National social insurance contributions (NSIC)
Since January 2014, income attracting NSIC has been capped. From 1 January 2019, the cap is EUR 62,800.
The contribution rates are summarised in this table:
|Employment with company registered in Latvia/EU/EEA (split rate):
|Employment with company registered in Latvia/EU/EEA (employee eligible for retirement) (split rate):
|Foreign national employed by foreign non-resident employer (full rate payable by either employer or employee):
|Self-employed (eligible for retirement)
NSIC should be reported and paid quarterly in the case of self-employed persons, whereas monthly contributions are required to be withheld, reported, and paid by Latvian employers.
Solidarity tax (ST)
ST has been in place since 1 January 2016. ST is applicable on income that exceeds the maximum income attracting NSIC, i.e. EUR 62,800 a year in 2019, and during the year is payable at the same rate as NSIC: 24.09% for employer and 11% for employee. However, the effective ST rate is 25.5%. Thus, the employer will receive ST refund by September 2020 for excessive ST payments made in 2019.
Under the ST Act effective from 1 January 2019, the ST paid will be split as follows:
- 1 percentage point to finance healthcare services, with 0.5 points coming from the employee’s part of ST and 0.5 points from the employer’s part of ST
- 10.5 percentage points become PIT, and
- the rest goes into the special budget for state pensions.
The ST Act does not provide for a different split if a person’s NSI rate is lower than the standard rate. So the fixed percentage points apply to all ST payers regardless of their NSI status and rates used.
The ST payer will also be required under the PIT Act to file their 2018 tax return between 1 April 2019 and 1 June 2019 in order to recalculate ST and PIT.
Value-added tax (VAT)
The standard VAT rate on supplies of goods and services is 21%. See the Other taxes section in the Corporate tax summary for more information.
Net wealth/worth taxes
There are no net wealth/worth taxes in Latvia.
Gifts in any form from individuals are subject to the progressive PIT rate after applying an annual exemption of EUR 1,425 to the value of the gift. Small gifts of up to EUR 15 (including VAT) from the employer are exempt from PIT. Gifts between spouses and relatives up to the third degree are fully exempt.
Light corporate vehicle tax (LCVT)
If LCVT is paid by the employer, no taxable car benefit arises for employees. See the Other taxes section in the Corporate tax summary for more information on the LCVT.