Latvia may align crypto taxation with shares: tax only above contributions and a 10% disclosure window

Latvia is advancing a new crypto-asset tax regime that would allow individuals to apply a principle similar to the investment-account system used for shares and bonds. Tax would not have to be calculated after every individual trade. It would arise when total withdrawals from a qualifying investment account exceed total contributions.

A separate one-off voluntary disclosure mechanism is also proposed. A Latvian resident could disclose crypto assets owned on 31 December 2026, pay personal income tax equal to 10% of their market value and establish that value as the acquisition cost for future tax calculations.

The regime is not yet in force. On 22 September 2026, the Saeima Budget and Finance (Taxation) Committee conceptually supported Bill No. 1522/Lp14 for referral to the first reading. The Saeima must still adopt the amendments in three readings. The conditions may change during the legislative process.

What exactly has the committee supported?

The proposal contains two separate elements that should not be confused:

a permanent crypto investment-account regime — tax is deferred until withdrawals from the account exceed contributions;
a one-off 10% disclosure mechanism — a person could pay 10% of the market value of crypto assets owned on 31 December 2026 and use that value as their acquisition cost in the future.

The 10% figure is not a proposed future tax rate for all crypto profits. It would be an optional one-off route for establishing a documented tax basis for previously acquired assets. The investment-account regime would mainly change when and how tax is calculated, rather than automatically reducing the tax rate itself.

How are crypto assets taxed now?

At present, an individual’s income from selling crypto assets in Latvia is treated as capital gains. Since 2025, it has been subject to personal income tax at 25.5%. The gain is calculated by deducting the documented acquisition cost and eligible acquisition expenses from the sale price.

If the original acquisition cost cannot be established, the Latvian State Revenue Service states that the cost is treated as zero. This can produce a highly unfavourable result for a person who bought crypto years ago but no longer has exchange statements, payment records or a complete transaction history.

Income is generally considered received when the person obtains money. Where one crypto asset is exchanged for another without receiving money, goods or services, the tax point is deferred until a later disposal in which such consideration is received.

Buying and selling crypto assets is not itself subject to value-added tax. The bill concerns personal income tax, not a new VAT charge on cryptocurrencies.

How would a crypto investment account work?

The main benefit of the investment-account regime is the ability to sell one asset, buy another and reinvest profits within the account without calculating tax on every trade. Taxable income arises only when cumulative withdrawals exceed cumulative contributions.

For example, a person contributes €10,000 to a qualifying crypto investment account. After several trades, the assets are worth €16,000. As long as the funds remain in the account and are reinvested, no tax would arise under the proposed principle.

If the person withdraws €7,000, cumulative withdrawals remain below the original €10,000 contribution. If another €5,000 is later withdrawn, cumulative withdrawals reach €12,000 and taxable income under the investment-account principle would be €2,000. If the current 25.5% rate still applied, the tax on that excess would be €510.

This is a simplified illustration. The exact treatment of contributions, withdrawals, fees, asset transfers and linked accounts will depend on the final legislation and Cabinet regulations.

Could the regime be used with any exchange or wallet?

No. The current proposal does not mean that every private crypto wallet would automatically become an investment account. The committee-backed plan would allow crypto-asset service providers licensed in the European Union to offer investment-account services.

The Cabinet would still have to set requirements for providers wishing to offer the regime. Important practical questions include:

which EU-licensed providers will qualify;
how an account will be registered with or reported to the State Revenue Service;
how transfers between platforms and private wallets will be recorded;
how euro values will be determined at the time of each transaction or transfer;
how fees, network charges, staking rewards and airdrops will be treated;
what happens if a provider loses its licence or ceases operations.

Until these rules are adopted, there is no basis for assuming that an existing foreign-exchange account can simply be declared a Latvian investment account retroactively.

How would the one-off 10% disclosure mechanism work?

The proposal would allow a Latvian resident to disclose crypto assets owned on 31 December 2026 and pay tax equal to 10% of their market value. Once the tax is paid, the disclosed market value would become the acquisition cost for future tax calculations.

For example, if the market value of disclosed crypto assets at year-end is €30,000, the one-off tax would be €3,000. If the assets were later sold for €38,000, the starting value for the future capital-gains calculation would be €30,000 rather than zero or an old acquisition price that is difficult to prove.

The mechanism may benefit a person who lacks complete historical records or has previously undeclared tax liabilities. It would not automatically be advantageous to everyone. If the documented acquisition cost is already high or the market value is temporarily elevated at the end of 2026, paying 10% of the entire market value may be more expensive than ordinary tax on the actual gain.

Would the 10% payment erase every previous violation?

No. According to the committee’s published information, a person who makes the disclosure and pays the tax would not face late-payment interest, administrative penalties or criminal liability for previously undeclared income connected with the disclosed crypto assets.

The relief would not apply where criminal proceedings, a tax audit, a tax control procedure or administrative-offence proceedings have already been opened in relation to the crypto income. Tax disclosure also cannot legalise proceeds of crime. Anti-money-laundering and source-of-funds requirements would continue to apply separately.

Why is Latvia proposing the change now?

Automatic exchange of information on crypto-asset users and transactions is being introduced from 2026. Crypto-asset service providers will collect reportable information, and the first report covering 2026 transactions is planned by 30 June 2027.

An account on a foreign platform can therefore no longer be regarded as an environment invisible to the tax authorities. Expanded information exchange will increase the State Revenue Service’s ability to compare platform data with declarations filed by Latvian residents.

The voluntary disclosure window would consequently serve two purposes: allowing people to establish a tax basis for older assets and bringing previously undisclosed crypto assets into a transparent tax record.

What should crypto holders do now?

Do not rush to pay 10%. The regime is not in force, and the bill may change in the Saeima.
Download complete transaction histories. Keep exchange statements, purchase evidence, bank transfers, wallet addresses and blockchain transaction identifiers.
Separate personal and company assets. The personal-income-tax regime is not the same as accounting and corporate-income-tax treatment for an SIA.
Calculate the current acquisition cost. Determine which amounts can be proved and where records are missing.
Compare both scenarios. If the law is adopted, compare ordinary tax on the actual gain with 10% of the entire market value to be disclosed.
Check the platform’s licence. MiCA licensing may become a prerequisite for using the investment-account regime.
Do not choose the 31 December value arbitrarily. Wait for final rules on price sources, timing, currency conversion and evidence.

What would this mean for crypto businesses and platforms?

If the bill becomes law, EU-licensed crypto-asset service providers could gain a new product in Latvia: a crypto investment account with tax-recording functionality. That would create demand for accurate contribution and withdrawal records, euro valuations, customer statements and data exchange with the State Revenue Service.

Competitive advantage would no longer depend only on fees or the number of assets offered. The ability to provide a tax-ready report and document every contribution, withdrawal and asset transfer would become essential.

The key conclusion

Latvia’s proposal represents a significant shift in tax policy. Crypto assets could move from a system in which every investor must reconstruct a complex transaction history to a controlled investment-account model. This would allow tax deferral while profits are reinvested and simplify calculations.

At the same time, the 10% disclosure window is neither an unconditional tax amnesty nor a new 10% tax rate on all crypto profits. It is a separate voluntary instrument with a cost equal to 10% of the entire disclosed market value. Before choosing it, each person would need to determine whether the benefit of an established acquisition cost outweighs the immediate tax payment.