Latvia Payroll Information

Updated on: 2025/08/04 14:35 (UTC)

Overview

Latvia is located in eastern Europe and is a republic that is a member country of the European Union. The countries that border Latvia are Estonia to the north, Russia to the east, Belarus to the southeast, and Lithuania to the south. The Baltic Sea borders Latvia to its west.

Latvia consists of 119 first-order administrations which are composed of 110 municipalities, or novadi, and nine cities.

Latvia’s currency is the euro.

Employers in Latvia must withhold income taxes and social taxes from all employees and pay additional social tax payments. Foreign employers and employers in the agricultural industry generally must contribute to the company car tax for all company cars used by employees. Employers must also adhere to Latvia’s Labor Law, which mandates minimum compensation and benefit standards.

Foreign workers in Latvia generally are bound by the same tax rules as Latvian citizens, but nonresidents are only taxed on their Latvian-sourced income, while residents are taxed on their worldwide income. Foreign workers generally are subject to the same labor provisions as citizens.

Latvian citizens working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

CURRENCY DETAILS

The currency of Latvia is the euro (€), which Latvia uses because it is part of the euro area, also known as the eurozone, which is a group of countries that adopted the euro as their currency. While the European Commission officially recognizes the spelling of the euro currency in Latvian as in accordance with the commission’s standard spelling of euro, in common Latvian parlance the currency’s name is spelled as eiro. The internationally recognized three-letter currency code for the euro is EUR, which also is one of the currency’s two commonly used currency symbols. The English plural form of euro officially recognized by the European Commission is the same as its singular form, although in common English parlance the plural form is euros. In Latvian, the plural form of euro when spelled in that manner and the plural form of eiro when spelled in that manner are the same as their singular forms.

When an amount of euro is written using the currency symbol € in accordance with the European Commission’s standard placement treatment of the symbol, which is the placement treatment used for the English language, the symbol precedes the numerical value with no space between the numerical value and symbol. When an amount of euro is written in Latvian using the currency symbol €, the most common placement treatment is that the symbol follows the numerical value with a space between the numerical value and symbol, although it is quite common for the symbol to precede the numerical value with a space, or rarely no space, between the numerical value and symbol.

When an amount of euro is written using the currency symbol EUR, the symbol precedes or follows the numerical value with a space or no space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a euro is referred to in English as a cent and the English plural form of cent officially recognized by the European Commission is the same as its singular form, although in common English parlance the plural form is cents. In Latvian, as officially recognized by the European Commission, one hundredth of a euro also is referred to as a cent and its standard plural form also is the same as its singular form, although in common Latvian parlance, one hundredth of a euro is referred to as a centa and has the plural forms of centu, centus, centi, and centiem, with usage depending on context.

When amounts of euro are written in Latvian, the comma that in English separates the thousands place from the hundreds place instead usually is rendered as a space but sometimes is rendered as a comma, and the dot (.) that in English separates the ones place from the tenths place instead usually is rendered as a comma but sometimes is rendered as a dot.

TAXES

The national government generally enacts laws relating to income taxes, social taxes, and automobile taxes. All taxes are payable to the State Revenue Service (SRS), which in Latvian is known as the Valsts ienemumu dienests (VID).

The tax year in Latvia is the calendar year, from Jan. 1 to Dec. 31.

Coronavirus (Covid-19) Guidance: Coronavirus (Covid-19) Guidance: Employers may apply using the State Revenue Service’s online portal to postpone tax payments or make them in installments for up to three years. Employers may generally apply within two months after the payment’s deadline if their income for August, September, and October 2020 decreased by at least 20% compared to the average monthly income for months the employer was in business in 2019. Applications are due within 15 days of the payment deadline and will be accepted through June 30, 2021

According to European Commission guidance, employees who normally work in one European Union member country and live in another are still considered to be insured by the social insurance system of the normal work country while working at home.

Income Taxes

Coverage: Latvia residents are taxed on their worldwide income. Nonresidents are only taxed on their Latvian-sourced income. Residents generally are defined as those with a permanent place of residence in Latvia or residing in Latvia for 183 days in a given 12 month period.

Employees: Employees are considered those who have economic dependence on whom they provide services, have a duty to observe the internal procedures and regulations of the organization for which they are providing services, perform work under the management or control of other persons or are not the owners of the fixed assets, material, or other assets used in the economic activity they perform.

Rates and Thresholds: Starting with 2018, income tax rates are levied on a progressive scale, with rates ranging from 20% to 31.4%.

While Latvia has three progressive income tax rates of 20%, 23%, and 31.4%, only the rates of 20% and 23% are applicable to income tax withholding on employment income, with the rate of 20% applicable to payroll withholding on employment income of up to €1,667 per month or up to €20,004 per year and the rate of 23% applicable to payroll withholding on employment income in excess of €1,667 per month or in excess of €20,004 per year. The income tax rate of 31.4%, which is not assessed as part of payroll withholding, generally applies to annual income in excess of a high-income threshold instead of being assessed as part of payroll withholding and is due as part of an employee’s annual individual income tax reconciliation. The annual high-income threshold effective for 2018 is €55,000 and for subsequent years, the high-income threshold is equal to the maximum amount of income subject to social insurance taxes, without regard to income subject to the solidarity tax.

Effective until Dec. 31, 2017, Latvia’s income tax on income from employment was levied at a flat rate of 23%.

Effective from 2019 to 2021, Latvia’s personal income tax rates and minimum and maximum amounts of annual income for each tax bracket are as follows:

Range of Annual Income in General (Euro)	Range of Annual Income Applicable for Payroll Withholding (Euro)	Income Tax Rate
Up to €20,004	Up to €20,004	20%
More than €20,004 and up to €62,800	More than €20,004	23%
More than €62,800	Not Applicable	31.4%

Effective since Jan. 1, 2019, the solidarity tax, assessed on annual income of more than €62,800, includes a 10.5% income tax contribution.

Registration: Companies register with the State Revenue Service through the Company Register. All corporations generally are required to register with the Company Register upon incorporating, while individuals generally are not required to do so. Those who are not required to register with the Company Register must register with the State Revenue Service within 10 days of signing their first employment contract. Employees must register themselves with the government of Latvia, upon which they will receive a salary tax booklet. This booklet must be submitted to the employer of the main place in which the employee receives taxable income.

Taxable Amounts: Taxable income for employment purposes generally is calculated as salary, bonuses, and all other remuneration.

Nontaxable items include social tax payments and certain education expenditures. Payments by employers into licensed pension schemes and life insurance schemes are tax exempt for amounts less than 10% of total remuneration.

Employees with annual income of up to €21,600 in 2021 are entitled to an amount of nontaxable income determined according to a formula, which is up to €300 per month in 2021. Effective from Jan. 1, 2022, to June 30, 2022, the maximum monthly nontaxable income will be €350 per month. Effective from July 1, 2022, to Dec. 31, 2022, the maximum monthly nontaxable income will be €500 per month.

Withholding Methods: Effective starting Jan. 1, 2018, withholding on employment income applies at rates of 20% for monthly income up to €1,667 and 23% for monthly income in excess of €1,667. Instead of withholding at the rate of 31.4%, amounts that would be subject to that rate instead are withheld at a rate of 23%.

Returns and Remittance: Employers must make payments and monthly returns by the last day of each month. Employers must file an annual return with the State Revenue Service by Feb. 1 of every year. In the case that an employer terminates an employee before the end of the year, the employer must submit an annual return by the 15th of the month following termination.

Employers must provide employees with a statement of the amounts paid to them and tax withheld for the previous pay within 15 days of employees’ requests.

Employee Share Plans: Stock options generally are taxable as income from salary and subject to income and social taxes. Effective since Jan. 12, 2021, stock options are exempt from taxes if they are exercised at least 12 months after they are granted, a period which was previously 36 months. If an employee is terminated, the option can still be exempt if it is exercised after the required 12-month period and within six months after the termination. Tax on stock options is calculated using the difference between the stock market value when granted and the purchase price of the stock options. Within two months after stock options have been granted, or within two months after the expiration of the purchase period offered for the stock options, employers must submit the conditions of the stock options and all participating employees to the State Revenue Service.

Recordkeeping: Employers generally must keep tax records for three years.

Penalties: Late payments are subject to an interest charge of 0.05% of taxes outstanding for each day of delinquency. Payments that are received within five days of the tax deadline will not be assessed interest charges.

Social Taxes

Social security provides employees with pensions, unemployment insurance, workers’ compensation, disability insurance, maternity and sick leave, and parental insurance. Social security is administered by the Ministry of Welfare and payable to the State Revenue Service.

Coverage: All employers generally must withhold social security contributions from all employees and make additional contributions.

Rates and Thresholds: Latvia has a standard social insurance tax rate for employers and standard social insurance tax rate for employees, with some exceptions to these rates based on the characteristics of employment for the employee to whom the taxable wages were paid.

Effective for 2021, the standard social insurance tax rate for employers is 23.59% of payroll and the standard social insurance tax rate for employees is 10.5% of salary, for a total rate of 34.09%. Effective for 2020, the standard social insurance tax rate for employers was 24.09% of payroll and the standard social insurance tax rate for employees was 11% of salary, for a total rate of 35.09%.

Effective for 2021, the standard total social insurance tax rate of 34.09% consists of the following components:

• Pension insurance: 23.91%;
• Unemployment insurance: 1.60%;
• Work accident insurance: 0.66%;
• Disability insurance: 2.29%;
• Maternity and sickness insurance: 3.47%;
• Parental insurance: 1.16%; and
• Health insurance: 1%.

Exceptions to the standard social tax rates for employers and employees are indicated on a webpage of Latvia’s State Revenue Service.

Latvia’s social insurance tax rates are subject to a maximum amount of annual income upon which social taxes may be assessed. The social taxes also are subject to a minimum monthly tax base, which is an annual amount that is 12 times the country’s monthly minimum wage. If an employee’s compensation for a month was less than the minimum monthly tax base, the employee’s compensation for the month would be treated as having been the minimum monthly tax base for calculations of social taxes.

Effective from 2019 to 2021, the maximum amount of annual income paid to each employee upon which social taxes may be assessed on the employee and employer is €62,800. Effective for 2018, the maximum amount of annual income paid to each employee upon which social taxes could be assessed on the employee and employer was €55,000.

Effective since Jan. 1, 2021, based on the monthly minimum wage in effect, the minimum monthly tax base is €6,000. Effective from Jan. 1, 2018, to Dec. 31, 2020, based on the minimum wage in effect for these years, the minimum monthly tax base was €5,160.

Solidarity tax: A solidarity tax applies to amounts of employment income paid to an employee during a year in excess of the maximum annual amount of income subject to social insurance tax.

Effective from 2019 to 2021, the solidarity tax is assessed on annual income paid to an employee in excess of €62,800.

The solidarity tax, unlike the social insurance tax, funds aspects of the national government other than social security benefits and does not affect entitlement to social security benefits.

Effective starting with 2019, the solidarity tax rate is 25.5%, divided into a 1% health care contribution, a 14% pension contribution, and a 10.5% income tax contribution.

Until 2019, the solidarity tax rate applicable to an employee was the same as the total social insurance tax rate applicable to that employee for other types of social taxes. The solidarity tax rate applicable to an employer for wages paid to an employee was the same as the total social insurance tax rate applicable to the employer for other types of social taxes based on wages paid to that employee. This method of calculating the solidarity tax rate was ruled unconstitutional by Latvia’s Constitutional Court Oct. 19, 2017, effective Jan. 1, 2019. The court found that the solidarity tax would not have been assessed equally on all eligible workers because not all workers were assessed the same social tax rates.

Registration: Companies who registered with the company register are automatically registered with the State Revenue Service. All corporations generally are required to register with the Company Register upon incorporating, while individuals generally are not required to do so. Employers must file a Particulars of Employees form with the State Revenue Service to register all employees within three days of their hire dates. Those who are not required to register with the Company Register must register with the State Revenue Service within 10 days of signing their first employment contract.

Taxable Amounts: Income subject to social taxes generally is defined as all remuneration paid to employees. Examples include wages, vacation pay, commissions, bonuses, benefits, severance payments, gifts, and housing subsidies. Nontaxable items include employee training costs, employee relocation costs, health insurance premiums, and other costs.

Returns and Remittance: Employers must submit returns to the government detailing social tax data on a monthly basis and must pay social taxes to the government on a monthly basis.

Effective until social taxes assessed on employment income paid in December 2020, reports regarding social taxation on employment income paid during a month are due to the government by the 15th day of the following month, and payments of social taxes based on employment income paid during a month are due to the government by the 15th day of the following month. Effective starting with social taxes assessed on employment income paid in January 2021, reports regarding social taxation on employment income paid during a month are due to the government by the 17th day of the following month, and payments of social taxes based on employment income paid during a month are due to the government by the 23rd day of the following month.

Recordkeeping: Employers generally must keep tax records for three years.

Penalties: Employers that fail to file returns or pay social insurance taxes are subject to a fine amounting to three times the mandatory contributions.

Other Taxes

Solidarity Tax

• A solidarity tax applies to income amounts in excess of the annual taxable wage base for social insurance taxation. See the Social Taxes

section for more details regarding the solidarity tax.

Company Car Taxes

• Coverage: The company car tax is assessed to all foreign business branches, merchants of foreign businesses, and local farms registered with the Company Register that purchase a car. The car is intended to transport passengers and their baggage and to be assigned to or held by an employee. The car must be a light passenger car that, excluding the driver, has no more than eight seats. The company car tax is assessed over the calendar year. Emergency vehicles, taxis, vehicles used as demonstration vehicles, vehicles used solely for business purposes, certain rental cars, and cars for athletes are exempt from the tax.
• Rates and Thresholds: The company car tax is levied at a flat fee based on the size of the engine.
• Returns and Payment: Employers must make tax payments by the 15th of each month for taxes assessed in the previous month. The tax is payable to the Road Safety Directorate (Celu satiksmes drosibas direkcija, abbreviated as CSDD). Employers must pay the first month’s payment upon purchasing and registering the car.

State/Jurisdiction Taxes

Taxes on employment income are not assessed by any of Latvia’s novadi, cities, or local jurisdictions.

COMPENSATION AND BENEFITS

The Ministry of Welfare and the State Labor Inspectorate oversee adherence to Latvia’s compensation and benefits standards. This includes Latvia’s laws related to minimum wage, overtime, hours of work, holidays, leave, wage payment, termination pay and recordkeeping. Workers’ compensation and retirement plans are fully financed through social security contributions.

The Labor Law is the main body of law mandating minimum compensation and benefits to all employees in Latvia.

Coronavirus (Covid-19) Guidance: Employers may apply using the State Revenue Service’s online portal for a wage-replacement program, known as the downtime benefit (dikstaves pabalsts), for employees who cannot work because of the coronavirus. Applications will be accepted through July 15, 2021, an extension from the previous deadline of Jan. 9, 2021. Applications are due by the 15th of each month. The amount of the benefit is 70% of an employee’s gross monthly wage from the previous six months, with a minimum of €500 per month and a maximum of €1,000 per month, and an additional €50 for each dependent child. Employers can apply for the benefit if their income for August, September, or October 2020 decreased by at least 20% compared to the average monthly income for months the employer was in business in 2019. Also, starting for applications March 16, 2021, and after, employers must provide evidence that fall in revenue is related to coronavirus restrictions.

Minimum Wage

Effective since Jan. 1, 2021, Latvia’s monthly minimum wage is €500. Effective from Jan. 1, 2018, to Dec. 31, 2020, Latvia’s monthly minimum wage was €430.

Overtime

Employers generally must pay overtime for work performed in excess of eight hours in a 24 hour period or 40 hours in a week. Employers must compensate employees with double pay for overtime work or work on a holiday. The maximum amount of overtime work allowed is an average of eight hours in a seven-day period, calculated over a period of up to four months. Employers and employees generally must agree upon overtime work in writing.

Hours of Work

The maximum normal workweek is 40 hours and the normal workday is eight hours. The regular workday of workers exposed to special risks is seven hours a day and 35 hours a week. Work before a national holiday must be reduced by one hour. The workweek generally must be five days, but a six-day workweek, with a maximum normal workday of seven hours and a maximum workday of six hours for workers exposed to special risks, may be used if the nature of the employer’s business does not allow for a five-day workweek. Night work is limited to seven hours a day. Night work is defined as a work shift where at least two hours of the work occurs between 10 p.m. and 6 a.m.

Employees who work more than six hours a day must receive a break of at least 30 minutes.

Employers must grant all employees rest periods of at least 12 consecutive hours in every 24-hour period and of at least 42 consecutive hours once a week, generally on weekends.

Holidays

The mandatory paid public holidays of Latvia are:

• Jan. 1: New Year’s Day
• Good Friday
• Easter Sunday and Monday
• May 1: Labor Day
• May 4: Independence Day
• Pentecost
• June 23, 24: Midsummer Day
• The final day of the Latvian Song and Dance Festival (irregular, but currently held every five years; last occurred in 2018)
• Nov. 18: Proclamation of the Republic
• Dec. 24: Christmas Eve
• Dec. 25: Christmas
• Dec. 26: Boxing Day
• Dec. 31: New Year’s Eve

If May 4, Nov. 18, or the final day of the Latvian Song and Dance Festival fall on a weekend, the holiday given is moved to the following Monday. Members of Christian denominations that celebrate Easter, Pentecost, and Christmas on different days may celebrate the holidays on those days.

Leave

Employers generally must provide all employees with at least four weeks of paid annual leave after they have worked for the employer for six continuous months. Three days of additional leave must be granted to employees who have at least three children under the age of 16, or a disabled child under the age of 18, and to employees who are exposed to special risks. At least one day of additional leave must be granted to employees with fewer than three children under the age of 14.

If the employer and employee agree, annual leave may be taken in parts, but one part must be at least two weeks.

Sick leave: Employees are entitled to a sick leave benefit paid by under the social security program. Sick benefits are provided from the 11th day of sickness up to a maximum of 26 weeks. Sick benefits are paid at 80% of wages.

Supplementary leave: Employers must provide an additional three days of paid annual leave to employees with three or more children under the age of 16 years and employees exposed to special risk .

Maternity leave: Employers must provide employees with 112 days of maternity leave, 56 days of which should be provided before the due date of the child with the other 56 days provided after the birth of the child. These days are paid at 80% of wages under the social security program.

Paternity leave: Employers must provide fathers of newborns with 10 calendar days of leave. Employers must provide fathers of newborns whose mothers passed away (or refused to care for the child within 42 days of the birth of the child) with leave until the newborn is 70 days old. These days are paid at 80% of wages under the social security program.

Parental leave: Employers must provide parental leave, because of birth or adoption, of up to 1.5 years before a child reaches the age of 8. The leave may be taken continuously or in parts with one month’s notice by the employee. A corresponding benefit is paid by the state, which the employee may choose to receive until the child is 1 year or 18 months old. The employee receives 60% of wages if they choose to receive the benefit until the child is 1 year old or 43.75% of wages if they choose to receive the benefit until the child is 18 months old.

Adoption leave: Effective since Sept. 1, 2019, when parents adopt a child under the age of 18, one parent must be provided with 10 days of paid leave. Effective until Aug. 31, 2019, adoption leave only applied when children under three years of age were adopted.

Study leave: Employers must provide all employees with leave to study. This leave may be provided with pay or without pay, as stipulated by an agreement.

Wage Payment

Employers generally make wage payments twice a month, but may make payments once a month if agreed upon.

Wage payments must be made in cash unless otherwise agreed upon.

Employers are required to provide employees with a pay slip detailing remuneration and mandatory social security payments within five days of a request by an employee.

Bonuses and Special Benefits

Latvia does not require employers to provide bonus payments to employees.

Termination Pay

Employers and employees generally must provide the other party with one month of notice prior to terminating an employment relationship. Employers must give only one day of notice to temporary workers. Shorter notice periods also apply in justified termination cases. In addition to giving notice, employers must provide the following minimum severance payments if:

• employed less than five years: one month of average earnings,
• employed at least five years but less than 10 years: two months of average earnings,
• employed at least 10 years but less than 20 years: three months of average earnings,
• employed 20 years or more: four months of average earnings.

Workers’ Compensation

Workers’ compensation and retirement plans are covered under social taxes .

Recordkeeping

Employers must keep accurate records of hours worked, overtime hours, nighttime hours, days of rest, and holidays for all employees.

FOREIGN WORKERS

Foreign workers are entitled to the same rights as Latvian citizens and generally are covered by the same tax and workplace laws.

Visas: Foreign workers generally must obtain entry visas, residence permits and work permits in order to live and work in Latvia. In order to employ foreign workers, employers generally must record the position with the State Employment Agency and submit an invitation request to the Office of Citizenship and Migration Affairs. Foreign workers must then apply for the necessary permits with their local Latvian diplomatic or consular mission. After receiving the necessary entry visa and work permit documentation, employers must receive and keep work permits on file. Foreign workers generally must acquire residency permits if residing in Latvia for more than 90 days, and must apply for the residency permits at their local Latvian diplomatic or consular mission.

Citizens of the European Union may work freely in Latvia without any visa or permit. They must register with the Office of Citizenship and Migration Affairs if wishing to reside in Latvia for three months or longer.

Taxes: Foreign workers generally are assessed income taxes and social taxes in the same manner as Latvian citizens. Nonresidents are subject to income tax on their Latvian-sourced income only. Foreign workers who are citizens of the European Union may be exempt from paying social taxes, provided they are paying social taxes in their country of citizenship.

Wages/Payments: Latvia does not have any restrictions on paying employees with foreign currencies.

WORKING IN THE UNITED STATES

Foreign workers from Latvia must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

Latvia is eligible for the visa waiver program for business visitors, which allows Latvian citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for a reasonable length of time is at the discretion of the Department of Homeland Security.

Latvian workers are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, Latvian citizens are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes. Latvia has a tax treaty with the U.S.

State and local taxation of Latvian workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes:

Generally, nonresidents in the U.S. who are from Latvia and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Latvia and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Latvia and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. To claim the tax treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.

Students and trainees in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student or trainee is temporarily in the U.S. for purposes of studying by a university or other recognized educational institution in the U.S. for no more than five years. It also must affirm that the individual will receive compensation for services performed in the U.S. The student/trainee exemption is not to exceed $5,000 a year.

Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: Latvia and the U.S. have not entered into a totalization agreement.

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

Latvia has entered into more than 55 income tax treaties, including an income tax treaty with the United States. Latvia also has nine totalization agreements for social tax coverage purposes, but does not have an agreement with the United States.

Latvia’s tax treaties are available in

RESOURCES

All resources in English unless otherwise noted.

General

CIA World Factbook: Latvia

U.S. State Department: U.S. Relations With Latvia

Currency Details

Unicode Consortium: Currency Symbols

International Organization for Standardization: Currency Codes - ISO 4217

United Nations: United Nations Terminology Database: Latvia

Taxes

Personal Income Tax Law (Latvian)

Social Insurance Act (Latvian)

State Revenue Service (Latvian)

Company Register (Latvian)

Official Publication No. 2018/225.25 (Latvian)

Official Publication No. 2018/249.1 (Latvian)

Compensation and Benefits

Holidays Act (Latvian)

Labor Law (Latvian)

Ministry of Welfare (Latvian)

State Labor Inspectorate (Latvian)

Foreign Workers

Ministry of Foreign Affairs

Office of Citizenship and Migration Affairs

Working in the United States

U.S. Department of Labor:

• Foreign Labor Certification
• Hiring Foreign Workers

U.S. Internal Revenue Service:

• IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
• IRS Publication 15, Circular E, Employer’s Tax Guide
• IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• IRS Publication 519, U.S. Tax Guide for Aliens
• IRS Publication 901, U.S. Tax Treaties

U.S. Department of State, Visa Waiver Program

Treaty Arrangements

Ministry of Finance, Tax Conventions Signed by Latvia