Tax on gambling winnings in Latvia

Winning always feels good, but the question of whether you have to pay tax on a win in Latvia tends to cause confusion. This article is general information about how gambling winnings are taxed and can't replace individual tax advice or an official explanation from VID (the State Revenue Service). Before you make any decisions, check the current information on the VID website or talk to a tax specialist.

In this article we'll look at which winnings are taxable, what the VID tax rate on winnings is, how to declare winnings in your VID tax return and what to do with winnings from foreign casinos.

What counts as a gambling or lottery win?

To make sense of the tax rules, we first need to clarify what actually counts as a gambling or lottery win. Latvian law splits them into several categories, and the tax treatment depends on which one applies.

Gambling winnings are winnings from:

• casinos and gaming halls (table games, slot machines);
• totalisators and betting (bookmaking) companies;
• online gambling platforms operating in Latvia with the appropriate licence.

Lottery winnings are regulated separately. Latvia's national lottery winnings have their own rules, and their tax treatment can also differ depending on the type and size of the win.

Jackpot winnings are unusually large wins, typically from progressive jackpots at casinos or on slot machines. The same basic principles apply to them, but their sheer size means they will almost always exceed the tax threshold.

Which winnings are tax-free in Latvia - the 3000 euro threshold

The key principle in Latvia is the annual threshold: winnings of up to 3000 euros within a calendar year are generally not subject to personal income tax. This means that if your total winnings from all gambling and lotteries over the year don't exceed 3000 euros, you don't have to pay tax on them.

If your total winnings for the year exceed 3000 euros, only the amount above the threshold is taxable. For example, if you've won a total of 4500 euros over the year, you'll pay tax on 1500 euros (the amount above the 3000 euro limit).

This threshold applies to your total winnings for the year, not to each individual win. So even if every single win is small, but the yearly total goes above 3000 euros, you need to assess whether tax applies.

VID tax rate on winnings: how much do you pay?

Once your winnings exceed 3000 euros a year, the part above the threshold is taxed at the personal income tax (IIN) rate. In Latvia, that rate is currently set at 23%.

A practical example:

• Total winnings for the year: 5000 euros.
• Tax-free portion (up to 3000 euros): 3000 euros.
• Taxable portion: 2000 euros.
• Tax (23% of 2000 euros): 460 euros.

Non-residents may be subject to different rules, which can depend on double taxation treaties.

Lottery winnings, as well as some other types of gambling, may have separate rules, so always check which type of win you're dealing with.

When the payer withholds the tax

You don't always have to pay the tax yourself. In some cases the tax is withheld at the moment of payout - the gambling operator or whoever pays out the win does it for you. That means the amount landing in your account already has the tax deducted.

This usually applies to large wins, for example:

• casino winnings above a certain amount;
• jackpot winnings;
• some lotteries with bigger prizes.

If the payer has withheld the tax, you normally don't have to make any further payments to the state for that particular win. However, if you've had several wins from different sources over the year, you'll need to report the combined information in your tax return so VID can verify that the tax was applied correctly.

How to declare winnings in your VID tax return?

If you have to declare a win yourself, you do it by filing an annual income tax return in VID's Electronic Declaration System (EDS).

Practical steps:

1. Log in to EDS with your authentication method.
2. Open your annual income tax return form (for the relevant tax year).
3. Find the section for other income (not from employment) - this is where gambling and lottery winnings go.
4. Enter the total amount of your winnings and the other requested details.
5. Submit the return and pay the calculated tax.

Filing deadlines: the annual income tax return for the previous year usually has to be filed by 1 June. 

If you're not sure how to fill in the return, we recommend using VID's advisory services or the digital tools that calculate the tax automatically once the return is complete.

Special cases: winnings from foreign casinos, jackpots and lotteries

One of the trickiest questions is tax in Latvia on winnings from foreign casinos. If you've won at a foreign online casino or gaming platform that isn't registered in Latvia, you still have to declare that win in Latvia if it exceeds the relevant threshold. Winnings from foreign gambling sites must be declared even if the site settles in a foreign currency - in that case you convert them to euros.

Jackpot winnings often exceed 3000 euros and are therefore almost always taxable. That said, most casinos licensed in Latvia withhold the tax at the time of payout, so all you need to do is check whether the payer has done so and whether you've been given a document confirming it.

The tax rules for Latvian lottery winnings can vary: some state-run lotteries may have a special regime, while commercial lotteries fall under the general rules. It's always worth asking the organiser for clear written confirmation of whether tax has already been withheld from your win.

How to pay the tax and how to avoid penalties

If you have to pay the tax yourself, there are several ways to do it:

• via EDS - the tax is calculated in the return and you receive a payment order;
• by bank transfer to the VID account (details are available on the VID website);
• in person at a bank.

It's important to stick to the payment deadlines. If the tax is paid late, late-payment interest applies. If a win isn't declared at all, you can face penalties for tax evasion, which significantly increase the total cost.

To stay out of trouble, we recommend:

• keeping all documents that prove your winnings (receipts, payout statements);
• registering your account on the payer's platform with your real details;
• keeping track of your accumulated winnings over the year;
• calling the VID information line before you file.

Frequently asked questions and a useful link

Do I have to declare tax on every win? No. If your total winnings for the year don't exceed 3000 euros, there's no tax to pay and nothing to declare.

What happens if I win more than 3000 euros in one go? You'll pay 23% tax on the amount above 3000 euros, and it's usually withheld by the payer if it's a licensed Latvian operator.

Are there different rules for online games from abroad? No, winnings from a foreign casino have to be declared in Latvia if they exceed the threshold, even if the operator has no licence in Latvia.

Remember - this article is for information only. For your specific situation, always consult VID or a certified tax adviser.