Establishing and managing a payroll in Latvia
Latvia’s growing economy, membership of the European Union, and convenient location in Europe all contribute to it being an excellent place to do business.
If your organization is planning an expansion into Latvia, an early step in the process is likely to be hiring a local workforce and setting up a payroll. This process can be very time-consuming, and you will need to ensure compliance with the country’s complex and unique employment regulations.
Horizons offers a flexible range of payroll outsourcing services for organizations expanding into Latvia. Our dedicated team can handle all the legal work, tax compliance, and administration, even acting as your employer of record in the country, making the whole expansion process simpler, faster, and more efficient.
If you have an entity
Does your organization have an entity registered in Latvia? We can help you to create and run your payroll in Latvia. In addition, we can provide HR, contract, and legal compliance support meaning you won’t have to worry about any of the complex administration and can focus on your expansion efforts.
If you don’t have an entity
If you haven’t established an entity in Latvia, our in-country subsidiary can act as your employer of record. We will take care of all payroll, contracts, associated legal work, and administration, helping you to outsource all the legwork and focus on successful expansion.
This service is perfectly suited to an organization looking for full flexibility and low risk when expanding into Latvia. We will take care of everything for you and be legally liable for employment, while you get to benefit from locally sourced talent.
Expanding your business in Latvia with Horizons
Latvia payroll guide
Taxation and withholdings in Latvia
Employers in Latvia generally need to withhold the income tax of employees. The income tax rate in Latvia is between 20% to 31.4% depending on income level.
Employers and employees are required to contribute to Latvia’s social security scheme, paying 23.59% and 10.5% of salaries respectively.
Entitlements and terminations rules in Latvia
Unless in a probation period, employees in Latvia are generally entitled to at least ten days of notice of termination and may receive up to one month.
Employees are also usually entitled to severance pay upon termination, with the amount varying depending on length of service. Usually:
- Up to five years with an employer = One month of salary
- Between five and ten years with an employer = Two months of salary
- Between ten and 20 years with an employer = Three months of salary
- More than 20 years with an employer = Four months of salary
How to establish a Latvia payroll
In general, businesses trying to set up a payroll in Latvia are required to register a legal entity in the country. This process can be complex and time-consuming, and it is important to follow the combination of national and EU-level regulations to avoid fines and legal issues.
Alternatively, you can choose to outsource all the setup to Horizons to ensure your expansion into Latvia is as simple and hassle-free as possible. Additionally, we can offer our employer of record service, so even organizations without an entity in the country can benefit from our comprehensive services.