latvia for foreign citizens requires a careful approach to the choice of bank and preparation of the necessary documents. The process may vary depending on the applicant's status (resident or non-resident) and the specific bank's policy.

The account opening procedure usually includes the following steps:

Appointment: Many banks require an appointment for visiting a branch.

Application submission: Completing an application form and providing necessary documents.

Document verification: The bank verifies the provided data.

Decision: After verification, the bank notifies about the decision to open an account.

Required documents

Document requirements may vary depending on the applicant's status:

For Latvian residents: Passport or eID card.

For citizens of EU and EEA countries:

- Identity document.

- Justification for opening an account.

- If necessary, supporting documents.

For non-residents:

- Passport.

- Proof of residential address (e.g., utility bills).

- Documents confirming the source of income or occupation.

- In some cases, an EU citizen certificate or residence permit in Latvia.

Features for non-residents

Since 2015, Latvia has tightened conditions for opening accounts for non-residents. Banks conduct thorough client checks, including studying financial history and confirming the source of funds. Some banks may refuse to open an account if the client's activities are not connected to Latvia.

Possibility of remote account opening

Some banks, such as BlueOrange Bank, offer online identification services, allowing accounts to be opened remotely via video call. However, this service is only available to citizens and residents of Latvia with a Latvian passport.

Recommendations

Connection with Latvia: Having ties with the country (relatives, property, business) increases the chances of successfully opening an account.

Preliminary Consultation: It is recommended to contact the chosen bank in advance to clarify the requirements and procedures for opening an account.

Document Preparation: Ensure that all documents are up-to-date and translated into the required language (usually Latvian or English).

Withdrawing cash from a foreign bank card in Latvia is a relatively simple process, but it's important to consider certain nuances to avoid unexpected fees and restrictions.

Using ATMs

ATMs (Automated Teller Machines) from various banks such as SEB, Swedbank, Citadele, and Luminor are widely available in Latvia. Most of them support international payment systems, including Visa, Mastercard, and UnionPay, allowing cash withdrawals from foreign cards.

Cash Withdrawal Fees

The amount of the cash withdrawal fee depends on several factors:

ATM Owner Bank: Some banks may charge an additional fee for using their ATMs with foreign cards.

Card Issuer Bank: Your home bank may have its own fees for international transactions. It is advisable to familiarize yourself with your bank's fees for withdrawing cash abroad beforehand.

Currency Conversion: If the currency of your account is different from the euro, currency conversion will occur during the cash withdrawal, which may involve additional costs.

Cash Withdrawal Limits

Banks set certain limits on the amount that can be withdrawn in one transaction or within a day. These restrictions may vary depending on the specific bank's policy and the type of card.

Recommendations for Minimizing Costs

Choosing an ATM: It is preferable to use ATMs from major banks such as SEB and Swedbank, which may offer more favorable conditions for withdrawing cash with foreign cards.

Avoid Dynamic Currency Conversion: Some ATMs offer to convert the withdrawal amount to your account currency at their rate. This is usually less advantageous, so it is recommended to select the option to withdraw in the local currency (euro) without conversion.

Checking Fees: Carefully read the ATM screen messages for possible additional fees. If the ATM warns of a fee set by the ATM owner, it is better to cancel the transaction and find another ATM.

Using Alternative Payment Methods: Bank cards are widely accepted in Latvia for paying for goods and services. Paying by card may be more advantageous than withdrawing cash, especially considering possible fees.

Additional Tips

Contact Your Bank: Before traveling to Latvia, it is recommended to inform your bank about planned transactions abroad to avoid card blocking due to security reasons.

Using Mobile Apps: Many banks offer mobile apps that allow tracking transactions and monitoring expenses in real-time.

Sending money from Latvia to other countries is possible through various methods, each with its own features, fees, and processing times.

Bank Transfers

Latvian banks provide international transfer services to various countries and currencies. The most common ones are SEPA and SWIFT transfers.

SEPA Payments: Intended for euro transfers to countries in the European Union, the European Economic Area, and also to Switzerland, Monaco, San Marino, Andorra, and the United Kingdom. Such transfers are usually processed within one business day and have low fees. For making a SEPA payment, you need:

- The recipient's account number in IBAN format.

- The name of the recipient.

- BIC/SWIFT code of the recipient's bank (in some cases).

SWIFT Payments: Used for transfers to other countries and currencies. The processing time for such transfers can range from 1 to 5 business days, depending on intermediary banks and the currency of transfer. SWIFT payment fees are usually higher than those for SEPA. For making a SWIFT payment, you need:

- The recipient's account number in IBAN format.

- The name of the recipient.

- BIC/SWIFT code of the recipient's bank.

- The address of the recipient's bank (in some cases).

Online Money Transfer Services

There are specialized online services providing international transfer services with competitive exchange rates and low fees.

Wise: Offers transfers in more than 50 currencies with transparent fees and real exchange rates. Transfers are made through their platform, and the funds can be credited to the recipient’s bank account.

Revolut: Allows sending money from Latvia in more than 70 currencies using competitive exchange rates. Transfers can be made through the mobile app.

Paysera: Provides the ability for international transfers with low fees and quick credit times. Transfers can be made through their mobile app or internet banking.

Money Transfer Systems

International money transfer systems allow sending money in cash or to bank accounts without the need to open an account in a bank.

Western Union: One of the largest money transfer systems that allows sending money to most countries around the world. Transfers can be made online or through agent locations. The recipient can receive money in cash or to a bank account.

KoronaPay: A service that allows quick and commission-free money transfers from Latvia to Russia, Belarus, Ukraine, and other countries. Transfers are made through the mobile app, and the recipient can receive money in cash or on a card.

Mobile Payment Systems

Some mobile apps allow international transfers with minimal fees.

TransferGo: Offers fast and inexpensive transfers to bank accounts in various countries. Transfers can be made through their mobile app or website.

Paysend: Specializes in card-to-card transfers, allowing money to be sent directly to the recipient’s bank card. Transfers are made through their mobile app or website.

Foreign citizens can obtain a loan or mortgage in Latvia; however, the process is associated with certain complexities and requirements. Let's consider the main aspects of lending for non-residents.

Mortgage Lending for Foreigners

Latvian banks provide mortgage loans to foreign citizens, but the conditions may be stricter compared to residents. In recent years, control over banking operations has intensified, leading to more thorough checks on non-residents. Banks carefully study the borrower's income, the liquidity of the acquired property, the family budget, and other credit obligations. Particular attention is given to the transparency of income sources and the borrower’s connections with Latvia, such as business or salary received here.

Mortgage Lending Conditions

Down payment: For foreign citizens, the down payment usually amounts to 30–40% of the property’s value.

Loan amount: Mortgages for foreigners are usually provided in the amount of 150,000 to 250,000 euros.

Interest rate: The rate is set individually and depends on the financial condition of the borrower and the characteristics of the property.

Borrower Requirements

Credit history: Having a positive credit history and stable income increases the chances of obtaining a loan.

Documents: Banks may request a resume on activities, income, and family status.

Consumer Loans for Foreigners

Foreign citizens can be eligible for consumer loans in Latvia subject to certain conditions:

Age: From 18 to 70 years.

Legal status: Possession of a visa or residence permit.

Residence period: Minimum of 6 months in Latvia.

Income: A permanent source of income and regular salary.

Documents: Passport, registration certificate, income certificate.

Recommendations for Foreign Borrowers

Income transparency: Ensure the transparency and documentary support of your income.

Connection with Latvia: Having ties with the country, such as work or business, increases the chances of loan approval.

Bank consultation: It is advisable to contact the chosen bank in advance to clarify the conditions and requirements.

Thus, foreign citizens can obtain a loan or mortgage in Latvia, but success depends on meeting several conditions and bank requirements. Thorough preparation and transparency of financial information will help increase the chances of loan approval.

In Latvia, strict restrictions are imposed on the use of cash for major purchases, such as real estate and cars.

Real estate purchase

According to Latvian law, real estate transactions cannot be conducted in cash, regardless of the transaction amount. This means that payment must be made exclusively through non-cash methods, such as bank transfers.

Car purchase

For transactions involving the sale of category M1 (passenger cars) and N1 (goods vehicles with a total weight of less than 3.5 t) vehicles, the following restrictions apply:

Transaction amount up to 7200 euros: payment can be made in cash.

Transaction amount over 7200 euros: payment must be made through non-cash methods.

However, there are plans to lower the cash transaction threshold for car purchases to 3000 euros, which will require non-cash payments for transactions exceeding this amount.

Recommendations for paying for major purchases

Non-cash payments: For real estate and car purchases exceeding the established limits, it is recommended to use bank transfers. This ensures transaction transparency and complies with legal requirements.

Bank cards: Many sellers accept payment via debit or credit cards. However, there may be limits for large sums, so verify the possibility of such payment in advance.

Mobile payments: Services like Google Pay and Apple Pay allow contactless payments. However, they are more commonly used for small and medium-sized purchases, and their use for large transactions is limited.

Declaration of cash transactions

If a transaction is conducted in cash and its amount exceeds 1500 euros, the participants are required to submit a declaration to the State Revenue Service no later than the 15th of the month following the reporting month.

Transaction security

When making major purchases, it is recommended to:

Verify the seller: Ensure the seller's reliability and integrity.

Legal support: Engaging a lawyer can help avoid potential risks and ensure the legality of the transaction.

Documentary procedures: All agreements should be documented in writing with signatures from both parties.

In Latvia, various saving and investment methods are available, each with its own features, advantages, and risks. Let's examine the main ones:

Bank deposits

Bank deposits are a traditional and popular method of saving funds. They ensure capital preservation and provide a fixed income in the form of interest. However, interest rates on deposits are often low, especially in a low-inflation environment. Term deposits are suitable for those planning long-term investments and who have significant amounts.

Savings accounts

Savings accounts allow flexible management of savings, providing the ability to deposit and withdraw funds at any time. They are suitable for creating a financial safety net for unforeseen expenses. However, interest rates on these accounts are usually lower than on term deposits.

Pension savings

Second pension level: Mandatory for all working citizens, with 6% of the salary transferred monthly. Additional contributions are not possible, and funds are accessible only upon retirement.

Third pension level: Voluntary savings, allowing for the increase of future pensions. Contributions to the third level grant the right to personal income tax returns of 20% of the contributed amount, making this tool attractive for long-term investments.

Life insurance savings

This tool combines insurance coverage and the ability to accumulate funds. Regular contributions help to build up capital by a certain term, for example, upon retirement. Additionally, contributions to life insurance savings also grant the right to personal income tax returns.

Investments in stocks and bonds

Investing in securities offers the possibility of obtaining higher returns compared to traditional savings methods. However, such investments carry increased risks and require specific knowledge. For novice investors, it is recommended to start with learning the basics and consultations with financial specialists.

Investment Funds and ETFs

Investment funds allow you to invest in a diversified portfolio of securities managed by professionals. This reduces risks and simplifies the investment process. ETFs (exchange-traded funds) provide the opportunity to invest in a wide range of assets with low fees. However, access to certain ETFs may be restricted for residents of Latvia.

Real Estate Investments

Purchasing real estate is a popular way to preserve and grow capital. Income can be generated from both rent and the appreciation of the property. However, such investments require significant initial funding and thorough market analysis.

Alternative Investments

Investing in precious metals, art, or other alternative assets can be a way to diversify a portfolio. However, they are often associated with low liquidity and require a deep understanding of the market specifics.

Recommendation: Consulting with financial advisors can help avoid common mistakes and choose the optimal strategy.

In Latvia, the tax obligations for foreign nationals depend on their tax status: resident or non-resident. This status affects the scope of taxable income and applicable tax rates.

Determining Tax Residency

A foreign national is considered a tax resident of Latvia if one of the following conditions is met:

- Registered residence: the person has officially registered their place of residence in Latvia.

- Length of stay: the person is physically present in Latvia for 183 days or more within any 12-month period.

- State service: a Latvian citizen working abroad for a Latvian employer.

Taxation of Tax Residents

Tax residents of Latvia are required to pay taxes on their worldwide income, regardless of its source. A progressive income tax scale applies as follows:

- 20%: on income up to 20,004 euros per year.

- 23%: on income from 20,004.01 to 78,100 euros per year.

- 31%: on income exceeding 78,100 euros per year.

Capital income (interest, dividends) is taxed at a rate of 20%.

Taxation of Tax Non-Residents

Non-residents of Latvia are taxed only on income derived from Latvian sources. Such income includes:

- Salaries: income from employment in Latvia.

- Real estate income: rental or sale of real estate located in Latvia.

- Capital income: interest, dividends, and other investment income in Latvia.

The tax rates for non-residents are similar to those for residents, applied to the respective types of income.

Social Contributions

Foreign nationals working in Latvia are required to pay social contributions on par with Latvian citizens. The amount of contributions depends on the type of activity and employment status.

Income Declaration

Tax residents of Latvia are obliged to submit an annual tax declaration.

Non-residents submit a declaration only upon receiving taxable income in Latvia.

Double Taxation Avoidance Agreements

Latvia has entered into double taxation avoidance agreements with a number of countries. These agreements regulate in which country and to what extent taxes are to be paid, preventing the double taxation of the same income.

Recommendations for Foreign Citizens: If necessary, consult with tax advisors to receive detailed information and assistance in fulfilling tax obligations.

In Latvia, the process of tax declaration for foreign nationals depends on their tax status: resident or non-resident. This status determines the scope of taxable income and the obligations to file declarations.

Residents are required to submit an annual income declaration if:

- Income is received from abroad.

- Income is received without tax being withheld at the source.

- There is a need to adjust tax obligations in connection with the progressive tax scale.

The deadline for submitting the declaration is usually until June 1 of the following year, but if the annual income exceeds a certain threshold, the deadline may be extended to July 1.

 

Non-residents of Latvia are required to declare and pay taxes only on income received from Latvian sources, such as:

Salaries: income from working activities in Latvia.

Rental income: proceeds from renting out property located in Latvia.

Capital income: interest, dividends, capital gains received in Latvia.

Non-residents must file a declaration if they have received taxable income in Latvia from which tax was not withheld at the source.

Declaration process

The State Revenue Service of Latvia provides an electronic declaration system through which tax returns can be submitted. Access requires registration and the presence of an electronic signature or another authentication method.

Steps to file a declaration through EDS:

- Logging in: authorize in EDS using an electronic signature or another authentication method.

Selecting the declaration form: choose the appropriate annual income declaration form.

Filling in data: enter information on the income received, taxes withheld, and applicable deductions.

Checking and submitting: ensure the accuracy of the entered data and submit the declaration through the system.

After submission, the SRS will calculate tax obligations. In case of tax overpayment, a refund is possible, and in the case of underpayment, a top-up is necessary.

Using electronic services and consulting with professionals can help simplify this process and avoid potential errors.

In Latvia, self-employed persons and freelancers have a special legal status that determines their tax obligations, social guarantees, and access to various benefits.

Definition of a self-employed person

A self-employed person in Latvia is an individual who independently conducts economic activities without forming a legal entity. Such activities include:

- Individual entrepreneurial activity: providing services, producing goods, and selling them.

- Creative activity: working as an artist, writer, musician, etc.

- Professional activity: consulting services, legal practice, accounting services, etc.

Registration of a self-employed person

To officially recognize the status of a self-employed person, registration with the State Revenue Service of Latvia is necessary. Registration is carried out by submitting an application through the electronic declaration system or in person at the State Revenue Service office.

Tax obligations

Self-employed persons are required to pay the following taxes:

Personal income tax: a progressive tax scale applies:

- 20%: on income up to 20,004 euros per year.

- 23%: on income from 20,004.01 to 78,100 euros per year.

- 31%: on income over 78,100 euros per year.

Value-added tax (VAT): if the annual turnover exceeds 40,000 euros, the self-employed person is obliged to register as a VAT payer and pay tax at a rate of 21%.

Social contributions

Self-employed persons are required to pay state social insurance contributions, which provide access to social guarantees such as pensions, sick leave, and other benefits. The contribution rate is 31.07% of taxable income. However, if the annual income does not exceed 20,004 euros, the contribution rate may be reduced.

Benefits and support for the self-employed

The Latvian government and various organizations provide support to self-employed persons:

Training programs and consultations: entrepreneurial support centers offer free courses and seminars on business development, financial planning, and other relevant topics.

Financial support: there are micro-lending and subsidy programs available for the self-employed aimed at business development and competitiveness enhancement.

Participation in government procurement: self-employed persons have the right to participate in tenders on an equal basis with legal entities, which opens up additional opportunities for obtaining contracts.

Features for foreign nationals

Foreign nationals wishing to work in Latvia as self-employed persons should consider the following:

Work and residence permits: appropriate permits must be obtained to legally stay and conduct activities in the country.

Tax residency: determines which income is subject to taxation in Latvia.

Double taxation avoidance agreements: Latvia has such agreements with a number of countries, allowing to avoid double taxation of the same income.