When asset-backed securities were first introduced, the standard withholding tax rate applied to all private investors was 20% (reduced with a tax certificate).
The Latvian fintech community, of which we are proud to be a part, worked diligently to pass new legislation, and as a result, EU residents will now be subject to a 5% withholding tax without the need to provide additional tax certificates, which will go into effect on January 1st, 2023.
What does this mean for you as an investor?
The 5% withholding tax rate will apply to investments in asset-backed securities beginning January 1st, 2023. Prior to that date, interest income is subject to the current tax rates. Any interest income received after the reduced rate goes into effect will be taxed at a 5% rate, regardless of when the investment was made.
There is no need to submit a tax certificate to have the 5% tax rate applied; this is now the standard rate for all private EU resident investors.
The 5% withheld tax will still be considered tax paid, and investors can use it to offset their state’s tax payment at the end of the year in most countries.
Our investors have already invested over €14 million in asset-backed securities, and there are more great investment opportunities with 13% annual returns published on a regular basis, so take advantage of this opportunity to grow your capital.
The following changes only apply to investments in asset-backed securities. The changes do not apply to private individuals who are not tax residents of EU or EEA countries, as well as legal entities.
If you are not a tax resident of the EU or EEA, you can submit your tax certificate after January 1st, 2023 to be eligible for the reduced tax rates. Information on withholding tax rates and tax treaties can always be found in our Tax FAQ section.
Interest income from asset-backed securities will continue to be subject to a 20% withholding rate for Latvian tax residents.
For investments in cessions originating from the Czech Republic, the tax certificate confirming the treaty between your country of residence and the Czech Republic is still required for the reduced rates to apply.