Latvia PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Latvia to companies willing to enter the Latvian market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Latvia. However our solution allows you to start the working process in Latvia within days hence save time and money.  WeHG would hire candidates on your behalf while you retain full operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Latvia fast facts

Population, million: 1,877,541
Land area: 64,589 km²
Capital: Riga
Local currency: Euro (EUR)

GDP per capita:$ 14500.00
GDP in currency:$ 28.20 billion

Latvia is officially the Republic of Latvia is an independent republic in the Baltic region of Northern Europe. Since gaining independence, Latvia has been considered one of the Baltic states. It borders Estonia in the northern region, Lithuania in the south, Russia and Belarus in the southeast in the east, and shares a maritime border with Sweden in the west.

Hiring, Negotiating and Doing Business in Latvia

Necessity of written employment contract

An employment contract must be in writing form. After the conclusion of the employment contract, the employer must register it.

Different forms of engagement: employment, contracting, work with private entrepreneur

A collective agreement may be concluded in writing between the employer and the workers ‘union or authorized workers’ representatives. A collective agreement is binding on all employees hired by a specific employer, unless otherwise specified in a collective agreement.

Latvia Employment Contract

Types of employment agreements

The employment contract can be temporary or signed on indefinite amount of time.

The employment contract can be temporary (for two years at most) or signed on indefinite amount of time.

Latvia working hours

40 hours per week.

Overtime

Overtime work cannot be more than 48 hours in a month or 200 hours a year.

Vacation leave in Latvia

The employee is authorized to 4 weeks of vacation, of which he must take at least 2 weeks of vacation per year. The remaining 2 weeks of vacation can be carried over to the next year once.

Latvia Maternity Leave

Women are entitled to 112 days of maternity leave. If a woman applied for maternity care at a medical institution by the 12th week of pregnancy and continued throughout the entire period of pregnancy, she is granted an additional leave of two weeks with its addition to the maternity leave. During maternity leave workers are paid 80% of the average wage subject to insurance contributions.

Latvian Severance Laws

The employee must be notified no later than a month in advance of the dismissal, if a shorter period for notification is not specified in the employment contract or in the collective agreement.

If there are good reasons the employer may, exceptionally, within a month to file a lawsuit claim for termination of the employment relationship in these cases. All circumstances which, for reasons of moral and mutual honesty, do not allow the continuation of a legal employment relationship are deemed to be such a ground. The question of whether there is a good reason is decided by the court upon its conclusion. Here, the legislature actually leaves the decision to the discretion of the court. The employee and the employer can terminate the employment relationship by mutual written consent.

Latvia Tax

PIT – 31.40%
Since 2020 tax rate for PIT (PIT) in Latvia is 31.40 %.
Individuals who are resident for tax purposes in Latvia are taxed on their worldwide income. Certain expenses are allowed: (e.g. educational and medical) as well as social security contributions, personal allowance (monthly EUR 75) and allowance on dependents (for each registered dependent 165 EUR).
A non-resident person is taxed on his Latvian source income and is not entitled to any deductions or allowances, except when he/she (resident of EU/EEA member state) has derived more than 75% of his total income in Latvia in the tax year. Deduction may apply if similar relief has not been applied in his/her residence country.
A  natural  person  is  considered  a Latvian tax resident if he resides or stays in Latvia for 183 days or more during 1year.

Social Security contributions 35,09%
The social tax or social insurance contribution rate of 35,09 % which consists of Employer’s part 24,09 % and Employee’s part 11%.
The social tax must be calculated for all Latvia’s residents and foreigners employed by Latvian or EU/EEA employer.
If the employer is a company registered outside the EU/EEA or in a country that does not have a tax treaty with Latvia, then the responsibility to settle Social Tax in Latvia lies on the employee (Social Tax rate in this case is 33,19%).

Health Insurance Benefits in Latvia

Latvia has universal healthcare funded by the government, with pay for fee service subject to an annual cap.

Additional Benefits in Latvia

Common employee benefits include supplemental health insurance and a company car.

General market practice benefits/additional allowances

There are no restrictions or guidelines on the type or size of bonuses that can be awarded to employees.

Latvia Holidays

Latvia celebrates 12 national holidays:

• New Year’s Day
• Good Friday
• Easter Sunday
• Easter Monday
• Labor Day
• Restoration of Independence
• Midsummer
• Proclamation Day of the Republic of Latvia
• Christmas Eve
• Christmas Day
• Boxing Day
• New Year’s Eve

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.