Published: 29.10.2021.

The purpose of the company car tax is to apply the tax for such vehicle owned or held by merchants, a branch of a foreign merchant or a farm, which is used not only for the performance of economic activity, but also for personal needs.

A merchant or a branch of the foreign merchant which is entered in the Commercial Register, or an agricultural farm, which is registered in the Enterprise Register and which owns or holds a passenger or goods vehicle – an object of a company car.

The taxation period of the company car tax is a calendar year.

The company car tax shall be paid for the following vehicles registered in the ownership or holding of a merchant or a branch of the foreign merchant, or an agricultural farm, or used on the basis of an employment contract, or lent from a person other than a merchant or a branch of the foreign merchant, or an agricultural farm:

  1. a car in the ownership or holding of a merchant, which by its construction and internal equipment is intended for the carriage of passengers and their baggage, the number of seats of which, excluding the driver's seat, does not exceed eight seats and which has been registered in the register as a car, passenger or general use car;
  2. a goods vehicle with gross weight up to 3000 kilograms which is registered as a heavy goods vehicle and which has more than three seats (including driver's seat).

Company car tax rate (euro per month):

Taxable object

  

The company car tax shall be payable for such vehicle, which was registered for the first time after 1 January 2009 and for which information regarding the maximum engine power in kilowatts (kW) is contained in the vehicle registration certificate, in the following amounts

up to 110 kW

33

between 111 kW  and 130 kW

0,3 per kW

between 131 kW and 150 kW

0,35 per kW

between 151 kW and 200 kW

0,5 per kW

above 200 kW

0,7 per kW

Electric car

15

Hybrid

25

Vehicle, which was registered for the first time before 1 January 2009

60

 

  • the company car tax for each vehicle in the ownership or holding of a taxpayer shall be paid into the State budget for the relevant time period, i.e., for the months, counting from the beginning of a taxation period in which these vehicles are in the ownership or holding of the taxpayer;
  • a taxpayer shall pay the company car tax prior to the State technical inspection to be carried out in a relevant taxation period into the State budget for the months from the beginning of the relevant taxation period until the month (including) in which the State technical inspection is carried out;
  • a taxpayer shall pay the company car tax into the State budget for a vehicle which is being registered in Latvia for the first time for the calendar month in which the vehicle is registered on the name of a taxpayer as the owner or holder of the vehicle on the day when the vehicle is registered in the register;
  • a taxpayer, if the taxpayer is not registered in the register as a holder of a vehicle, however he or she uses the vehicle on the basis of the employment contract or on the basis of the lending contract which has been entered into with a person who is not a taxpayer, the company car tax shall be paid each month until the 15th date of the following month during the validity of such contract;
  • a taxpayer shall pay the rest part of the company car tax into the State budget for the remaining months of the taxation period in the next taxation period prior to the State technical inspection of the vehicle;
  • a taxpayer has the right to pay the company car tax prior to the State technical inspection in full amount for the whole taxation period.

The procedures for the reimbursement of the company car tax are determined in Section 15 of the Law on the Vehicle Operation Tax and Company Car Tax

The company car tax shall not be paid:

  • for a vehicle which is registered as an emergency vehicle or is being registered as an emergency vehicle;
  • for vehicles in the ownership or holding of a person authorised by the manufacturer of vehicles, which are used as demonstration vehicles and which a merchant or a branch of the foreign merchant has declared in the register;
  • if not less than 90 per cent of the total turnover of a merchant or a branch of the foreign merchant is made up from the lease services of or the lease services of such vehicles together with trading in vehicles, for the vehicles intended for short-term lease in the ownership or holding thereof, which the merchant or the branch of the foreign merchant has declared in the register maintained by the Road Traffic Safety Directorate;
  • for vehicles which a taxpayer uses only for the needs of his or her economic activities and has declared in the register maintained by the Road Traffic Safety Directorate;
  • for the time period when the vehicle has not been at the disposal of the taxpayer as a result of a criminal offence;
  • for the time period when the vehicle had been pledged in the cases provided for in the laws and regulations and the use of it in road traffic has been prohibited;
  • for the time period when the vehicle had been removed from the register for alienation in Latvia or for bringing out of Latvia, or the vehicle registration had been temporarily suspended by handing over the number plates;
  • for a vehicle having been registered or being registered with the status of a historic motor vehicle;
  • for a vehicle which is registered or is being registered as a sports vehicle;
  • for the time period when the vehicle registered in Latvia had been brought out of Latvia and had been registered in a foreign country;
  • by a taxpayer, if he or she cultivates the land in his or her ownership, permanent use or lease to be used for agriculture, which has been approved for the receipt of the single area payment in the Rural Support Service;
  • for a vehicle which is removed from the register by the insolvency administrator of the vehicle owner for alienation in Latvia or bringing out of Latvia;
  • by a merchant or a branch of the foreign merchant, or an agricultural farm for a vehicle of the natural person which is used on the basis of a lease contract.

Records of the use of a vehicle owned or held by a taxpayer for economic activity shall be carried out using route control systems which ensure recording and holding of the data related to each trip.

A taxpayer shall declare vehicles which may be exempted from the payment of the company car tax to the Road Traffic Safety Directorate by the 25th date of the month when the right to exemption has entered into force. The exemption shall be applied until the tax exemption is no longer due, i.e., it no longer meets the criteria laid down by law in order to continue to apply the tax exemption. Such vehicle shall be declared by the taxpayer in the Register within five days after the loss of rights to apply the tax exemption.

  • Information reports and tax studies are available her.