Hiring in Latvia? One contribution, one agency, no guesswork.

Latvia is one of the most straightforward EU markets to run payroll in, but its corporate tax model rewards the businesses that understand it and quietly penalises the ones that assume it works like everywhere else. We help you choose the right way to hire, place you with the right partner, and stay alongside you for the life of the relationship.

  • Independent advice
  • Vetted partners
  • On your side at renewal

A eurozone economy with one social insurance scheme. A tax model that rewards patience.

Latvia’s payroll mechanics are genuinely simple: one mandatory social insurance contribution, one agency, one combined rate. What catches employers out is the corporate side, where profit sitting inside the company is taxed at 0% and only becomes taxable the moment you distribute it, which changes how a foreign parent should think about dividends from day one, not after the first annual return.

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A eurozone economy that rewards reinvestment, literally

Riga’s ICT, fintech, and logistics sectors sit inside the eurozone and the EU single market, but Latvia’s corporate tax is not a flat annual charge: retained and reinvested profit is taxed at 0%, and the 20% rate only applies once profit is distributed to shareholders.

02

Simple contributions, distinctive tax timing

One state social insurance contribution (VSAOI), collected by a single agency, at a combined rate that has not moved in years, sits alongside a corporate tax system that only charges you when you take money out of the company, and a personal income tax that moved to a genuinely progressive structure in the recent reform.

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Independent expert advice

Not sure whether you need EOR, payroll, or your own SIA? We map your headcount, timeline, and risk profile and give you a clear recommendation, not a product pitch.

Four ways to hire in Latvia. Pick once, pick right.

Most businesses arrive having already decided, and often decided too quickly. Here is the honest version of each route. When one fits, the detailed guide is one click away.

Employer of Record

An EOR partner becomes the legal employer of your Latvian staff, handling the contract, VSAOI-compliant payroll, income tax withholding, and Darba likums notice and leave rules, while you direct the work. Operational in days, no entity needed. Best for testing the market or hiring a small team.

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Global Payroll

For when you already have a Latvian entity, or want to consolidate payroll across several countries. You stay the legal employer; a specialist partner runs the monthly VSAOI and income tax withholding correctly, and keeps the corporate-tax-on-distribution timing straight with your finance team.

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Entity Formation (SIA)

Your own Latvian company, most commonly a SIA (the standard limited-liability vehicle, minimum capital as low as EUR 1 for smaller founder groups), registered at the Register of Enterprises. Full control and a local presence, but you carry the registration, notary, and ongoing filings. Right when the headcount and permanence justify it.

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PEO Services

A co-employment model alongside your own Latvian entity. Genuine PEO co-employment is less commonly used in Latvia than a straight EOR or payroll arrangement, so for most companies one of those is the better fit. We will tell you honestly which one your situation calls for.

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Latvia at a glance

Currency

Euro (EUR). Latvia has used the euro since 2014, so unlike Sweden or the UK there is no currency-conversion risk sitting underneath your Latvian payroll.

Minimum wage (2026)

EUR 780 per month gross (about EUR 4.50 per hour) for full-time work from 1 January 2026, up from EUR 740 in 2025. One national rate, no regional variation to track.

Employer costs

Employers pay 23.59% of gross salary in mandatory state social insurance contributions (VSAOI), collected by a single agency (VSAA) rather than split across several schemes. There is no separate health-insurance or pension top-up to track outside this one rate.

Leave & Notice

Latvia is not at-will: notice runs from 3 days in probation up to 1 month depending on the statutory ground for dismissal, with severance banded by length of service. Statutory annual leave starts at 4 calendar weeks (28 days), on top of around 13 public holidays in 2026.

Hiring in Latvia: quick answers

The questions we are asked most about hiring in Latvia.

What is the fastest way to hire someone in Latvia?

An Employer of Record. Your hire can start in days, with a compliant Latvian employment contract under the Darba likums from day one and no entity to set up. It is the lowest-risk way to test the market or place a small team.

Do I need a Latvian entity to hire?

No. With an EOR you can employ people in Latvia without your own company. You only need to incorporate a SIA when you are committing to a permanent, larger presence, and we will tell you honestly when that point arrives.

The social insurance side (VSAOI) genuinely is simple, one agency, one combined rate. The complexity sits on the corporate tax side, where retained profit is taxed at 0% and the 20% rate only bites the moment it is distributed, plus the newer progressive personal-tax bands most people still assume are a flat rate. None of it is a problem when a partner who already knows the rules is running it for you.

We are independent: we assess what you actually need, place you with the right vetted partner, secure pricing you will not get going direct, and stay on your side to escalate or renegotiate. You get advice, not a product pitch.

Let’s map your Latvia hire.

Tell us who you want to hire and where you are headed in Latvia. One conversation maps your options, flags the risks, and usually gets you to a better answer, and better pricing, than going direct. No pitch.

Tax and labour data verified July 2026 (State Revenue Service (VID), State Social Insurance Agency (VSAA), Register of Enterprises). Figures change; we confirm the current position when we scope your hire.