Please be informed that amendments to the law One Personal Income Tax took effect on 1 January 2010 according to which income from capital and from growth of capital of individuals (residents and non-residents of Latvia) will be applicable with the personal income tax.
For convenience of its customers AS “Akciju komercbanka “Baltikums”” (Baltikums Banka) has implemented deduction of the personal income tax from the deposit interest income when the income is paid out. Baltikums Banka will deduct the tax amount (10%) and will transfer it to the State Revenue Service of the Republic of Latvia (not later than the 5th date of the month following payment of the interest) thus issuing the net income amount to customers. This will allow customers not to take any additional actions related to payment of the tax.
Example 1. If a deposit was placed at the bank for a 5-year term starting from 1 July 2005 and interest was paid as of 31 December at the end of each year, including 2009, the personal income will only apply (the bank will deduct it) to the interest calculated after 1 January 2010, i.e. for the period starting on 1 January 2010.
Example 2. If a deposit was placed at the bank on 1 July 2009 for 1 year and the interest was paid semi-annually, i.e. on 31 January 2010 and 31 July 2010, the depositor will have to pay the tax (the bank will deduct it instead of the customer) applied to the interest calculated throughout the deposit term including 6 months of 2009. This transaction is made upon receipt of the interest.
At the end of 2010, the customer will have to submit a declaration on the income obtained from deposits and personal income tax paid (deducted by the bank) from such income to the State Revenue Service.
This note is for information only. Please consult your tax advisor on all issues related to application of tax rates and payment of the tax in each individual case.
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