Employing in Latvia

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Enter the Latvian market without the requirement of opening a local entity.

Expanding into
Latvia

Global expansion is a step to make for any business, regardless of what you wish to achieve. The opportunities that can come with an expansion can be both incredibly exciting as well as intimidating and confusing, especially when you consider all of the registration procedures that needs to be done and documentation required.

Latvia city centre
Latvia city centre

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Expanding to countries such as Latvia – which is characterized by a skilled and driven workforce, multi-layered employment and tax laws, and a developed infrastructure network linking to the rest of the Baltics and Europe, and leading sectors in textiles, processed wood products, processed foods, chemicals, metalwork, and machine building – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

Ensuring compliance without the sufficient knowledge of the country’s laws also adds to the stress of getting your new entity off the ground and ready to test new markets. Going at it without the proper support can increase the costs, time and risks involved.

Each new markets bring new challenges, and these can be worked through more efficiently and cost-effectively with the support of an International Professional Employer Organization (PEO) such as Bradford Jacobs, especially through our Employer of Record (EOR) framework.

This can be best utilized when businesses are just beginning their expansion process and require more information before committing to incorporating an entity and fully establishing themselves in that market.

Country EOR Guide - Bradford Jacobs

Download our Guide to Latvia

Learn all about expanding into Latvia and see what we can do to make your expansion easier.

Download our Guide to Latvia

Learn all about expanding into Latvia and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs

Hiring Staff
in Latvia

Hiring Staff
in Latvia

The Main Sectors of the Latvian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Agriculture enjoys the fertile soil and temperate climate of Latvia. It is the traditional trade of Latvians and is still relevant today. Grain makes up a third of the sector. Quality dairy products and honey lead the niche of high added value exports.

Although the agricultural sector contributes to only 3.9% of Latvia’s economy, it employs about 8% of the country’s labor force. With regards to agricultural practices, the government of Latvia disfavors biotechnology.

Instead, it promotes organic farming which aims at establishing sustainable agricultural practices. Subsequently, Latvia ranks among the EU member states with the highest proportions of land used for organic farming.

Chemical industry relies on highly educated human resources. Pharmacy, recycling, eco-friendly chemicals, and bio cosmetics are manufactured in Latvia and widely exported abroad.

University educated local experts provide innovative fundamental research and development (as in the Institute of Organic Synthesis). Medicinal discoveries are among the highlights of the Latvian chemical industry.

Latvia was among the first countries to be industrialized. Its major industries are textiles, processed wood products, processed foods, chemicals, metalwork, and machine building. Latvia builds both small and big machines such as railway cars, buses, washing machines, and radios. The chemical industry makes up a huge chunk of exports.

The industry relies on highly specialized and educated human resources who have made great medicinal discoveries over the years. Products manufactured include bio cosmetics and eco-friendly cosmetics. The decline in demand for fibers and detergents may affect the chemical industry over time.

This progressive sector is one of the fastest-growing industries in Latvia. In Latvia, the ICT industry demonstrates 30% profit growth YoY. In our country, we observe 5% added value growth YoY. ICT sector contributes 6% of total GDP (2020).

There are also 36k people employed in the ICT sector in Latvia, and a growing number of ICT enterprises – 7056 in 2020.

Woodworking thrives on the green gold of Latvia. Half of the country is covered by lush forests, some of which are cut and exported. Raw lumber and manufactured products are a notable component of Latvian exports. Designated natural reserves, state owned forests and long-term business strategies keep the balance between business and nature.

This industry is very export oriented. The forest sector contributes 19% of total Latvia’s exports or 2,6 billion EUR (2020). Currently, Latvia exports approximately 70-75% of forest sector output, indicating the historically high quality of Latvian woodworking products. Forestry, wood processing, and furniture making represent around 5.3% of GDP (2020).

The forestry and woodworking sector is also one of the biggest employers in Latvia, employing around 38 813 people (2020).

The transport and logistics field is attractive and lucrative in Latvia, as 6621 companies operate within the sector, with total employment of 71, 005 people.

Logistics is well established since time immemorial thanks to the geographic location of Latvia. Ports, rail, and roads of Latvia have always linked Europe and the rest of the West with the East. 25 million customers are reachable within 48 hours in the Baltic region next to Latvia. Airport of Rīga provides European and transcontinental flights to almost a hundred destinations.

In 2020, Latvia had more than 145 million tons of cargo transported through railways, roads, and ports – 24 million tons through railway, 45 million tons sent internationally out from Latvian seaports, 76 million tons transported by road and 11 thousand tons of cargo delivered by air transportation.

The Main Sectors of the Latvian Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Photo of picnic setting in Latvia
Agriculture enjoys the fertile soil and temperate climate of Latvia. It is the traditional trade of Latvians and is still relevant today. Grain makes up a third of the sector. Quality dairy products and honey lead the niche of high added value exports.

Although the agricultural sector contributes to only 3.9% of Latvia’s economy, it employs about 8% of the country’s labor force. With regards to agricultural practices, the government of Latvia disfavors biotechnology.

Instead, it promotes organic farming which aims at establishing sustainable agricultural practices. Subsequently, Latvia ranks among the EU member states with the highest proportions of land used for organic farming.

Chemical industry relies on highly educated human resources. Pharmacy, recycling, eco-friendly chemicals, and bio cosmetics are manufactured in Latvia and widely exported abroad.

University educated local experts provide innovative fundamental research and development (as in the Institute of Organic Synthesis). Medicinal discoveries are among the highlights of the Latvian chemical industry.

Latvia was among the first countries to be industrialized. Its major industries are textiles, processed wood products, processed foods, chemicals, metalwork, and machine building. Latvia builds both small and big machines such as railway cars, buses, washing machines, and radios. The chemical industry makes up a huge chunk of exports.

The industry relies on highly specialized and educated human resources who have made great medicinal discoveries over the years. Products manufactured include bio cosmetics and eco-friendly cosmetics. The decline in demand for fibers and detergents may affect the chemical industry over time.

This progressive sector is one of the fastest-growing industries in Latvia. In Latvia, the ICT industry demonstrates 30% profit growth YoY. In our country, we observe 5% added value growth YoY. ICT sector contributes 6% of total GDP (2020).

There are also 36k people employed in the ICT sector in Latvia, and a growing number of ICT enterprises – 7056 in 2020.

Woodworking thrives on the green gold of Latvia. Half of the country is covered by lush forests, some of which are cut and exported. Raw lumber and manufactured products are a notable component of Latvian exports. Designated natural reserves, state owned forests and long-term business strategies keep the balance between business and nature.

This industry is very export oriented. The forest sector contributes 19% of total Latvia’s exports or 2,6 billion EUR (2020). Currently, Latvia exports approximately 70-75% of forest sector output, indicating the historically high quality of Latvian woodworking products. Forestry, wood processing, and furniture making represent around 5.3% of GDP (2020).

The forestry and woodworking sector is also one of the biggest employers in Latvia, employing around 38 813 people (2020).

The transport and logistics field is attractive and lucrative in Latvia, as 6621 companies operate within the sector, with total employment of 71, 005 people.

Logistics is well established since time immemorial thanks to the geographic location of Latvia. Ports, rail, and roads of Latvia have always linked Europe and the rest of the West with the East. 25 million customers are reachable within 48 hours in the Baltic region next to Latvia. Airport of Rīga provides European and transcontinental flights to almost a hundred destinations.

In 2020, Latvia had more than 145 million tons of cargo transported through railways, roads, and ports – 24 million tons through railway, 45 million tons sent internationally out from Latvian seaports, 76 million tons transported by road and 11 thousand tons of cargo delivered by air transportation.

Commercial Laws
in Latvia

  • State Revenue Service – a direct administrative authority under the supervision of the Minister of Finance, which ensures:
    • the accounting of tax payments and taxpayers
    • the collection of taxes, duties and other mandatory payments specified by the State in the territory of the Republic of Latvia
    • the collection of taxes, duties, and other mandatory payments into the budget of the European Union
    • the implementation of the customs policy and organization of customs matters.
  • The State Labor Inspectorate (SLI) – a direct management authority which is subordinated to the Minister of Welfare. The legal status, function, tasks, and the operational procedure of the SLI is defined in the State Labor Inspectorate Law adopted on 19 June 2008.It is the authority responsible for the enforcement of labor law including both general working conditions and occupational safety and health.

In Latvia, employment contracts must be presented to employees in writing. An indefinite contract is the standard, with fixed-term contracts admitted only in certain conditions.

Labor law in Latvia is based on both employer and employee protection. The employment relationship and its terms are hierarchically determined by the Constitution, international treaties, the local labor law, collective bargaining and agreements, employment rules and business practices, with the individual contract being last in the order.

All employee contracts, irrespective of type, should contain the following conditions:

  • the place of work
  • the employee’s specific occupation and its corresponding functions
  • the salary
  • the probation periods
  • the working hours
  • the required notice periods
  • the conditions of the collective agreement or work procedure regulations that apply to the employment relationship
  • the start date and duration of the employment relationship (for fixed-term contracts only)

Income Tax: Personal Income Tax (PIT) in Latvia is withheld by the employer and paid to the tax authorities every month. An employee’s income is taxed progressively, depending on their annual income.

Any individual earning an income must pay local taxes in Latvia, regardless of their residential status. Permanent residents are taxed on their worldwide income, whilst foreign nationals living and working in Latvia are only taxed on the income they receive in Latvia.

Filling tax returns can be done in person at the nearest State Revenue Service office, but it is generally done online via Electronic Declaration System (EDS). For tax-filing in Latvia, it is mandatory for a taxpayer to obtain a personal identification code (PIC).

For more information on topics such as Social Insurance/Security, Sick Leave & Pay, Paid Vacations and Maternity & Paternity Leave Download our Latvia Country Guide

Commercial Laws
in Latvia

Blacksmith working in smithy workshop
  • State Revenue Service – a direct administrative authority under the supervision of the Minister of Finance, which ensures:
    • the accounting of tax payments and taxpayers
    • the collection of taxes, duties and other mandatory payments specified by the State in the territory of the Republic of Latvia
    • the collection of taxes, duties, and other mandatory payments into the budget of the European Union
    • the implementation of the customs policy and organization of customs matters.
  • The State Labor Inspectorate (SLI) – a direct management authority which is subordinated to the Minister of Welfare. The legal status, function, tasks, and the operational procedure of the SLI is defined in the State Labor Inspectorate Law adopted on 19 June 2008.It is the authority responsible for the enforcement of labor law including both general working conditions and occupational safety and health.

In Latvia, employment contracts must be presented to employees in writing. An indefinite contract is the standard, with fixed-term contracts admitted only in certain conditions.

Labor law in Latvia is based on both employer and employee protection. The employment relationship and its terms are hierarchically determined by the Constitution, international treaties, the local labor law, collective bargaining and agreements, employment rules and business practices, with the individual contract being last in the order.

All employee contracts, irrespective of type, should contain the following conditions:

  • the place of work
  • the employee’s specific occupation and its corresponding functions
  • the salary
  • the probation periods
  • the working hours
  • the required notice periods
  • the conditions of the collective agreement or work procedure regulations that apply to the employment relationship
  • the start date and duration of the employment relationship (for fixed-term contracts only)

Income Tax: Personal Income Tax (PIT) in Latvia is withheld by the employer and paid to the tax authorities every month. An employee’s income is taxed progressively, depending on their annual income.

Any individual earning an income must pay local taxes in Latvia, regardless of their residential status. Permanent residents are taxed on their worldwide income, whilst foreign nationals living and working in Latvia are only taxed on the income they receive in Latvia.

Filling tax returns can be done in person at the nearest State Revenue Service office, but it is generally done online via Electronic Declaration System (EDS). For tax-filing in Latvia, it is mandatory for a taxpayer to obtain a personal identification code (PIC).

For more information on topics such as Social Insurance/Security, Sick Leave & Pay, Paid Vacations and Maternity & Paternity Leave Download our Latvia Country Guide

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