Tax system for entrepreneurs in Latvia

In Latvia, the tax system for entrepreneurs depends on the chosen form of activity and tax regime. Below are the taxes in Latvia as of 03.07.2025.

Main taxes for individual entrepreneurs

Personal income tax (IIN)

25.5% – standard rate on income.
33% – if income exceeds € 105,300 per year (progressive rate).
+3% – if income is more than € 200,000 / year.

Features

Tax book, non-taxable minimum € 510 / month, additional benefits for pensioners and dependents.

Micro-enterprise tax

25% – of turnover.

If the annual turnover is €50,000 or more and the company is required to register as a VAT payer, it loses the right to be a micro-enterprise tax payer.

The right to become a micro-enterprise and choose to pay the micro-enterprise tax is granted to:

• a sole proprietor;
• individual enterprise, peasant or fishing farm;
• an individual who is registered with the State Revenue Service as an entity carrying out economic activities.

Value Added Tax (VAT)

21% – standard rate.
12% – reduced rate (medicines, special products, baby food, hotel services, firewood).
5% – special cases (printed materials).
0% – in certain cases provided by law (e.g. export of goods).

Exemption from VAT if the turnover is less than €50,000/year (but you can register voluntarily).

Social contributions in connection with the payment of salaries (MSSIC)

For companies: 34.09% of the salary (of which 23.59% is paid by the employer, 10.50% by the employee).
For self-employed persons: 31.07% of the minimum wage established in the country and +10% of the remaining income.

Corporate income tax (dividend tax)

20% – if dividends are paid to an individual.
0% – if the profit is reinvested.

Real estate tax

From 0.2% to 1.5% of the cadastral value of the real estate, up to 3% for abandoned properties.

The most popular forms of business in Latvia

1. Limited Liability Company (SIA) – profit tax on dividend distribution 20% (or 0% if the profit is not distributed).
2. Sole proprietor or self-employed person (FIK) – pays IIN (25.5%) or micro-enterprise tax (25%).

Law firm Inlatplus is always ready to assist its clients in registering a company and provide the necessary legal advice.