Is a Crypto-to-Crypto Swap Taxed in Latvia? No – With One Big "But"

It is one of the questions we hear most often: “I spent the whole year swapping one crypto for another, but never sold anything for euro. Do I owe tax?”

The short answer: no. The long answer: no – but the swaps are exactly where the mechanics live that will later decide how big your tax bill is, and whether you can calculate it correctly at all. And this time we do not have to rely on practice alone: the Latvian tax authority’s (VID) methodological guide contains worked examples that show the mechanics explicitly.

This page is general information, not individual tax advice. The fundamentals are covered in the full guide.

In short

• Exchanging one crypto-asset for another is not in itself taxable – confirmed both by VID’s stated position and by the worked examples in its methodological guide.
• A swap into a stablecoin is not a fiat conversion either – a stablecoin is a crypto-asset.
• The cost basis travels: the asset received in a swap inherits the acquisition cost of the asset given up. The gain at the end of the chain is calculated against that original cost.
• Partial sales are allocated proportionally.
• FIFO or weighted average – the chosen method must be used for at least 10 years (Cabinet Regulation No. 899, paragraph 82).
• Without records, your cost basis is zero – and the entire sale amount becomes taxable.

When tax arises – and when it does not

Tax on crypto transactions arises at the moment of disposal for value: selling for euro or another fiat currency, or paying for goods or services with crypto. What is not a taxable event:

• a swap between crypto-assets (BTC for ETH, for example);
• a swap into a stablecoin (ETH for USDT) – a stablecoin is a crypto-asset, not fiat;
• transfers between your own wallets;
• simply holding.

The stablecoin point deserves saying plainly, because we hear the opposite assumption constantly: “rotating into USDT or USDC” is not the same as selling. No fiat currency appears in the transaction, so there is no disposal for tax purposes. The tax arises later, when you sell the stablecoin for euro or spend it.

The big “but”: the cost basis travels with you

That swaps are untaxed does not mean they are invisible to the tax calculation. The asset you receive in a swap inherits the acquisition cost of the asset you gave up – the value travels through the whole chain of transactions until a sale for euro finally happens. This is exactly what VID’s worked examples show.

A simplified example following the same logic:

1. You buy crypto-asset “A” for €850.
2. You swap all of it for crypto-asset “B” – no tax.
3. You sell “B” for €950.

The capital gain arises only at step 3, and it is calculated against the original acquisition cost: €950 − €850 = €100, taxed at 25.5% – €25.50. The swap in the middle triggered nothing, but its documentation is the only thing connecting the sale to the original purchase.

If you sell only part of what you received in a swap, the cost is allocated proportionally: sell half, deduct half of the original cost. That proportional logic is also shown directly in VID’s examples.

FIFO or weighted average – and the 10-year rule

If you bought the same crypto-asset several times at different prices and sell it in parts, you need to know which acquisition cost to deduct. Two methods are allowed:

• FIFO (first in, first out) – you are treated as selling your earliest-acquired units first;
• weighted average cost – all units carry the average acquisition cost.

And now the rule almost nobody knows: once chosen, the method must be used for at least 10 years – set by paragraph 82 of Cabinet Regulation No. 899. It is not something you can flip year to year depending on which happens to be cheaper. Practically, the choice you make in your first declaration is a long-term decision, and it is worth making deliberately.

What it means in practice: records are everything

The non-taxation of swaps is only good news if you can prove the chain. For every transaction – including the “non-taxable” swaps – record:

• the date and type of transaction;
• the quantity given up and received;
• the value in euro at the time;
• exchange statements or transaction confirmations.

Without that data, the arithmetic at the end of the chain turns ugly: an undocumented acquisition cost is zero, and on a sale for euro the entire amount becomes taxable – even if your actual profit was small.

One more reason for clean records: from 2026, EU exchanges report to the tax authorities under DAC8, including swap transactions. It does not change the tax treatment, but it makes the chain visible – including whether your declared cost basis matches what actually happened.

Frequently asked questions

Does swapping BTC for ETH trigger tax in Latvia? No. A swap between crypto-assets is not in itself taxable – tax arises on a sale for euro or another fiat currency, or when paying for goods and services.

Is swapping into USDT the same as selling? No. A stablecoin is a crypto-asset, not fiat currency – a swap into it remains a non-taxable crypto-to-crypto transaction. Tax arises when the stablecoin is sold for euro or used for payments.

Why keep documents for non-taxable transactions? Because the cost basis travels through swaps, and the gain at the end of the chain is calculated against the original cost. Without documents it is zero – and the entire sale amount is taxable.

Can I use FIFO one year and weighted average the next? No. The chosen method must be used for at least 10 years (Cabinet Regulation No. 899, paragraph 82).

Will the tax authority learn about my swaps? From 2026, increasingly completely: exchanges report swap transactions under DAC8, and the data reaches the authority automatically.

When to talk to a lawyer

If your transaction chain is long, some original documents are missing, or the choice of method could materially change the result, it is worth putting things in order before filing rather than after the tax authority’s questions. We help reconstruct transaction histories, choose and document an accounting method, and bring past periods in order. Get in touch or see how we work. Related reading: Crypto Tax in Latvia 2026, How to Declare Crypto Income in Latvia and Crypto Staking, Airdrop and DeFi Taxes in Latvia.

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Updated: 3 August 2026. General information only and not individual tax or legal advice.