Super Deduction and R&D Grant (EU)

Following the trend, Latvia offers an R&D tax incentive in the form of a super deduction, as well as the European Union R&D grant.

With a corporate income tax rate of 15%, Latvia allows a super deduction of 300% of qualifying research and development expenses.


Description of Incentive

Latvia offers a 300% super deduction for three types of R&D expenses.

  • Labor costs of employees directly involved in R&D
  •  Contract research payments to registered scientific institutions (SIs)
  • Contract research payments to accredited organizations for conducting certification, calibration and testing services

Latvia also offers R&D grants under the Horizon 2020 program created by the European Commission.

Eligibility Requirements

Latvia has a broad eligibility criteria and it is not limited to certain industries.  Furthermore, qualifying expenditures are widely defined and include all direct costs incurred in R&D and relating to applied research and experimental development.

Typical eligible costs include:

  • Gross wage of R&D
  • Cost of new equipment
  • Cost of goods/materials/R&D services purchased from third parties

Another positive is that the incentive is not restricted to Latvian companies. It can also be applied for by registered branches of foreign companies.

Other Considerations

Latvia requires applicants to provide extensive documentation of their R&D activities and expenses. Pre-approval of the super deduction is not required, but is available. The super deduction may be carried forward until fully utilized, but may not be carried back.


Swanson Reed offers the following services:

  • Advice on tax preparation relevant to claiming the R&D tax credits incentive
  • Preparation of documents relating to filing and substantiating a R&D taxation claim
  • R&D tax advice and consultations
  • R&D tax claim planning and preparation

For a full range of services in relation to the credit, please click here.

Incentive Page - Latvia

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