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Personal income tax and social contribution in Latvia 2017

10 August 2017
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Personal income tax and social contribution in Latvia 2017

Choosing a place of temporary or permanent residence can be based on various factors, one of which is the tax regime applicable to individuals. For employers, employees, sole proprietors, individual merchants and others the most important tax rate is personal income tax, because by this tax the personal income and salary is being taxed. Another tax-alike issue specifically addressed to employers and employees is the obligatory contribution amount for social security budget. In this article, personal income tax and social security contribution amount amendments of 2017 in Latvia are reviewed. The amendments have been lastly revised and adopted in the third Parliament sitting on July 27, 2017. It is planned that the amendments will be in force from January 1st, 2018, but some rules only from January 1st, 2019.


   I.            Personal income tax changes in Latvia 2017

Starting from 2018, there will be differentiated personal income tax in Latvia – 20% on the income which does not exceed EUR 20’000 per year (a lower rate than before the tax reform). 23% on the income between EUR 20’000-50’000 per year will be taxed, which was the rate for all personal income before the reformation. The income above EUR 55’000 will be taxed with a rate of 31,4%, which is a novelty for the purpose to receive more in taxes from the individuals having more income, but lower the rate for those receiving less. Also, non-taxable minimum and minimum salary up to EUR 430 is to be raised in Latvia by taxation changes of 2017.


      II.            Mandatory social security contribution changes in Latvia 2017

Health insurance will be included in the mandatory social security contribution system of Latvia and the rate of mandatory social security contribution will be raised by 1%. These changes have been justified by the fact that the rate in Latvia is the lowest in Baltics (before the reform it was 34,09% on mandatory social security contribution, while in Lithuania it is 40,2% and in Estonia 37,4%). This have been done due to problems in the public health providing sector, which drastically lacks monetary funds, and is in a process to be reformed as well.


Should you have any questions about personal income tax in Latvia, Lithuania or Estonia please do not hesitate to contact our English speaking lawyers at


T: +37167240090


F: +37167240091

For questions, please, contact Valters Gencs, attorney at law at

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The material contained here is not to be construed as legal advice or opinion.

© Gencs Valters Law Firm, 2016