Freelancer taxes in Latvia (2026).

Important context

Models the full chain to the owner's pocket for a one-person SIA that distributes the whole year's profit; retaining profit defers the 20% (no tax until distributed). Above EUR 3,900 of monthly turnover the owner either takes the minimum wage as pay (modelled; 34.09% social insurance of which 10.50% is withheld, wage tax after the employee share and the EUR 550 minimum) or leaves it unpaid and the company pays the deemed-income charges (27.20% social insurance on EUR 780 with no deduction, 25.5% wage tax) from its own funds without any money reaching the owner; at the 60,000 profile the unpaid route costs about EUR 1,270 a year more in the owner's pocket, assuming the company can deduct what it pays, so it is not modelled. Not modelled: (1) the alternative 15% corporate rate for companies owned only by individuals (UIN Art. 4.2), which adds 6% personal tax on the dividend and costs 15 + 6% × 85 = 20.1 per 100 of profit versus 20.0 on the standard route; (2) a higher salary than the minimum, which carries 34.09% social insurance and 25.5% wage tax and so costs more than distributing profit; (3) the 3% additional income tax on total annual income (including the exempt dividends) above EUR 200,000 (IIN Art. 15.1); (4) the company's accounting, VAT and filing costs, and the fact that a minimum-wage base buys little pension and sickness cover; (5) the first calendar year after registration, when the deemed-income rule does not apply; (6) the business-risk state duty, which is not due on a board member without an employment contract (VID); (7) months with turnover below EUR 3,900, which the annual model cannot see — a business that bills unevenly may need the salary in only some months; (8) non-business expenses that the company law treats as conditionally distributed profit.

Important context

Modelled as a steady state: the person chooses the legal minimum monthly base (EUR 780) and earns twelve equal months, because the 780 test and the 10% rule apply month by month on that month's revenue minus expenses (a loss in one month is not carried to another); lumpy income changes the split between the 31.07% and 10% parts. A higher chosen base costs 31.07% instead of 10% on the extra and buys more pension and benefit rights — not modelled. The social-insurance charge is built from two components (10% on all profit plus a fixed 1,972.20 from the profit at which monthly income reaches 780); the 8,423.99 band edge is 0.9 × 9,360 − 0.01 because the band is tested on profit after the 10% deduction. The contributions are paid on the profit before the contributions themselves (they may not be booked as a business expense, Art. 10(9) of the income-tax law) and then deducted in full from the annual income-tax base. The 33% band is applied to taxable income after the deductions, because Art. 15(1)-(2) of the income-tax law applies the rates to annual taxable income; the 10% contribution stops at the EUR 105,300 annual ceiling (10% of it is 10,530). Not modelled: the solidarity tax on income above the contribution ceiling, the 3% surtax on total income above EUR 200,000, the self-employed of pension age (29.36%), dependants' reliefs and other deductions, the carry-forward of losses (three years), VAT (a freelancer with business customers in other EU states must register for VAT, but it is a pass-through).

Important context

The 15% applies only for the first 365 days of Latvian tax residency (counted from the day the person became resident, but not before 1 January 2023); after that the progressive 25.5% / 33% income tax of the general regime applies, with the non-taxable minimum. The headline 15% is misleading on its own: unless another state's social-insurance law applies, VID treats the visa holder as a domestic employee of a foreign employer and charges 34.09% on the whole remuneration received (no 780-euro floor trick as for the self-employed), which makes the combined burden about 44% — heavier than the ordinary self-employed route — so the option exists to show the 15%-only case. For a visa holder with an own business registered in an OECD state VID gives no formula for the contribution base (its worked example only says the person pays as a domestic employee of a foreign employer); this scheme applies the rate to net profit, which is an interpretation, and the examples use plain remuneration. A foreign tax paid can be credited against the Latvian tax (not modelled). Doubt: the income-tax law's Art. 15(19.2) still cites Art. 11(5) of the old Immigration Law, which ceased to be in force on 15 September 2026; the visa now sits in Art. 17(6)/18(2) of the new law, and no VID statement withdrawing the 15% rate was found. Not modelled: the other rules of the visa itself (income threshold, insurance), EU/EEA citizens (the visa is for third-country nationals), and the solidarity tax on income above the EUR 105,300 contribution ceiling, where the model stops the 34.09% (34.09% of 105,300 = 35,896.77).

Important context

The 25% is the full cost: it already contains the social insurance (the State Social Insurance Agency derives the contribution object from the 80% share at the self-employed rate, about 64% of turnover, so the person is insured and builds a pension) and the income tax on the business income, and no non-taxable minimum or deduction applies to this income (the minimum can still be used against other taxable income). The VAT-threshold cap is a registration rule, not a hard stop: exceeding it forces VAT registration and ends the status from the next tax year. The old EUR 25,000 / 40% band, the 720 EUR employee limit and the quarterly minimum contribution no longer exist. Not modelled: from 1 April 2027 a separate 10% 'iesācēju' microenterprise tax for turnover up to EUR 12,000 (law of 17.09.2026), VAT, and the loss of status on becoming VAT-registered.