Self-Employed Tax in Latvia (2026): Income Tax and Social Contributions
A Latvian self-employed person (saimnieciska darbiba) pays income tax on the same 25.5%/23%/33% scale as employees, applied to net business profit after deductible expenses, with the EUR 550/month non-taxable minimum available on the annual return. VSAOI is around 31.07% on a chosen base (or a 10% minimum contribution when monthly income is below EUR 700). Verify all figures with VID (vid.gov.lv).
Income tax for the self-employed
Self-employed income tax uses the same progressive rates as salary income: 25.5% up to EUR 20,004, 23% to 105,300, 33% above. The base is net profit -- business revenue minus documented deductible expenses. The fixed non-taxable minimum (EUR 6,600/year) is applied through the annual income declaration. Because business income is often uneven, the self-employed make advance payments during the year and reconcile on the annual return.
Social contributions
Self-employed VSAOI is higher than the employee rate because there is no employer to share it: around 31.07% on a chosen contribution base (subject to minimum and maximum bases). Where monthly income is below the minimum wage threshold (about EUR 700/month), a reduced 10% minimum contribution applies to maintain basic coverage. The exact bases and rates change annually -- confirm with VID and the State Social Insurance Agency before filing.
Micro-enterprise alternative
Some small businesses opt for the micro-enterprise tax regime, which replaces income tax and social contributions with a single turnover-based tax at a flat rate. Eligibility and rates are restricted and have changed in recent years. Choosing between the standard regime and the micro-enterprise tax depends on your margins, turnover and whether you have employees. Consult a Latvian accountant and confirm the current rules with VID.
FAQ
Do the self-employed pay the same income tax rates as employees?
Yes. The 25.5%/23%/33% scale applies to net business profit, with the fixed non-taxable minimum available via the annual return. The difference from employment is mainly on the social-contribution side. Verify with VID.
How much VSAOI does a self-employed person pay?
Around 31.07% on a chosen contribution base (both the employee and employer shares fall on the individual), with a reduced 10% minimum contribution when income is below roughly EUR 700 per month. Confirm the current bases with VID.
What is the micro-enterprise tax?
It is an optional simplified regime taxing turnover at a flat rate instead of separate income tax and social contributions. Eligibility is limited and the rules change; check the current conditions with VID before choosing it.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.