Latvia

Latvia classifies cryptocurrencies as capital assets and contractual means of payment, distinguishing them from legal tender. The country has a regulated environment for crypto, with a dedicated framework for crypto-asset services under EU regulations and specific tax guidelines. The State Revenue Service (SRS) is the primary authority responsible for governing cryptocurrency taxation in Latvia. Taxation operates under specific Latvian legislation that defines crypto-assets, and it integrates with broader EU regulations like the upcoming Crypto-Asset Reporting Framework (CARF) and DAC8. Income derived from the sale of crypto assets is generally subject to a flat capital gains tax rate of 25.5% upon conversion to fiat currency or for purchasing goods. However, from 2026, a holding period differentiation will apply: short-term gains (from assets held for less than one year) will be taxed at progressive personal income tax rates ranging from 20% to 31.4%, while long-term gains (from assets held for over one year) will benefit from reduced rates, though the exact percentages are not yet specified. Investors must declare capital income if it exceeds a quarterly threshold of €1000. Transactions involving only crypto-to-crypto exchanges are not currently taxable events, the cost basis carries over to the next transaction. Crypto trading itself is exempt from Value Added Tax (VAT), but VAT does apply to related services. Staking rewards will be taxed as regular income at progressive rates upon receipt, effective from 2026. Income from mining is also treated as business income, subject to progressive rates, with deductions possible for expenses like hardware and electricity if operated as a business. Decentralized Finance (DeFi) activities, including yield farming and swaps, are taxable events, with taxation determined by the specific transaction type. Non-fungible tokens (NFTs) are treated similarly to other crypto assets, with sales subject to the 25.5% capital gains tax. Significant changes are anticipated from January 1, 2026, with the implementation of the Crypto-Asset Reporting Framework (CARF) and DAC8. These will introduce mandatory reporting obligations for crypto service providers. Additionally, Latvia has introduced tax relief for non-residents on the disposal of public crypto assets, which will be effective from 2025 to 2027.