Taxes in Latvia and EU

We wish you a happy New Year 2015! May this year bring you a lot of success, sustained economic growth and of course good profits!

I would like to inform you about important tax and accounting services changes in the Latvian law, which are coming into force starting form 01.01.2015:

1 - Minimal salary is now 360 euros and minimum hourly rate - 2,166 euros

This means that the total tax burden in the calculation of minimal salary, applying the non-taxable minimum will be 179,4 euros and without the non-taxable minimum - 197,19 euros. The amount of tax for one dependent will be reduced to 37,95 euros.

2 - Personal income tax rate decreased to 23% (previously 24%)

This tax rate also applies to self-employed persons.

3 -  The micro tax stays at 9% for turnover under 7.000 euros , but is increased to 11% for the turnover over 7.000 euros. In 2016, this rate will reach 13%, and in 2017 - 15%.

4 – The minimal salary for the member of the board will be set only if the turnover of the company is more than 1 800 euros and if none of the employee did not receive minimal or higher salary. This rule does not apply to micro-enterprises and to recently registered companies.

How great it is that draconian rules are no longer in force. That means that the rule, which supposed repayment of minimal salary tax from any turnover of a small company, is already in the past.

  5 - The Government introduced a liability for company’s tax debts for individuals (members of the board of the company). If the following points are accomplished, the State Revenue Service has the right to start a trial against the board of the company:

1) The amount of tax debt should exceed 50 times the minimal salaries (in 2015 - EUR 18,000);
2)  Legal person received the decision of tax debts recovery;
3) It has been found that after the tax debts overhang, legal person decided to sold  (or to transfer) the assets to a  person,  interested in  the company’s management;
4) The act of impossibility of pursuing debts has been drawn;
5) The legal person did not make an application for insolvency proceeding to be commenced.

I do not think that this rule will affect your company, but it is good to keep in mind this information.

Some minor changes that might be interesting for you as well:

The abolition of limitation on the social benefits, like sickness benefits, unemployment benefits, maternity (paternity) benefits, are coming into force starting from the next year.

Social insurance contributions on the subject of compulsory payments:

• for self-employed persons it comes  to 30.58% (from 01/01/2015 the minimal facility charges are 360 euros per month, before the rate was 31.06%.)
• if the employee is a recipient of superannuation or handicapped person,  the rate  makes 31.07% (before 31.48%)
• an employee who has reached the age of pension (even before the target date ) - 28.70% (Before - 29.12%)

Financial institution will inform the SRS of all individual loan repayments that exceed 360 euros per month or 4320 euros per year. This will help to compare the incomes and expenses of individuals and to determine the undeclared incomes and all kind of tax avoidance.