Interim dividends: the legal basis
Latvian company law (Komerclikums) allows interim dividend distributions (starpperioda dividendes) during the financial year, in addition to the classic annual distribution decided after the shareholders' meeting. This is directly tied to the dividend taxation mechanism: every distribution, whether annual or interim, triggers the same tax treatment at the time it happens.
Unlike a classic annual distribution based on the closed financial year's accounts, an interim distribution relies on interim accounts prepared specifically for the occasion, which must show a sufficient positive result to cover the amount distributed.
What's needed before each distribution
Three conditions must be met before each interim dividend payment:
- Prepared interim accounts, generally closed at the end of a quarter, showing a positive net profit
- A formal shareholder decision (or sole shareholder decision) setting the amount and date of the distribution
- Certainty that the company retains enough cash to cover its ongoing obligations after payment
In practice, a quarterly rhythm is the most common among our clients who choose this approach: it smooths personal income without excessively multiplying accounting work.
A point of caution
An interim distribution decided on the basis of accounts that turn out to be wrong (a loss recorded at year-end, for example) can expose directors to having to justify that decision. Hence the importance of rigorous accounting oversight before each payment, not a rough estimate.
Frequency doesn't change the total tax amount
This is the most commonly misunderstood point: distributing more often neither reduces nor increases the overall tax charge. Each distribution is taxed individually at 20% at the time it happens (gross base reconstructed by dividing the net amount by 0.8, as detailed in our €100,000 simulation). Distributing €40,000 at once or €10,000 four times a year results in exactly the same total tax: €12,500.
Why choose one frequency over another?
If tax doesn't change, choosing a frequency remains a real practical trade-off. It mostly depends on your personal cash-flow needs and your tolerance for admin work:
| Frequency | Main advantage | Constraint |
|---|---|---|
| Single annual distribution | One accounting exercise per year | Personal income concentrated in one payment |
| Quarterly distribution | Regular income, close to a salary | 4 interim closes and 4 filings per year |
| Ad hoc distribution (on demand) | Maximum flexibility based on needs | Requires responsive accounting oversight |
For a consultant or freelancer who depends on dividends for monthly living expenses, a quarterly rhythm combined with a small fixed salary is often the most workable solution.
"Distributing more often doesn't save a single euro of tax. It's a question of personal cash flow, not tax optimisation."
The practical procedure, step by step
- Closing interim accounts on the chosen date (most often end of quarter)
- The accountant verifies the result is sufficiently positive
- A formal distribution decision signed by the shareholder or shareholders' meeting
- Filing the distribution tax before the 20th of the following month
- Actual payment of the net amount to the shareholder's personal account
Frequently asked questions
In summary, distributing dividends several times a year in Latvia is entirely legal and common, provided you follow the interim-accounts procedure at every step. The total tax charge stays identical regardless of frequency: it's a personal cash-flow trade-off, not a tax-optimisation lever. Our team can set up this quarterly accounting process for you if it fits your needs.