micro company taxes and VAT in Latvia
Thread poster: Alexandra Lindqvist

Alexandra Lindqvist
Local time: 06:45
English to Swedish
+ ...
Feb 3, 2011

Dear Latvian collegues,

I am a Swedish native living in Latvia working as a freelance translator under the form of a selfemployed person in Latvia.

Recently I heared that there is a new law about micro companies. Supposivly this law would make it possible for almost anyone to form such a company and from what I heard the taxes are a lot lower than for working as a self employed person 10% compared to 26%.

However how does it function with the VAT? I know
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Dear Latvian collegues,

I am a Swedish native living in Latvia working as a freelance translator under the form of a selfemployed person in Latvia.

Recently I heared that there is a new law about micro companies. Supposivly this law would make it possible for almost anyone to form such a company and from what I heard the taxes are a lot lower than for working as a self employed person 10% compared to 26%.

However how does it function with the VAT? I know I would have to pay VAT but to I also have the right to impose VAT on the companies I work for? Is it different depending on if they are in Latvia or not?
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Olga Judina  Identity Verified
Latvia
Local time: 06:45
Latvian to Russian
+ ...
Hi Alexandra, Mar 3, 2011

VAT and micro company tax are separate things. You must register as a VAT payer when you reach turnover of 30,000 lats in any 12 successive months. Under that it's not mandatory.
As a self-employed person, you can choose to register as a fixed income tax payer, if your annual income does not exceed 10,000 lats. This way, you pay the tax on your entire business income (i.e. no costs can be deducted) , but the rate is much lower. In fact, maximum income tax you can pay whilst eligible is 500
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VAT and micro company tax are separate things. You must register as a VAT payer when you reach turnover of 30,000 lats in any 12 successive months. Under that it's not mandatory.
As a self-employed person, you can choose to register as a fixed income tax payer, if your annual income does not exceed 10,000 lats. This way, you pay the tax on your entire business income (i.e. no costs can be deducted) , but the rate is much lower. In fact, maximum income tax you can pay whilst eligible is 500 lats. You must pay social security tax as usual.
With micro company you pay fixed tax of 9%, which includes both social security payments and income tax, and, again, no costs can be deducted. However, in this case your cannot receive salary over 500 lats a month. There may be other details and restrictions, but this is to give you a general idea.
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micro company taxes and VAT in Latvia

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