Employers may choose to handle payroll in-house or outsource to an external provider. It is important to ensure that payroll in Latvia is processed accurately and on time to avoid penalties and legal issues. You can seek the services of our company formation agents regarding payroll services in Latvia. Besides this, if you need any other accounting services, you are welcome to get help from our company incorporation specialists.
| Short facts | |
| Is payroll mandatory for companies in Latvia? | Yes, for foreign and local companies with employees. Payroll involves the calculation and distribution of salaries. |
| Frequency of payroll in Latvia | Monthly |
| Employer social security contributions | 23.59% |
| Employee social security contributions | 10.50% |
| Minimum wage | Around EUR 740/month |
| Working hours | 40 hours/week |
| Overtime regulations | Extra hours are paid double. |
| Benefits | – private healthcare, – additional pension contributions, – life insurance in some cases |
| Mandatory leaves/ days off | – paid annual & sick leave, – public holidays |
| Paid leaves | – 112 paid days of maternity leave, – 10 paid days of paternity leave, – paid annual leave of 20 days |
| Regulations regarding payroll in Latvia | Labor Law in Latvia |
| Termination notice period | 30 days |
| Compensation | Severance pay, ranging from 1 to 4 months’ average salary |
| Unemployment benefits | Granted for at least 9 months, depending on the years in the labor market |
| Working with our accountants in Latvia | Our payroll specialists in Latvia can offer in-depth services for company owners at affordable prices. |
Table of Contents
Payroll regulations in Latvia
Payroll in Latvia is subject to various legal and regulatory requirements that employers must adhere to. In relation to this, some key points are given below:
- Taxes: Employers are required to deduct and pay taxes on behalf of their employees, including personal income tax and social security contributions;
- Minimum wage: The minimum wage in Latvia is determined by the government and reviewed annually; to learn about the recent rates, get in touch with our Latvian agents;
- Working hours: The standard working week in Latvia is 40 hours, with a maximum of 48 hours per week. Overtime pay is required for any additional hours worked;
- Annual leave: Employees in Latvia are entitled to at least 28 days of paid annual leave per year;
- Sick leave: Employees are entitled to paid sick leave in Latvia, with the duration of the leave depending on the length of employment;
- Payroll reporting: Employers must submit regular payroll reports to the State Revenue Service, including information on salaries and taxes withheld.
Overall, payroll in Latvia can be complex and time-consuming, particularly for international companies operating in the country. It is important to seek professional advice and ensure compliance with all legal requirements to avoid potential legal and financial risks. As a foreigner, if you are looking to get help for complying with the Latvian payroll requirements, you are welcome to get in touch with our company incorporation specialists. You can also discover the infographic below:
Payroll-related taxes in Latvia
There are several payroll-related taxes that employers are required to withhold and pay on behalf of their employees in Latvia. For instance, employers are required to withhold personal income tax from employees’ salaries based on their income level. Employers also need to pay social security contributions on behalf of their employees. These contributions consist of two parts: the state social insurance contribution and the mandatory funded pension contribution.
Employers need to make contributions to the State Employment Agency to fund unemployment insurance, as well as they are also required to pay a solidarity tax on employees’ salaries. It is crucial for employers to accurately calculate and withhold these taxes from employees’ salaries and remit them to the relevant authorities on time. Employers should seek professional advice to ensure compliance with all tax and payroll-related requirements in Latvia.
Payroll and foreign employees in Latvia
Latvia has been a very attractive destination for many foreign business owners who wanted to start a company in Latvia. Latvian payroll, labor, immigration, and tax laws must be followed by employers recruiting foreign workers. Every worker, including non-residents (EU/EEA or non-EU/EEA nationals), as well Latvian nationals, must be registered in the State Revenue Service - VID (Valsts ienēmumu dienests), when taking up employment. Employers should also check if foreign employees have a valid residence and work permit issued by the Office of Citizenship and Migration Affairs (OCMA) unless they are an EU or EEA national.
In Latvia, payroll calculations depend on the employee’s tax residency status. Both personal income tax (PIT) and social security contributions are affected by whether the employee is a Latvian tax resident or a non-resident. Usually, individuals who legally work in Latvia own a tax residency who allows them to pay taxes in this country. In case you are going to start a company in Latvia and you are willing to employ foreign individuals for your business, our Latvian company formation agents can offer full assistance related to payroll in Latvia issues and the due taxes as per the local law.
How can our agents help you with payroll in Latvia?
Our payroll agents in Latvia can provide valuable assistance to companies operating in Latvia by handling various aspects of payroll processing and administration. Here are some ways in which our payroll agents can help with payroll in Latvia:
- Ensuring compliance: Our payroll agents can ensure that companies comply with all legal and regulatory requirements related to payroll in Latvia. They keep up to date with changes in legislation and ensure that the company is adhering to all relevant laws and regulations;
- Processing payroll: Our payroll agents can process payroll on behalf of the company, including: calculating salaries, withholding taxes, and managing employee benefits. They can also handle the distribution of paychecks or direct deposits to employees;
- Filing reports: Our company formation agents in Latvia can file necessary reports and forms related to payrolls, such as tax returns, social security contributions, and annual payroll reports. This can help ensure that the company remains in good standing with the relevant authorities;
- Providing support: Our specialists can provide support and guidance to companies regarding payroll matters, including answering employee questions and resolving issues related to payroll processing;
- Improving efficiency: By outsourcing payroll processing to our payroll agents, companies can free up time and resources to focus on their core business operations. They can also improve the accuracy and efficiency of payroll processing, reducing the risk of errors and penalties.
Our payroll agents can provide a valuable service to companies operating in Latvia by ensuring compliance with legal and regulatory requirements, processing payroll efficiently and accurately, and providing support and guidance as needed.
Employment and unemployment data in Latvia
In 2024, the labor market in Latvia showed changes in both employment and unemployment trends, showing the importance of payroll regulations in Latvia. Below is an overview of key statistics:
- Unemployment in 2024 was 6.9% in Latvia, 0.4 percentage points higher than in 2023;
- The number of people aged 15-74 unemployed in 2024 was 65,300, an increase by 3,800 (6.2%) from 2023;
- The youth unemployment rate (15-24 years old) was 13.6% in 2024;
- The long-term unemployed (12 months or more) made up 32.3% of all those without jobs.
Our company formation agents offer a wide range of services regarding Latvian company incorporation. For instance, if you need a virtual office in Latvia, our agents can help you get one. Besides this, if you buy a shelf company in Latvia, the services of our company incorporation consultants are at your disposal. Moreover, if you are interested in opening a branch in Latvia, the incorporation services of our agents are at your disposal. We can also help you if you want to open a company in Latvia.
You can contact our Latvian company formation specialists for any information and support with regard to payroll in Latvia.