Taxes from the sale of agricultural land

What are the taxes from the sale of agricultural land?

The sale of real estate in Latvia is subject to a 20% personal income tax (PIT). But it is not always applied. The sale of agricultural land is not subject to personal income tax in the following cases:

• When selling the only real estate.
• PIT is not applied if you sell agricultural land to an agricultural producer.*
• If you sell agricultural land property to the state (Altum)

When is PIT applied?

• if the buyer is not an agricultural producer.

Agricultural producer: a company or farm that has, in at least one year in the last three years, more than half of its revenue from economic activities, but not less than 3000 euros per year, coming from agricultural activities. Or the buyer receives state or European Union support payments for agriculture and rural development as a new farmer. You will not have to pay taxes from the sale of agricultural land when selling to such a buyer.

Example.

John wants to sell agricultural land because he owns an apartment in the city. John acquired this property in 1995 for 7000EUR. RESSELLER Ltd is ready to buy John’s property for 70,000EUR.

John will have to pay a 20% personal income tax because the buyer does not meet the status of an agricultural producer.

The capital gain in this example is 63,000EUR. The State Revenue Service will withhold 20% personal income tax. John will have to pay 12,600EUR after selling the property.

When is personal income tax due?”

If the transaction is subject to 20% personal income tax, this transaction must be declared by the 15th of the following quarter. Payment must be made by the 30th of the same month.

If the transaction is not subject to 20% personal income tax, such a transaction must be declared (Appendix D1 to the declaration) by January 15th of the following year.

Where can the transaction be declared?

The real estate sales transaction must be declared in person at the State Revenue Service or by logging into the EDS system.

***In the State Revenue Service’s information summary ‘Income tax on capital gains’, there is a reference – an invitation to consult with the State Revenue Service before selling real estate. Therefore, in an individual situation, questions about the application of tax should be clarified with the State Revenue Service.