P2P Lending in Latvia

June 14th, 2020
3 minutes read

The Latvian Market for Crowdfunding and Peer-to-Peer Lending

According to data from the latest report by Cambridge Centre for Alternative Finance (CCFA) on the global market of alternative finance and crowdfunding, Estonia had a total funding volume of €227.3 million in 2018, up from €92.2 million in 2017, which corresponds to an impressive growth rate of 146.5%. This places Estonia’s crowdfunding market as number 10 in Europe and as number 23 in the worldwide crowdfunding statistics. The countries topping the list in Europe are the United Kingdom, the Netherlands, Germany, France, and Italy. P2P consumer lending was by far the largest business model driving crowdfunding volumes in Latvia, accounting for more than 90% of the total volume.

Interestingly, Latvia was ranked as number 3 worldwide in terms of funding volumes on a per capita basis with $132.12/per capita only surpassed by the UK ($155.93) and the US ($186.88), which provides an idea of the relative market size. The high volume per capita is thus indicative of high adaptation, usage, and penetration of crowdfunding in Latvia despite the relatively small total funding volume.

It is also worth noting that Latvia and the two other Baltic states, Estonia and Lithuania, are home to some of the largest European-based peer-to-peer lending platforms operating on an international scale, especially within P2P consumer lending and P2P business lending.

Best Peer-to-Peer Lending Platforms in Latvia

Here, you will find a list of the best peer-to-peer lending platforms in Latvia. When choosing the best peer-to-peer lending sites in a country we consider a variety of factors that you can find in the Methodology below.

More P2P Lending Platforms in Latvia

Below, you will find a list of the remaining peer-to-peer lending platforms located in Latvia. If a new platform has been launched since this article was published and you do not see it here, please feel free to submit the platform by using the submit formula.

Taxation on Peer-to-Peer Lending in Latvia

As many Latvian platforms operate on an international scale, it is important to note that the income earned through Latvian platforms is usually based on the tax laws of the investor’s country of residence. If you are a Latvian investor, interest earned through P2P lending must be included in the yearly income declared to the Latvian State Revenue Service (the SRS). The Latvian income tax system has been progressive since 2018, which means the annual taxable income is:

  • 20% for an annual income up of to €20,004.
  • 23% for the annual income between €20.004 up to €62,800.
  • 4% for the annual income exceeding €62,800.

For Latvian investors, Mintos has made a thorough review of the tax rules in Latvia, which you can find here. To get an overview of the Latvian tax system for both companies and individuals, we can also recommend this overview made by PwC.

Keep in mind that this should not be considered tax advice and can be outdated, why you should always contact a tax adviser when handling your taxes.

Regulation on Crowdfunding and P2P Lending in Latvia

Due to the variety of business models, regulation on crowdfunding and P2P lending in Latvia is still unclear. In the other Baltic countries, Estonia and Lithuania, platforms need explicit permission to lend in the form of a credit mediator license, whereas Latvian rules are vaguer. This does, however, not mean that crowdfunding and P2P lending is not regulated at all in Latvia, but there is still a lack of a specific regulatory framework for this type of financing, which might be introduced on a European level in the near future.

If you are interested in learning more about how crowdfunding is regulated in Latvia and the Baltics, take a look at this research article by Tomas Sadzius & Linas Sazius: Crowdfunding Regulation in the Baltic Region.

Methodology

At P2PMarketData we are dedicated to providing an unbiased overview of the Peer-to-Peer Lending market and platforms. Among other, in our mission to bring more transparency to the market for online lending we track over 70 platforms funding volumes.

When choosing the best platforms in a country we have considered a variety of factors such as:

  • Number of investors
  • Minimum investment requirement
  • Historical annual returns
  • Diversification opportunities
  • Reinvestment opportunities
  • Educational and informational offerings
  • Platform fees
  • Total capital invested
  • Features (such as secondary market and automatic investing)
  • General transparency (the difficulty of finding who the owners are, how they make money on the platform (fees), terms & conditions and more)
  • Management team

We also look into the company’s online reputation (for example customer reviews, news, complaints, average monthly searches and social media).