Our platform operates from Latvia and we must comply with local legislation. Due to this when private individuals invest on Capitalia, we must deduct a withholding tax from their interest and late interest income received. Starting from 1st of September, 2023 Capitalia will begin to withhold this tax.

When the tax withholding happens:

1. You invest in a project.
2. The borrower makes a payment that covers interest (interest or late interest). 
3. Once the received payment is processed and is being distributed to investors, a part of the interest payment is automatically deducted from repayment to your account as withholding tax based on the applicable tax rate.
4. When you declare your income in your country of tax residence, you might be able to reduce the tax payable in your country by the withheld amount. Please consult your local tax legislation and seek professional advice if needed. 
5. You can see the withheld amount as a separate entry in the account statement, as well as in the bank transfer payment details text. The total withheld amount will be visible on your tax report which you can download from the Account statement page. Note: for repayments starting from the 1st of September, 2023. 

Please note that no withholding tax is deducted from investors - legal entities. 

The withholding tax rate depends on your country of tax residence. Currently, the following rates are applicable:

• For investors who are tax residents of Latvia, the withholding tax rate is 20%, in line with the Personal Income Tax Act.
• Investors who invest as private persons and are tax residents of Lithuania can reduce their withholding tax rate to 0% if they provide a tax resident certificate. Note: In case your income on Capitalia platform is over EUR 5,000 the original tax resident certificate must be submitted to our office in Vilnius or Riga via post or in person. Tax resident certificates must be renewed every year and submitted to us no later than the 31st of January of the new year.
• For all other investors who invest as private persons, the standard withholding tax rate is 20%. The rate can be reduced if the investor provides a tax resident certificate. Note: In case your annual income on Capitalia platform is over EUR 5,000 the original tax resident certificate (2 copies) must be mailed to our office in Riga via post. Tax resident certificates must be renewed every year and submitted to us no later than the 31st of January of the new year. Please see the full list of reduced applicable tax rates:
• 
  

  Country	Double tax treaty rate (%)	Country	Double tax treaty rate (5)
  EU		Non-EU
  Austria	10	Albania	10
  Belgium	10	Armenia	10
  Bulgaria	5	Azerbaijan	10
  Croatia	10	Belarus	10
  Cyprus	10	Canada	10
  Czech Republic	10	China	10
  Denmark	10	Georgia	10
  Estonia	10	Hong Kong SAR	10
  Finland	10	Iceland	10
  France	10	India	10
  Germany	10	Israel	10
  Greece	10	Japan	10
  Hungary	10	Kazakhstan	10
  Ireland	10	Korea (ROK)	10
  Italy	10	Kosovo	10
  Lithuania	0	Kuwait	5
  Luxembourg	10	Kyrgyzstan	5
  Malta	10	Mexico	10
  Netherlands	10	Moldova	10
  Poland	10	Montenegro	10
  Portugal	10	Morocco	10
  Romania	10	North Macedonia	5
  Slovakia	10	Norway	10
  Slovenia	10	Qatar	5
  Spain	10	Saudi Arabia	5
  Sweden	10	Serbia	10
  		Singapore	10
  		Switzerland	10
  		Tajikistan	7
  		Turkiye	10
  		Turkmenistan	10
  		Ukraine	10
  		United Arab Emirates	2.5
  		United Kingdom	10
  		United States	10
  		Uzbekistan	10
  		Vietnam	10

To register your tax residence and apply a reduced withholding tax rate, we are required to receive a tax resident certificate from you. Check with your local tax authorities to see how you can obtain a tax resident certificate in your country of tax residence. Your tax resident certificate must meet the following requirements to be accepted:

• It must contain your full name and tax identification number
• It must confirm your tax residence for the current year
• It should specify that it applies to income generated in Latvia
• It must be in English and signed by the issuing tax office

You can submit your tax resident certificate via email support@capitalia.com

The reduced withholding tax will be applied from the next month after Capitalia has received and processed your tax resident certificate. If the tax resident certificate is provided later, but not more than 3 years after the date of receiving interest, you can request repayment from the Latvian tax authorities.

Unless stated otherwise, your tax resident certificate remains valid until the end of the specified calendar year. You will need to submit a new tax resident certificate to reduce your tax withholding rate in the next calendar year.

An additional form only needs to be provided when you generate more than €5000 in income during one calendar year.