How much you pay in Latvia depends on how you earn, so here are all three pictures: an employment contract, self-employment and running your own company. Real headline rates, verified July 2026.
As an employee
Income tax: 25.5% up to ~€105k/yr, 33% above (2025 reform). Social contributions: 10.5% employee.
The reform flattened the old three brackets into two. Rates as of July 2026. Tax rules change every budget cycle and depend on your personal situation: verify with a licensed tax advisor before acting.
As a freelancer or sole trader
Income tax: Micro-enterprise tax: 25% of turnover (limits apply), or regular brackets on profit. Social contributions: 31.07% self-employed social on the base.
Micro-enterprise status is simple but caps who you can work with; check eligibility. Rates as of July 2026. Tax rules change every budget cycle and depend on your personal situation: verify with a licensed tax advisor before acting.
As a company owner
CIT 0% on retained profits; 20/80 (~25% effective) on distribution. Dividends covered by the distribution tax.
Latvia mirrors the Estonian keep-it-in-the-company model. Rates as of July 2026. Tax rules change every budget cycle and depend on your personal situation: verify with a licensed tax advisor before acting.
Two rules that apply everywhere
Tax residence usually follows your life, not your paperwork: spend 183+ days in Latvia (or keep your centre of vital interests there) and you generally owe taxes there regardless of visa or company setup.
Special regimes and treaty rules can change these numbers dramatically in both directions. This page is educational information, not tax advice: before you commit to a structure, have a licensed Latvia tax advisor confirm the current rules for your specific case.