Latvia is considering allowing residents to pay personal taxes using cryptocurrency starting in 2027, as the country seeks to strengthen its position as a European destination for digital asset businesses.
The proposal has reportedly received support from Latvia's Finance Ministry, although technical arrangements with a payment provider remain unfinished.
Didzis Dejus, an adviser to the prime minister on strategic planning and the new economy, discussed the initiative during the UN:BLOCK Fintech conference in Riga.
The proposal builds on plans announced in May 2025 to explore cryptocurrency tax payments and the tokenization of assets, including real estate.
However, the government has not announced which cryptocurrencies would be accepted or identified a payment provider.
Parliament Approves New Crypto Tax Framework
The proposed payment system comes alongside significant changes to Latvia's cryptocurrency taxation rules.
On October 15, the country's parliament approved legislation changing how gains from cryptocurrency investment accounts are taxed.
Under the new framework, tax obligations would arise when withdrawals exceed the amount originally deposited into an eligible investment account, rather than after every individual cryptocurrency trade.
This approach could simplify tax calculations for investors who frequently exchange digital assets.
Instead of tracking taxable gains from each transaction, qualifying investors would focus on the relationship between their deposits and withdrawals.
The legislation represents a shift toward investment-account-based cryptocurrency taxation, potentially reducing administrative burdens for active traders.
However, the exact application will depend on the legal requirements governing eligible accounts and transactions.
One-Time Declaration Offers 10% Tax Settlement
Another major component of the legislation is a temporary declaration mechanism for cryptocurrency holdings with incomplete historical records.
The measure targets investors who acquired cryptocurrencies years ago but no longer possess documentation proving their original purchase prices.
Eligible holders would be able to declare their assets and settle certain past tax obligations by paying 10% of their declared cryptocurrency holdings' market value at the end of 2026.
The declaration period is scheduled to run from April 1 through May 31, 2027.
Payments associated with the declaration process would need to be completed by July 23, 2027.
Dejus explained that the measure is intended to help long-term investors resolve tax uncertainty without reconstructing years of historical transaction records.
The temporary mechanism could also encourage holders to bring previously undeclared cryptocurrency assets into the formal tax system.
Latvia Seeks to Attract Crypto Companies
Latvia's broader strategy involves positioning the country as a competitive destination for cryptocurrency companies, investors and financial technology businesses.
The government wants to attract businesses through initiatives extending beyond cryptocurrency licensing.
Allowing residents to settle tax obligations using digital assets could provide an additional practical use case for cryptocurrencies within public financial services.
However, the proposed payment system would still require technical implementation and government coordination before becoming available.
The political situation could also influence the timeline.
Following Latvia's October 3 parliamentary election, the formation of a governing coalition remains relevant to whether the initiative proceeds as anticipated.
Crypto Tax Payments Could Begin Next Year
If implemented, Latvia would join a small number of jurisdictions that have introduced cryptocurrency payment options for government tax obligations.
For comparison, the US state of Colorado began accepting cryptocurrency tax payments through PayPal in 2022, with digital assets converted into dollars.
Latvia has not yet clarified whether its proposed system would use a similar conversion process.
The Finance Ministry has also not publicly confirmed the final implementation details.
Nevertheless, the parliamentary approval of new cryptocurrency tax rules represents a concrete legislative development, while the cryptocurrency payment initiative remains a government proposal.
With the new declaration mechanism scheduled for 2027 and tax payment infrastructure under consideration, Latvia is pursuing a more integrated approach to cryptocurrency taxation.
Whether residents can begin paying taxes directly with digital assets next year will depend on technical readiness and further government decisions.
