Employer Tax Contributions

Tax Type	Rate	Base
State Mandatory Social Insurance Contributions (VSAOI) - Employer Share	23.59%	Employee's Gross Salary (up to EUR 105,300 annual cap)
Personal Income Tax (PIT) - Withholding	Progressive (20%, 23%, 31%)	Employee's Gross Salary (with progressive rates based on annual income)
Solidarity Tax	25%	Annual income exceeding EUR 78,100 (for social security purposes)

Filing & Compliance

• Monthly Report on Income Tax and VSAOI: Due by the 17th day of the following month.
• VSAOI Payments: Due by the 23rd day of the following month.
• Annual Report of Total Paid to Each Employee: Due by February 1.

In Latvia, employee tax deductions encompass several areas, including social security contributions, personal income tax, and specific deductible expenses.

Social Security Contributions

• State Social Insurance Contributions (SSIC): These contributions are mandatory for all employees and cover areas such as healthcare, pensions, and unemployment benefits. As of 2025, the employee's contribution rate is 10.50% of their gross salary. A minimum SSIC object equivalent to the minimum wage (EUR 740 for 2025) applies.

Personal Income Tax (PIT)

• Progressive Tax Rates: Latvia's PIT system uses progressive tax rates. As of 2025, the following rates apply:
  • 20% on annual income up to EUR 20,004.
  • 23% on annual income between EUR 20,005 and EUR 78,100.
  • 31% (inclusive of solidarity tax) on annual income exceeding EUR 78,100.
  • An additional 3% surcharge applies to the portion of income exceeding EUR 200,000 annually.
• Non-Taxable Minimum: A fixed non-taxable minimum of EUR 510 per month (EUR 6,120 annually) is applied to all employees, irrespective of their gross income. This amount is deducted from the taxable income before calculating PIT. For pensioners, the non-taxable minimum is EUR 1,000 per month (EUR 12,000 annually)
• Tax Return Deadline: The annual income tax return is due by June 1st of the following year.

Deductible Expenses

Certain expenses can be deducted from an employee's taxable income, reducing their overall tax burden:

• Education and Medical Expenses: Expenses related to education and medical services, including dental services, are deductible up to EUR 600 per year for each family member.
• Private Pension and Endowment Insurance Contributions: Contributions to private pension funds and endowment insurance (with a maturity of at least ten years) are deductible up to 10% of annual taxable income, capped at EUR 4,000 annually.
• Donations: Donations to public benefit organizations and political parties are deductible up to 50% of the individual's annual taxable income, capped at EUR 600 per year per family member.

Additional Information

• Employers' Responsibilities: Employers are responsible for withholding PIT and SSIC from employees' salaries and remitting these amounts to the relevant authorities monthly. They are also responsible for providing employees with the necessary information on tax deductions and allowances. Employers must submit the annual income tax return and payroll tax reports by the due date.
• Non-Residents: Taxation rules may differ slightly for non-residents. Generally, non-residents are taxed only on Latvian-source income.

This information pertains specifically to the 2025 tax year in Latvia and is current as of February 5, 2025. Tax laws and regulations can change, so it's essential to stay updated on any revisions. Consulting with a tax advisor can provide personalized guidance based on individual circumstances.