Justified expenses for education and medical services

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Name of the instrument - Local language
Attaisnotie izdevumi par izglītību un ārstnieciskajiem pakalpojumiem
Name of the instrument - English translation
Justified expenses for education and medical services
Scheme ID
150
Country
Latvia
Reporting year
2020
Type of instrument
Tax incentive for individuals
Sub-type of instrument
Treatment of work/profession related training costs
Type of entry
Single instrument
Short description

Adults can deduct costs related to continuing vocational training for their current occupation or a future occupation from the base of their individual income tax. The state co-funding - in the form of foregone tax revenues - equals eligible costs multiplied by the marginal tax rate (between 20 and 31%). Co-funded training is expected to sustain or increase future income, implying higher tax revenues later on. The costs of education and training provided by institutions not accredited by the State and the costs of learning abroad are not deductible from the tax. For the deduction, a ceiling is introduced (EUR 600). Individuals with no taxable income cannot profit from the tax deduction. The same applicant can re-use the scheme after a break of a particular period (1 year).

Level of operation
National
Name of a part of the country
Not applicable
Name of the region (for regional instruments)
Not applicable
Name of the sector (for sectoral instruments)
Not applicable
Relevance
Key instrument
Regulation of the Cabinet of Ministers No 336, on the basis of Law on income tax of inhabitants
Objective(s) and target(s)
The objective of the instrument is to enhance the investment of the citizens in formal education leading to the acquisition of higher education degrees and VET qualifications.
Year of implementation
1995
Year of latest amendment
2017
Operation/management
State Revenue Service is the main responsible authority for implementing the instrument. It provides guidance, administers the instrument and makes the payments. It operates under the supervision of the Ministry of Finance. State Revenue Service does not make any policy decisions about the instrument, it is responsible for successful implementation.
Eligible group(s)
A person (resident or non-resident living in the Republic of Latvia during the taxation period) who has worked and paid personal income tax may receive an overpayment of the personal income tax for his or her expenses. The eligible costs cannot be applied to individuals who: - have not paid income tax; - were only employed by micro-enterprise; - patent taxpayers; - seasonal farmworkers.
Group(s) with preferential treatment
No preferential treatment
Education and training eligible
Higher education, all levels of vocational education and acquisition of occupation in State-accredited institutions or State-accredited educational programmes; preparatory training necessary for entering an institution of higher education. Training in company or occupation for acquiring and improving skills in work/profession/vocation and broadening knowledge. The costs of education and training provided by institutions not accredited by the State and the costs of learning abroad are not deductible from the tax.
Source of financing and collection mechanism
The funding source is the state budget (loss of tax revenue). Individuals can apply for the tax reduction by submitting an Annual Income Statement and attaching information on payment for the received training (receipt, bank transfer confirmation, etc.).
Financing formula and allocation mechanisms
Adults can deduct costs related to continuing vocational training for their current occupation or a future occupation from the base of their individual income tax. The state co-funding - in the form of foregone tax revenues - equals eligible costs multiplied by the flat tax rate (23% in 2015). Co-funded training is expected to sustain or increase future income, implying higher tax revenues later on. The maximum deductible amount per year is EUR 600. The tax incentive can be re-used once a year. Individuals with no taxable income cannot profit from the tax deduction.
Eligible costs
Tuition fees/fees for participation (external providers)
Volumes of funding
Volumes of funding:2018: EUR 50 790 000
Beneficiaries/take up
Total number of beneficiaries:2017: 35 9852018: 51 9612019: 44 162
Organisation responsible for monitoring/evaluation
State Revenue Service
Monitoring/evaluation reports available
Not available
Most relevant webpage - in English
https://www.latvija.lv/en/DzivesSituacijas/Nauda-un-nodokli/attaisnotie…
Most relevant webpage - local language
https://likumi.lv/ta/id/27973-noteikumi-par-attaisnotajiem-izdevumiem-p…
Recent changes

The most recent amendment was in 07.11.2017. It allows to adjust the submitted declaration and add additional requests within three years.

Recent changes in response to COVID-19

No changes

Sources
State Revenue Service of the Republic of Latvia: https://www.vid.gov.lv/sites/default/files/metodiskais_materials_attais…
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