One of the most consistently challenging aspects of contracting in Latvia is complying with the country’s tax system. As well as paying tax in Latvia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
If you’re working in Latvia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Latvia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Latvia, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Latvia through PAYE is left with the prospect doing everything themselves.
Do you know much about Latvian Tax Law? Does Latvia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Latvia can range from 20 to 31.4 percent, and you need to be sure you are placed in the correct tax brackets.
If you are a contractor and want a calculation on your tax and net retention in Latvia, we can supply it to you free of charge.
Contractors in Latvia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Latvian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Latvian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Latvian tax office or tax department directly including processing your tax refund if you are eligible.
We work with numerous umbrella companies in Latvia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Latvia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Latvian work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Latvia but without the overhead of directly dealing with the Latvian tax authorities. Get in touch with us today for some reliable advice on tax in Latvia!
You can file your taxes online via the State Revenue Service’s Electronic Declaration System (EDS).
Step 1: Register
There are 2 ways to register for the State Revenue Service’s EDS.
You may register here(link is external) using your online banking details, electronic identification card (eID) or secure electronic signature (sParakstu).
Alternatively, you can complete the form here(link is external) and submit it to your nearest State Revenue Service (SRS) Client Service Centre, along with a passport or ID. This can be found here(link is external).
Within 5 working days, you will receive a username and password from the SRS.
Step 2: Sign In
Log in to the EDS here(link is external). Here you can declare and pay your taxes.
You become a tax resident in Latvia when:
- Your registered (declared) place of residence is located in Latvia;
- You stay in Latvia for 183 days or longer in a 12-month period beginning or ending during the tax year; or
- You are a citizen of Latvia and you are employed abroad by the Latvian government.
Tax treaties may apply to influence residence for tax purposes.
Residents are taxed on their global income. Non-residents are taxed on their Latvia-source income only.