Tax Credit for Individuals
According to the law “On personal income tax” by donating to one of Latvian Republic registered associations, foundations and religious organizations which have be granted public benefit organization status in accordance with the Public Benefit Organizations Law, before the income taxation of the annual taxable income amount will be deducted the amount of the donation, however this amount cannot exceed 20% of taxable income.
In order to receive a tax refund for donations:
- fill out annual income declaration indicating the donated amount and submit to the State Revenue Service;
- -State Revenue Service recommends to submit to the Ministry of Finance a copy of declaration of a public benefit organization status to Latvian SOS Children’s Village Association;
- submit to the State Revenue Service documents certifying Latvian SOS Children’s Villages Association donated sum amount (cash register receipt or bank payment order, these documents must be maintained for three tax years).
Tax breaks for Businesses
According to the law “On Corporate Income Tax” by donating to the budgetary authority, to Latvian Republic registered associations, to foundations and religious organizations or institutions which have been granted public benefit organization status, in accordance with the Public Benefit Organizations Act, you are entitled to a tax credit. Income tax is reduced by 85% of the donated amount, but the total deduction cannot exceed 20% of the total amount of tax.
Property or financial resources of the person on a contractual basis, free of charge transfers to the budgetary authority or public benefit organizations (having such status was granted in accordance with the Public Benefit Organizations Law) its articles of association, constitution or by-laws to meet these objectives are to be treated as a donation if the recipient has not determined corresponding duty to take action to be regarded as compensation.
A tax credit under the law will not apply if the donation target set in the donation recipient contains a direct or indirect reference to a specific donation beneficiaries, which is a donor related company or a related person or employee of the donor, or the employee’s family member.
To receive this tax credit:
- fill in the corporate income tax annual statement indicating the amount of the donation;
- submit declaration to the State Revenue Service procedures;
- State Revenue Service must submit a copy of the decision of the Ministry of Finance for the public benefit organization status of Latvian SOS Children’s Village Association and documents certifying that Latvian SOS Children’s Village Association donated sum amount (cash register receipt or bank payment order, which must be maintained for five tax years).