Taxes and payrolls: the labour market in Latvia
Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the labour market in Latvia.
General data about the Latvian labour market
| Minimum wage | 620€ |
| Payment basis | At least twice a month |
| Maximum working hours a week | 40 |
| Working hours compensation | At 200% of the regular salary rate of pay |
Payroll taxes in …
Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.
| Contingencies | Employer % | Employee % |
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (employee eligible for retirement-split rate) | 20.77% | |
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (split rate) | 23.59% | |
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (employee eligible for retirement-split rate) | 9.25% | |
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (split rate) | 10.5% | |
| Total | 20.77% to 23.59% | 9.25% to 10.5% |
Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries.
| Gross salary | Income tax |
| up to 20,004€ | 20% |
| from 20,005 to 78,100€ | 23% |
| more than 78,100€ | 31% |
Example of net salary in Latvia
As a reference, we use the average salary of a software engineer. In Latvia, on average, software engineers earn annually 37,100€.
| Employer | Employee | |||
| % | € | % | € | |
| Gross salary (annually) | 37100 | |||
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (employee eligible for retirement-split rate) | 20.77% | 7705.67 | ||
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (split rate) | 23.59% | 8751.89 | ||
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (employee eligible for retirement-split rate) | 9.25% | 3431.75 | ||
| National Social Insurance and Solidarity Tax (NSIC) for Employment with company registered in Latvia/EU/EEA (split rate) | 10.5% | 3895.5 | ||
| Total | 7705.67 – 8751.89 | 3431.75 – 3895.5 | ||
| Income tax | 20% | 6641 – 6733.65 | ||
| 23% | 7637.15 – 7743.70 | |||
| 31% | 10293.55 – 10437.16 | |||
| Net salary (annually) | 22910,95 – 26563,5 |
The employer contributes from 7705.67€ to 8751.89€ to social security and the employee from 3431.75 to 3895.5€.
After paying the income tax, the employee has a net salary of 22910.95 to 26563.5€ coming from a gross salary of 37100€.
Unemployment regulation in Latvia
Contracts can be terminated due to business, personal, or worker misconduct (with a previous warning). The notice period is at least 1 month.
| Time worked | Severance pay |
| Up to 5 years | 1 month |
| Between 5 and 10 years | 2 months |
| Between 10 and 20 years | 3 months |
| Over 20 years | 4 months |
Contracts can also have probation periods of:
- Up to 1 month for employment contracts for up to 6 months.
- Up to 2 months for employment contracts for up to 1 year.
- From 3 to 6 months for permanent contracts.
Different kinds of leaves in Latvia
If employees have been employed for at least six consecutive weeks, they are entitled to annual leave. It consists of not less than 20 days (4 calendar weeks), not including public holidays. Employees under 18 are entitled to annual paid leave of one month.
The leave can be granted in parts. But one part of the leave in the current year shall be at least two uninterrupted calendar weeks.
There are 12 national holidays.
Employees who have been employed for at least one month are entitled to receive sick pay for the first ten days of leave, paid for by the employer at a rate of 75.00% of the regular rate of pay for the first three days, increasing to 80.00% for the fourth to the tenth day.
If the employee is sick for more than ten days, the salary payment will continue to be paid by the government as Sick Leave Benefit for up to 52 weeks.
Paid parental leave
Female employees are entitled to 56 days before the birth and 56 days following the birth of a child, with maternity pay of 80.00% of the regular salary paid by the government.
There is a supplementary leave of 14 days in case of complications in the pregnancy, childbirth, or postnatal period if two or more children are born, and if the woman has initiated pregnancy-related medical care at a preventive medical institution by the 12th week of pregnancy and has continued for the whole period of pregnancy.
fathers are entitled to 10 working days’ leave no later than 6 months after the birth.
Other common Latvian benefits
| Benefit | % of companies with this benefit |
| Work-life balance | 17.5 |
| Flexible working hours | 10.7 |
| Health insurance | 10.7 |
| Work from home | 10.1 |
| Professional development | 8.1 |
How to employ a Latvian worker
The main work authorization categories are the Residence Permit with Work Authorisation, available to many foreign national workers.
The EU Blue Card is suitable for highly skilled, locally hired employees who meet a salary threshold. The (EU) Intracompany Transferee (ICT) Permit is available for intracompany transfers of managers, specialists, or trainees from outside the EU.
The application process always requires an in-country application with the Office of Migration and Citizenship Affairs (OCMA). If the intended stay is under 90 days, foreign nationals may also request a residence permit, thereby choosing between a visa and a residence permit.
Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.
Follow TalentUp on LinkedIn and subscribe to our newsletter to get our latest articles!
