LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Annija Kārkliņa, Ēriks Krēsliņš and Rihards Strads, BERG
rates depend on the buyer type (individual or legal entity) and the form of submission (electronic or paper). Transaction costs are subject to agreement between the parties, but in practice are usually borne by the buyer. From the seller’s perspective, individuals are subject to capital gains tax of 25.5% on the profit from the sale, while companies are taxed under a deferred regime, where corporate income tax is applied only upon profit distribution, such as dividends. In a share deal, where shares in a property-owning company are transferred, no real estate transfer taxes are generally triggered, as ownership of the underly - ing property does not change. Instead, the change is recorded in the shareholders’ register, with lower reg - istration costs payable to the Register of Enterprises. However, capital gains tax may still apply to the seller. For partial transfers, fees may apply proportionally if only a fraction of the property is acquired, based on transaction or cadastral value. However, where only a change of control at company level occurs, real estate transfer taxes are generally not triggered. State fees are typically calculated based on either the transaction value or the cadastral value, whichever is higher, and in the case of partial acquisitions they are reduced proportionally. Exemptions are limited, but may apply in specific cases, such as transfers carried out within the framework of corporate reorganisations, including mergers or demergers. 2.11 Legal Restrictions on Foreign Investors In Latvia, foreign investors are generally allowed to acquire real estate, though certain restrictions apply depending on the type of land and the investor’s sta - tus. Investors from EU, EEA, Swiss Confederation and OECD Code of Liberalisation of Capital Movements countries are largely treated the same as Latvian nationals and may freely acquire most types of real estate, including land. However, some restrictions may still apply to agricultural and forest land, where specific eligibility criteria (such as intended use or qualifications) must be met under Latvian land laws.
For investors from non-EU, non-EEA, non-Swiss and non-OECD Code of Liberalisation of Capital Move - ments countries, restrictions are stricter. Acquisition of land (especially agricultural, forest land or land in the border zone of the State and others) may be limited entirely or require additional conditions, and in some cases ownership is only possible through a locally registered company. Since 2025, it is prohibited by law for citizens or enti - ties from the Russian Federation or Belarus to acquire real estate in Latvia. Overall, while Latvia is relatively open to foreign real estate investment, limitations mainly concern land ownership – particularly agricultural and forest land – and depend on the investor’s country of origin. 3. Real Estate Finance 3.1 Financing Acquisitions of Commercial Real Estate In Latvia, acquisitions of commercial real estate are typically financed through bank loans secured by a mortgage over the relevant property. Usually, the buyer contributes part of the purchase price as equi - ty, while the remaining portion is financed by a credit institution. In addition to the mortgage, lenders often require supplementary security, such as a commercial pledge over the borrower’s assets or shares, and in some cases guarantees. In larger transactions, such as acquisitions of real estate portfolios or companies holding real estate (share deals), financing structures tend to be more complex. These may involve syndicated loans (ie, financing provided by multiple lenders) and structured financing arrangements combining different instru - ments. Transactions are often carried out through special purpose vehicles (SPVs), with security grant - ed both over the underlying real estate and over the shares of the acquiring entity. Accordingly, while the basic principle of secured bank financing remains the same, larger and more complex transactions typically involve more sophisticated and layered financing structures.
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