Pros for obtaining a property in Latvia
- Visa free travel into 179 countries, including US and Canada.
- Long standing partner of NATO, the EU, the EUR Zone Schengen since accession.
- GDP per capita of Latvia is 18,000 USD per year.
Property prices are still below 1,000 EUR, but the new ones in the capital city will cost 2,000-7,000 EUR/m2.
The yields are not great (around 4%), but investing in Riga's Old Town may bring you the yield of 6-7% annual yield.
GDP has sustained stable and Latvian economy is really good' in the years of pandemic it only dropped by 3.5%, which is much better than most of the West-European countries.
Salary increase has been 600 to 860 EUR in the last few years.
National debt is around 50% of GDP.
Tourist numbers are growing steadily.
The process of buying real estate is simple and regulated; and it is very fast.
Residence permits on the grounds of owning real estate
250,000 EUR investment into Latvian properties is necessary to obtain this kind of residence permit. You would not be permitted to buy agricultural land, woods or forests though. Each property you buy would have to be valued at least 80,000 EUR to join the scheme, to which a 5% state tax is added and a 2% state duty. The residence is then granted to the dependants such as spouse, minor children and parents.
The residence permit is granted for 5 years with the annual renewable requirement.
Residence permits on the grounds of company formation
This is not exceptionally necessary and not even advised for taxation reasons once you apply for the residence permit on the grounds of purchasing a property.
Taxes & Rental income tax
Dual citizenship is permitted but the profit derived globally does get taxed. Personal income tax rate is 31%, CIT is 20%, VAT is 20%, social security tax is 35.09% and they charge taxes on the worldwide income.
Purchasing estates is cheap - the buy-sell costs are very affordable. 21% VAT on the new builds; older buildings are 2% stamp duty and 0.5% of the notary; sales party pays 3%.
No inheritance tax, no city tax, no wealth tax. CGT is 20% (up to 20,004 EUR) - 31% (above 64,000 EUR) and fairly good deductions are allowed. Alternatively a 10% flat fee tax is allowed with no deductions.
Property taxes are higher than in Lithuania or Estonia, but lower than in the Western Europe.
Which residence permits offer a path to permanent residency and citizenship?
Various, such as spouse residence permit, employment, etc. You can apply for a passport after 5 years of permanent residence, which makes it at least 10 years of living in Latvia.
Restrictions & Challenges
20% sales rate is applied to the new builds.
The population of Riga and Latvia is actually going down, which is not a good indicator to invest in the real estate market, and is different to the other Baltic states capital - Vilnius or Tallin.
There are a lot of foreign buyers - up to 70% in Riga. There is risk of depression when they liquidate their investments.
Unemployment is quite high.