Becoming self-employed in Latvia: VID registration, the €50,000 VAT threshold, and the PIT-versus-micro choice
A Latvian freelancer registers as a performer of economic activity with the State Revenue Service, watches the €50,000 VAT threshold, and picks between profit-based PIT and the 25% micro-enterprise tax. Social insurance runs about 31.07%.
This article is general information, not tax advice. Regulations change — verify the current rules with the official sources below before acting.
Freelancing in Latvia starts with a simple registration, but the interesting decision comes next: which income tax regime to sit in, and how that interacts with VAT.
Registration with the VID
You register as a performer of economic activity (saimnieciskās darbības veicējs) with the State Revenue Service (VID) through its EDS electronic system, before you start trading. There is no fee. This registration is what turns your freelance activity into a recognised taxable one and sets up your declaration obligations.
The €50,000 VAT threshold
You must register for VAT when your taxable supplies over the preceding 12 months exceed €50,000. Because this is a rolling 12-month test rather than a calendar-year one, track it continuously — a strong run of invoices can quietly push you over. One important interlock: a micro-enterprise tax payer cannot be VAT-registered, so crossing the threshold effectively forces you out of that regime.
Choosing a regime, and social insurance
There are two income tax regimes. Under personal income tax (PIT) you are taxed on profit — 25.5% up to €105,300 and 33% above — after deducting expenses. Alternatively, the micro-enterprise tax (MET) is 25% on turnover with no expense deduction (and no VAT registration). On top of either, mandatory state social insurance (VSAOI) runs about 31.07% for the self-employed, paid quarterly. The right regime depends on your margins: high-expense work usually favours PIT.
General information about becoming self-employed in Latvia, current as of the review date above, and not tax advice. Thresholds and rates change — confirm current figures with the VID or a qualified accountant.
Frequently asked questions
When must a self-employed person in Latvia register for VAT?
When taxable supplies over the preceding 12 months exceed €50,000. This is a rolling 12-month test rather than a calendar-year one, so track it continuously. Note that a micro-enterprise tax payer cannot be VAT-registered, so crossing the threshold effectively forces a move out of that regime.
What are the two income tax regimes for Latvian freelancers?
Either personal income tax (PIT) on profit — 25.5% up to €105,300 and 33% above — after deducting expenses; or the micro-enterprise tax (MET) at 25% on turnover with no expense deduction. An MET payer cannot be VAT-registered, which makes the choice interlock with your VAT position.