Taxes for self-employed in Latvia: choosing the right regime

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The number of self-employed in Latvia is growing. According to the Central Statistical Bureau (2024), over 60,000 people are registered as self-employed. Choosing the right tax regime affects income, expenses, and social guarantees.

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Main requirements and step-by-step guide

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Steps:

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1. Register as self-employed at the State Revenue Service (VID) via EDS (https://vid.gov.lv).
2. Choose a tax regime:
   • general taxation,
   • micro-enterprise tax (MUN),
   • patent fee (available for certain professions).
3. Keep track of income and expenses.
4. Submit declarations via EDS.
5. Pay social contributions to the State Social Insurance Agency (VSAA).

Details and examples

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• General regime: income tax 20–31%, social contributions 31.07%.
• Micro-enterprise tax (MUN): 25% of turnover up to €25,000 per year.
• Patent fee: fixed €50–100 monthly, for specific professions (craftsmen, service providers).
• Official guidance: VID (https://vid.gov.lv).

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Advantages and risks

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Advantages:

• Flexible choice of taxation.
• Access to pension and social benefits.
• Simple online registration.

Risks:

• Wrong regime leads to higher taxes.
• Penalties for late declarations.
• Minimum contributions mean lower pensions.

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FAQ

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1. Can self-employed choose any regime?
   Yes, depending on income and profession.
2. When are social contributions due?
   Quarterly, if monthly income exceeds €620 (2024).
3. Is VAT registration required?
   Yes, if turnover exceeds €40,000 per year.
4. Does patent fee provide social benefits?
   No, only simplified taxation.
5. Can the regime be changed?
   Yes, once a year by notifying VID.

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The right tax regime ensures financial stability and reduces risks. Contact LexFinance for professional advice: lexfinance.lv | +37129515251