Latvia Offers Tax Amnesty on Crypto Holdings with 10% Flat Rate
Latvia is encouraging its residents to declare their undeclared cryptocurrency holdings by offering a one-time tax incentive. The country’s parliament, the Saeima, has approved urgent amendments to the Law ‘On Personal Income Tax’ that will overhaul how crypto-assets are taxed and establish a special declaration period in 2027.
A One-Time Declaration Window
The central feature of the new legislation is a flat 10% tax rate on declared crypto assets. Individuals will have a single opportunity to report their crypto holdings as of December 31, 2026. This 10% rate will be applied to the market value of these assets on that specific date.
The scheme encompasses assets held in accounts with EU-licensed Crypto Asset Service Providers (CASPs), as well as those stored in self-custodied digital wallets. However, individuals currently involved in tax proceedings related to crypto income will not be eligible for this special provision.
Future Crypto Taxation Framework
Beyond the declaration window, the amendments introduce a significant change to the ongoing taxation of crypto. A new investment-account model for crypto-assets will be permitted. Under this model, tax liability will only be triggered when withdrawals from the account exceed the initial investment amounts. Individual transactions within the account will not be taxed separately.
These investment accounts will be accessible through crypto-asset service providers licensed within the European Union and operating under the Markets in Crypto-Assets (MiCA) regulation, the EU’s comprehensive framework for licensing and supervising crypto firms.
The legislative changes align with the EU’s DAC8 directive, which mandates the automatic exchange of information between tax authorities to enhance transparency and compliance within the cryptocurrency sector. This initiative also builds upon Latvia’s previous efforts to attract foreign crypto businesses, including a waiver of a 3% levy for non-residents from 2025 to 2027.
The legislation is not yet fully operational. The Cabinet of Ministers is expected to release supporting regulations by December 30, 2026, to facilitate its implementation.
Implications for Taxpayers and Firms
For Latvian residents holding undeclared crypto, the new framework offers a straightforward path to compliance with a predictable 10% tax on the market value as of a set date. However, the rate is based on current market value, not historical cost. This means individuals who acquired assets early and hold significant unrealized gains might find the 10% rate appealing, while those who purchased near market peaks may view it differently. The specific valuation date of December 31, 2026, means that price fluctuations leading up to the end of the year will directly influence the tax liability.
For cryptocurrency firms, the integration with MiCA is a key development. The investment-account model will exclusively be available through EU-licensed providers.
Key dates for implementation include December 30, 2026, for the Cabinet’s regulations, April 1, 2027, for the opening of declarations, and July 23, 2027, as the deadline for tax payments.
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