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International Internet Magazine. Baltic States news & analytics Monday, 11.12.2023, 03:40

Social security contributions in Latvia to be cut by 1 pp in 2021

BC, Riga, 27.11.2020.Print version
Social security contributions in Latvia will be cut by one percentage points as of next year under draft amendments to the law on state social insurance, which the Latvian Saeima passed in the final reading on November 27th, cites LET.

The new legislation also regulates the size of social security contributions for persons whose income is below the minimum wage, including self-employed persons. 

According to the new amendments, the rate of social security contributions is being reduced from 35.09% to 34.09%, or by 0.5 percentage points both for employers and employees. Thus, the rate of the social contributions is planned at 23.59% for employers and 10.5% for employees. 

As of 2021, the minimum quarterly social security contribution will be calculated from three minimum monthly wages. The minimum monthly wage will be raised to EUR 500 next year. The minimum monthly social contribution for insured employees has been set at EUR 170.

The declared income of persons doing several jobs will be summed up. If the quarterly income of such persons will be smaller than three minimum wages, the difference between the social tax paid and the minimum tax will be paid by the employer. 

As of July 1, 2021, the rate of the pension insurance contribution paid by self-employed persons will be raised from 5 percent to 10 percent. The mandatory contribution for those self-employed persons whose monthly income is below the minimum wage will be 10% from the minimum wage. 

As of July 1, 2021, payers of microenterprise tax will have to be socially insured like a self-employed person, while employees of microenterprises will have to be insured according to the general regulation.

Seasonal agricultural workers and self-employed working for foreign employers will be exempt from the minimum contributions. 

The above amendments have been included in the package of legislations related to Latvia's 2021 budget and will come into effect on January 1, 2021.

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