Here's a guide on how to start and manage a freelancing business in Latvia, covering registration, tax obligations, and essential record-keeping for legal compliance.
*Please be aware that we do not update this information in real time, so you should verify that the law has not changed recently.
State Revenue Service (SRS):
All freelancers must register their business with Latvia’s State Revenue Service, declaring the business category and showing certifications if your field requires them.
Registration can be done online through the SRS Electronic Declaration System (EDS), though you will need to verify your identity in person at a Client Service Center.
Workspace Requirements:
If renting a workspace outside your home, you must provide landlord permission and documentation from co-owners of the space.
Registration Fees:
While registration includes a licensing fee, you may qualify for a reduced rate if you meet conditions like earning under €3,000 annually, receiving disability benefits, or holding an old-age pension.
Personal Income Tax (PIT):
Freelancers in Latvia are subject to a progressive income tax rate:
20% for income up to €20,004
23% for income between €20,004 and €78,100
31% for income exceeding €78,100
PIT filings are due annually, with deadlines between March and June, or April to July for higher earners.
Minimum Tax:
A minimum tax of €50 applies even if your earnings are low or zero.
State Social Insurance Contributions (MSSIC):
As a self-employed person, freelancers must report quarterly MSSIC contributions at a rate of 31.07%. Reduced rates may apply if you receive a pension or manage immovable property.
The required amount for quarterly payments is calculated based on your income over the past three months and communicated by the State Social Insurance Agency.
Value Added Tax (VAT):
If earning over €40,000 annually, freelancers must register for VAT, applying a standard rate of 21% on transactions. Reduced rates of 12% and 5% apply to specific sectors. Some sectors, like international transport, are VAT-exempt but still need proper record-keeping.
Income and Expense Journals:
Freelancers are required to maintain detailed records of all income and expenses. This can be in a paper or electronic journal, with official templates provided by the government.
Paper Journals:
Numbered and chronologically ordered pages, each certified by your signature and stamp.
Electronic Journals:
Must be available for printing upon request and comply with official structuring, including sequential and verified entries.
Journal Requirements:
A separate journal is required for each fiscal year and for monthly reporting, with an ongoing balance between the end of one reporting period and the beginning of the next.
Supporting documents must justify each journal entry, with personal expenses recorded in a separate journal.
Freelancing in Latvia offers a flexible lifestyle and income potential. However, compliance with tax and regulatory requirements, including personal income tax, social insurance contributions, and VAT, requires diligent record-keeping and understanding of changing regulations. With structured financial management and professional support, freelancers can focus on growing their business with confidence in their legal compliance.