Annual Income Declaration

Submitting the Annual Income Declaration (GID) is mandatory for individuals conducting economic activity and the self-employed. The GID for the previous year must be submitted from March 1 to June 1, but if the annual income exceeds €78,100, then from April 1 to July 1. For the self-employed, section D3 in the VID EDS system must be completed when submitting the GID.

A few steps to prepare successfully:

• Remember that the rule limiting deductible expenses to no more than 80% of total business income has been repealed. Under the new regulations, expenses no longer need to be divided into full and limited expenses, but are recorded together in the business journal. Read more about the changes here.
• When submitting the 2022 declaration in 2023, social contributions will count as deductible expenses. A separate field will be provided for tracking these expenses, but development of this change is still in progress and amendments to Cabinet Regulation No. 622 will be announced soon.
• To calculate taxable income, expenses must be clarified in advance to exclude those not related to that year’s income. Read more about it here.

Personal income tax (IIN) calculated in the declaration must be paid into the unified tax account by June 23. If the tax amount exceeds €640, it can be split into three payments: by June 23, July 23, and August 23, paying one-third each time. If annual income exceeds €78,100, the tax must be paid by July 23. Likewise, if the amount exceeds €640, it can be split into three payments: by July 23, August 23, and September 23.

Note: When submitting the GID, you may have to pay an additional tax amount if the calculated tax exceeds the advance payments made during the year.

Advance IIN – do I need to pay it?

Yes, and many new self-employed individuals may not know this – but personal income tax must be paid in advance! From 2020 to 2022, due to COVID-19, advance IIN payments were temporarily suspended. This relief ended in 2023, so mark it in your calendar – March 23 is the first due date for this year’s IIN advance payment!

How does it work? The VID EDS system automatically calculates the advance IIN payment based on the previous year’s income. If your GID income for the previous year is less than €78,100, you must pay advance IIN no later than March 23, June 23, August 23, and November 23. If the income exceeds €78,100, the deadlines are March 23, July 23, September 23, and November 23.

You can reduce the calculated advance tax if your actual income changes and you submit a revised calculation. This applies if your business activity, income, expenses, or profits have significantly changed.

Reminder: If you registered your business in 2023, you are not required to make advance IIN payments. However, you may do so voluntarily within 30 days of starting your business by submitting an estimated income calculation. In that case, the first due date is the one following the month of registration. For example, if you registered in January or February, your first due date will be March.

Here are a few useful resources we recommend for submitting your annual income declaration correctly, making timely payments, and staying informed:

• VID information summary on economic activity performers
• VID information summary on the annual income declaration

Pats.lv automatically prepares the necessary data for your annual declaration based on the transaction information entered by the self-employed user, which must be submitted in the VID EDS. All the complex steps – tax calculation, business journal entries, and report preparation – are automated in pats.lv. All the user needs to do is consistently record income and expenses and upload the data to the system.

No prior accounting knowledge is needed to use pats.lv – try it free for the first 7 days!