Employer of Record in Latvia: A Comprehensive Guide for 2026

Introduction

Latvia offers foreign employers European Union (EU) market access, a competitive cost base in the Baltics, and a deferred Corporate Income Tax model that taxes profits only on distribution. The employment compliance load is heavier than the tax structure suggests.

This is where an Employer of Record (EOR) in Latvia can help. An EOR can legally employ workers, so you can hire and pay talent in Latvia without setting up a local entity or sponsoring OCMA permits directly.

This guide covers employment laws, contractor classification, work permits, payroll, taxes, incorporation, and how Skuad's EOR supports each step.

Latvia at a glance

Population: 1.8 million

Currency: Euro (EUR)

Capital: Riga

Languages: Latvian

GDP: 40.2 billion

Employment in Latvia

Latvia's employment law is set out in the Labour Law (Darba likums), adopted in 2001 and in force from 2002, administered by the Ministry of Welfare of Latvia. As a European Union (EU) Member State, Latvia also adheres to EU employment directives covering working time, anti-discrimination, parental leave, and health and safety at work.

Statutory social insurance benefits, including maternity, sickness, paternity, parental, and unemployment benefits, are administered by the State Social Insurance Agency (Valsts sociālās apdrošināšanas aģentūra, VSAA) under the Law on Maternity and Sickness Insurance and the Law on State Social Insurance.

The State Labour Inspectorate (Valsts darba inspekcija, VDI) supervises compliance with the Labour Law.

Written contracts and contract types

The Labour Law requires every employment relationship to be documented in a written contract concluded before work begins. The contract must set out the job title, duties, salary, working hours, leave entitlements, and duration, where applicable.

Latvia recognises two forms of employment contracts:

• Indefinite contracts: The relationship continues without a pre-set end date and can be terminated only on grounds set out in the Labour Law.
• Definite contracts: Concluded for a specified period under Section 45 of the Labour Law, with statutory maximum durations and limits on consecutive renewals. Repeated renewals beyond the statutory framework can result in the relationship being treated as indefinite.

Foreign employers hiring in Latvia operate under the Labour Law (Darba likums) 2001, the Law on Maternity and Sickness Insurance, the Law on State Social Insurance, and EU directives covering working time, anti-discrimination, parental leave, and health and safety at work.

Enforcement is spread across the State Labour Inspectorate (VDI), the State Social Insurance Agency (VSAA), the State Revenue Service (VID), and the Ministry of Welfare, each with its own filing cadences and penalty regimes.

Contractors vs full-time employees

Latvia distinguishes between two types of work arrangements. Employees working under an employment contract under the Labour Law (Darba likums), and contractors working under a civil-law service agreement under the Civil Law (Civillikums).

The two arrangements are governed by different bodies of law and carry different statutory protections, tax treatments, and social insurance obligations.

Employment contract

Employees working under an employment contract fall fully within the Labour Law framework. Their statutory entitlements include the working hours, leave, overtime, maternity, paternity, parental, and anti-discrimination protections set out in the Employment section of this guide.

Latvian courts and the State Labour Inspectorate (VDI) look at the substance of the working relationship rather than the contract label. Employees are identified by:

• Working under the employer's direction, supervision, and internal regulations
• Integration into the organisational structure of the employer
• Use of employer-provided equipment, premises, and resources
• Receipt of regular remuneration with statutory social insurance coverage

Part-time employees are still employees under the Labour Law and receive the full set of statutory protections, with working hours and pay scaled to the part-time arrangement. The employment contract documents the working hours, pay, and other terms before work begins.

Civil-law contract

Contractors engaged under a civil-law contract sit outside the Labour Law. Contractors do not receive statutory annual leave, sick pay, minimum wage, maternity or parental benefits, or notice and severance protection under the Labour Law.

Natural persons providing services as contractors in Latvia must register with the State Revenue Service (Valsts ieņēmumu dienests, VID) before starting business activities, either as a self-employed person or as an individual entrepreneur. Contractors are responsible for:

• Filing their own Personal Income Tax (PIT) annual return with the State Revenue Service between 1 March and 1 June
• Paying their own mandatory state social insurance contributions to the State Social Insurance Agency (VSAA)
• VAT registration where their annual turnover exceeds the threshold set in the Value Added Tax Law

Contractor terms, including scope of services, deliverables, payment, and contract duration, are negotiated and documented in the civil-law service agreement between the parties.

Substance-over-form rule

Latvia applies a substance-over-form test to contractor relationships. Applying the same indicators of an employment relationship listed in the Employment contract subsection above, the State Labour Inspectorate or a Latvian court can reclassify a civil-law arrangement as employment under the Labour Law, regardless of how the parties have labelled it.

A misclassified contractor relationship can be re-characterised as an employment relationship, with the State Revenue Service imposing retrospective assessments of unpaid taxes and social insurance contributions, and the State Labour Inspectorate imposing fines under the Labour Law.

Tax and social insurance contributions for both employees and contractors are covered in the Payroll and Taxes section of this guide.

The decision between hiring a Latvian full-time employee and engaging a contractor under a civil-law service agreement changes everything downstream.

It affects PIT withholding, VSAOI contributions, statutory leave under the Labour Law, and the substance-over-form reclassification risk that the State Labour Inspectorate and Latvian courts apply when a civil-law arrangement looks like employment in practice.

Skuad supports both hiring models from a single platform:

EOR for full-time employees

• Acts as the legal employer across 160+ countries, so you can hire without setting up a local entity
• Supports employment contract generation aligned with local employment laws across supported markets
• Facilitates statutory contribution workflows covering applicable social insurance, pension, and other statutory obligations
• Supports payroll processing in 70+ currencies with automated tax withholding and statutory deductions
• Helps administer statutory benefits, paid leave, and parental entitlements in line with local requirements
• Assists with termination and offboarding, including notice periods and severance calculations as required locally

Contractor management

• Helps onboard contractors with locally compliant agreements that reduce misclassification exposure
• Supports invoice generation, approval workflows, and payment processing across supported currencies
• Helps flag classification risk through built-in worker classification checks before it becomes a compliance issue
• Facilitates multi-currency payouts across 70+ currencies with no manual reconciliation
• Helps manage contractor records, contracts, and payment history from a single dashboard alongside full-time employees

Full-time or contractor, Skuad supports both. See pricing.

Hiring in Latvia

Hiring in Latvia is governed by the Labour Law (Darba likums) for employment relationships and the Immigration Law (Imigrācijas likums) for the employment of foreign nationals.

As a European Union (EU) Member State, Latvia operates a two-track hiring framework. EU/EEA/Swiss citizens benefit from free movement and can work without a permit, while third-country nationals require a residence permit with the right to employment.

Hiring EU/EEA and Swiss citizens

Under EU free movement rules, citizens of EU Member States, European Economic Area (EEA) countries (Iceland, Liechtenstein, and Norway), and the Swiss Confederation can start working in Latvia as soon as the employment contract is signed, with no work permit required.

EU/EEA/Swiss citizens have the same employment rights, wage protections, and access to social security as Latvian nationals from the first day of employment.

For stays longer than 3 months, EU/EEA/Swiss citizens must register with the Office of Citizenship and Migration Affairs (Pilsonības un migrācijas lietu pārvalde, OCMA, also referred to as PMLP) and obtain a certificate of registration. No registration is required for stays of up to 6 months where the purpose is to find a job.

Hiring third-country nationals

Third-country nationals (foreign nationals who are not EU/EEA/Swiss citizens) require a residence permit with the right to employment before lawfully taking up work in Latvia. The framework is administered by OCMA under the Immigration Law, with the employer acting as the sponsoring inviting party.

Third-country nationals can be employed only if the vacancy has been free for at least 10 working days on the State Employment Agency's CV and vacancies portal, ensuring suitable candidates from Latvia or other EU countries are considered first.

From 1 January 2025, employers applying to OCMA for an invitation visa or residence permit for the employment of third-country nationals must also obtain an opinion from the State Employment Agency (NVA) authorising the recruitment of the foreign national.

The full visa and work permit framework is covered in the Visas and Work Permits section of this guide.

Recruitment channels

Common recruitment channels in Latvia include:

• State Employment Agency (Nodarbinātības valsts aģentūra, NVA), which operates the CV and vacancies portal at cvvp.nva.gov.lv and provides matching services between employers and jobseekers
• Private recruitment agencies and headhunting firms, particularly for senior or specialised roles
• Online job platforms operating in the Latvian market
• Professional networks for senior, specialised, or executive recruitment

Pre-employment screening in Latvia runs alongside the EU General Data Protection Regulation (GDPR) and the Personal Data Processing Law, with the State Employment Agency vacancy posting and labour market test opinion adding further employer obligations for third-country national hires.

Onboarding integrity becomes a multi-track load before the employment contract under the Labour Law is even signed.

Skuad supports background checks as part of the hiring workflow, covering identity verification, employment history, criminal records, and education credentials, so you can see where each candidate stands before the contract is signed.

Combined with Skuad's local EOR infrastructure, candidate verification and compliant onboarding are accessible through one platform.

Probation and termination

Under Section 46(2) of the Labour Law, the employer and the employee may mutually agree on a probationary period at the time of executing the employment contract. The standard probationary period in Latvia is 3 months.

The probation period may not exceed 3 months, excluding periods of temporary incapacity and other periods of time when the employee did not perform work for justified cause.

Under Section 47 of the Labour Law, employees whose probation period has expired but continue to work for the employer have legally passed the contracted term of probation. During the probation period, the employer and the employee have the right to give written notice of termination 3 days before termination.

Grounds for termination

The Labour Law sets out an exhaustive list of grounds on which an employment contract can be terminated. The grounds fall into four broad categories:

• Employee-initiated termination: Resignation by the employee under the procedure set out in the Labour Law
• Mutual agreement of the parties: Written agreement between the employer and the employee on the termination date and any agreed terms
• Employer-initiated termination with employee fault: Grounds include violation of the employment contract or internal work rules, gross misconduct, intoxication at work, and acting contrary to moral principles
• Employer-initiated termination without employee fault: Grounds under Section 101 of the Labour Law, including liquidation of the employer, redundancy from reduction in headcount or reorganisation, employee incapacity confirmed by a medical opinion, lack of adequate occupational competence, reinstatement of a previously dismissed employee, and expiry of a fixed-term contract

For employer-initiated termination, the employer must provide written notice stating the grounds of termination. The notice can be challenged through the labour dispute resolution framework and the Latvian courts.

Notice periods

Under Section 103 of the Labour Law, the standard notice period for employer-initiated termination is 1 month, with shorter periods applying to specific grounds:

• 3 days during the probationary period (Section 47)
• 10 days for gross misconduct, intoxication at work, violation of safety rules, or temporary disability for more than 6 months
• 1 month for redundancy, liquidation of the employer, lack of adequate occupational competence, or reinstatement of a previously dismissed employee

The notice can be shortened by agreement of the parties, or extended where the employment contract or a collective agreement specifies a longer period.

Severance pay

Under Section 112 of the Labour Law, where the employer terminates the contract on grounds not related to employee misconduct, the employee is entitled to severance pay calculated as a multiple of monthly average earnings based on length of service:

• 1 month average earnings if employed for less than 5 years
• 2 months' average earnings if employed for 5 to 10 years
• 3 months' average earnings if employed for 10 to 20 years
• 4 months' average earnings if employed for more than 20 years

A collective agreement or the employment contract may specify a higher severance pay. Severance is not paid in cases of dismissal for employee misconduct or termination during probation.

Final settlement

On termination, the employer must complete the final settlement on the employee's final working day. The final settlement covers outstanding salary, cash compensation for unused annual leave, and any severance entitlements due under the grounds of termination.

Latvia's termination framework starts with a 3-month probationary period under Section 46(2) of the Labour Law, with exhaustive grounds for termination set out in Section 101.

Written notice is required, with statutory notice periods under Section 103 scaling from 3 days during probation to 10 days for serious misconduct and 1 month for redundancy. Severance pay under Section 112 ranges from 1 to 4 months' average earnings, based on length of service.

Procedural missteps during termination can trigger State Labour Inspectorate exposure and Latvian court proceedings under the labour dispute resolution framework.

Skuad supports termination and offboarding through the shield compliance layer across supported markets, helping align notice periods, severance, and final pay with the relevant local statutory framework.

EOR solution

Hiring in Latvia carries multiple regulatory touchpoints for the employer:

• Employment contract drafting under the Labour Law (Darba likums)
• Employer registrations with the State Revenue Service (VID) for Personal Income Tax withholding and the State Social Insurance Agency (VSAA) for state social insurance contributions
• Statutory leave administration under the Labour Law
• Notice procedures and Section 112 severance pay on termination

For third-country national hires, OCMA residence permit sponsorship and the NVA labour market test opinion add a further set of employer obligations.

The foreign client does not need to incorporate a local entity in Latvia or register as an employer with OCMA, the State Revenue Service, or the State Social Insurance Agency.

The foreign client retains day-to-day direction of the worker, decisions on compensation and role and responsibilities, and the option to terminate the engagement, subject to Latvian labour law.

For EU/EEA/Swiss citizen hires, the EOR onboarding step is directly under the employment contract framework. For third-country national hires, the EOR supports the OCMA invitation, residence permit, and NVA labour market test process before the worker can start employment.

Types of visas in Latvia

Latvia is a member of the Schengen Area, and its visa framework is administered by the Ministry of Foreign Affairs of Latvia through Latvia's Consular Offices abroad, alongside the Office of Citizenship and Migration Affairs (OCMA) for residence permits.

The legal basis is the Immigration Law (Imigrācijas likums), complemented by EU law applicable to harmonised permit categories.

Citizens of EU/EEA Member States and the Swiss Confederation do not require a visa or work permit to enter and work in Latvia, with the registration requirement covered in the Hiring section. The visa and work permit framework below applies to third-country nationals.

Visa categories

Latvia issues three main visa categories:

• Type C (Schengen short-stay visa): For stays of up to 90 days in any 180 days for tourism, business, family visits, short-term studies, and similar purposes; valid across the Schengen Area
• Type A (Airport transit visa): for transit through the international transit zone of a Latvian airport without entering the Schengen Area
• Type D (Long-stay national visa): For stays exceeding 90 days, with a maximum validity of 1 year, and the holders can move freely within the Schengen Area for up to 3 months in any 6 months

Long-stay Type D visa for employment

A third-country national taking up employment in Latvia applies for a long-stay Type D National Visa at a diplomatic or Consular representation of Latvia in the applicant's country of residence. The Latvian employer typically initiates the process by filing an invitation request with OCMA, and the application is then submitted by the foreign national abroad.

The accompanying residence permit with the right to employment, required for stays exceeding 90 days, is covered in the Work Permits section.

Work permits

Latvia does not issue a standalone "work permit" document. The right to employment for a third-country national is endorsed within the residence permit issued by the Office of Citizenship and Migration Affairs (OCMA) under the Immigration Law, with the long-stay Type D visa covered in the Visas section, enabling entry into Latvia for the residence permit application.

Two main work authorisation routes apply to third-country nationals:

• The residence permit with the right to employment
• EU Blue Card for highly qualified employees

Residence permit with the right to employment

The residence permit allows a third-country national to reside in Latvia for a defined period (temporary residence permit) or indefinitely (permanent residence permit). For employment, the residence permit carries an endorsement of the right to employment tied to the specific employer that filed the invitation request with OCMA.

Key features:

• Issued by OCMA after the State Employment Agency (NVA) labour market test process covered in the Hiring section
• Tied to the specific employer named in the OCMA invitation, a change of employer requires a fresh invitation, labour market test, and residence permit application
• Validity periods vary by the underlying employment ground, with extension procedures available before expiry
• The employer is fully responsible for the foreign national's employment, place of residence, healthcare, and removal costs from Latvia, if applicable

EU blue card

The EU Blue Card is a residence permit issued by OCMA to highly qualified third-country employees taking up employment in Latvia, under Directive (EU) 2021/1883 transposed into national law.

Under the European Commission framework for the EU Blue Card in Latvia, the applicant must hold a work contract or binding job offer for highly qualified employment of at least 1 year, with a gross annual salary at or above 1.5 times the average gross annual salary in Latvia.

For professions listed in the Cabinet of Ministers regulations as having a lack of local labour force, the salary threshold is reduced to 1.2 times the average gross annual salary in Latvia.

Key features of the EU Blue Card under Directive (EU) 2021/1883:

• Standard minimum validity of 24 months, or the duration of the work contract plus 3 months, where the contract is shorter
• 3 months of unemployment grace period to find a new job, where the Blue Card has been held for less than 2 years, or 6 months where the Blue Card has been held for more than 2 years
• Easier path to EU long-term residence status under the EU Blue Card framework compared to standard temporary residence permits

Latvia's work authorisation framework for third-country nationals layers a long-stay Type D National Visa application abroad, an OCMA invitation request filed by the employer, the State Employment Agency labour market test, and a residence permit endorsement tied to the specific employer named in the OCMA invitation.

The EU Blue Card adds its own qualifying thresholds, including a gross annual salary, a minimum 1-year work contract for highly qualified employment, and a 24-month minimum validity under Directive (EU) 2021/1883.

Coordinating OCMA filings, NVA opinions, and consular submissions across these stages adds weeks to any third-country national hire.

Skuad supports the work permit process across supported markets, including:

• Supporting work visa and residence permit applications for foreign nationals joining your team
• Helping coordinate visa documentation with the relevant immigration authorities
• Assisting with employer-side accreditation, labour market tests, and prevailing wage steps where they apply
• Helping track documentation requirements and renewal deadlines across the full permit lifecycle
• Helping keep your team aligned with immigration documentation requirements as local policy and renewal rules change

For third-country national hires whose first day depends on a clean OCMA invitation and residence permit application, the gap between the HR team and the immigration paperwork is where most timelines slip.

Book a demo to see how Skuad supports work permits and immigration for Latvia hires.

Payroll and taxes in Latvia

Taxes in Latvia are governed by the Law on Taxes and Duties and the relevant subject-specific tax laws, administered by the State Revenue Service (Valsts ieņēmumu dienests, VID).

The main taxes affecting payroll and corporate operations are Personal Income Tax (PIT), Corporate Income Tax (CIT), Value Added Tax (VAT), mandatory state social insurance contributions (VSAOI), and Solidarity Tax.

Personal Income Tax is withheld at source by the employer as withholding agent, with self-assessment applying to business and capital income outside the withholding framework.

Personal Income Tax (PIT)

Latvia applies a progressive Personal Income Tax structure on employment income for resident individuals. Effective 1 January 2025:

• 25.5% on annual income under EUR 105,300
• 33% on annual income from EUR 105,300

The non-taxable minimum applicable to employment income in 2026 is EUR 550 per month, or EUR 6,600 per year, applied through the employee's payroll tax booklet submitted to the employer. A higher non-taxable minimum of EUR 12,000 per year applies to pension income.

Corporate Income Tax (CIT)

Latvia has operated a deferred Corporate Income Tax model in place since 1 January 2018. Under this model:

• Retained and reinvested profit attracts a CIT rate of 0%
• Distributed profit (dividends) and profit used for purposes not directly related to business development are taxed at a CIT rate of 20%, with the tax base divided by the coefficient 0.8 (giving an effective rate of 25% on the gross amount)

The deferred model means that a Latvian company pays no CIT for as long as profits are retained and reinvested in the business. CIT becomes payable only at the point of profit distribution.

Value Added Tax (VAT)

The standard VAT rate in Latvia is 21%, with reduced rates of 12% and 5% applying to specified goods and services such as medical products, books, periodicals, and locally grown fresh fruits, berries, and vegetables. VAT registration and compliance are administered by the State Revenue Service.

Mandatory state social insurance (VSAOI)

Employers and employees are required to make mandatory state social insurance contributions (Valsts sociālās apdrošināšanas obligātās iemaksas, VSAOI) where the employee is covered by all forms of social insurance.

The total VSAOI rate is 34.09% of the employee's income. Of this, 23.59% is paid by the employer on top of gross salary, and 10.50% is withheld from the employee's salary.

VSAOI contributions fund the state pension, healthcare service (1% of the total rate allocated), unemployment benefit, workplace accident insurance, and maternity, paternity, and sickness benefits, with contributions administered jointly by the State Revenue Service and the State Social Insurance Agency.

Solidarity tax

Solidarity Tax (ST) applies to income exceeding the maximum annual VSAOI base of EUR 105,300 in 2026, at the same nominal split as VSAOI (23.59% employer and 10.50% employee), with an effective rate of 25%. Solidarity Tax is administered by the State Revenue Service, with the accounting, transfer, and distribution handled by the State Social Insurance Agency.

Total cost-to-employer in Latvia runs well above gross salary. Employer VSAOI contributions on top of gross salary, Solidarity Tax, progressive PIT, the 21% standard VAT, and the deferred CIT model that taxes distributed profit at 20% all stack on top of the headline figure.

Skuad's employee cost calculator helps estimate the cost of hiring across supported markets, including employer social and tax contributions, and statutory deductions, so finance teams can build a clean total-cost view into headcount plans without manually modelling each country's contribution rules.

Incorporation

Incorporation in Latvia is governed by the Commercial Law (Komerclikums) of the Republic of Latvia, with registration administered by the Register of Enterprises of the Republic of Latvia (Latvijas Republikas Uzņēmumu reģistrs, UR). The framework applies uniformly across all regions of Latvia.

As an EU Member State, Latvia operates within the EU free movement of capital framework, allowing foreign investors from EU and non-EU jurisdictions alike to establish or acquire Latvian commercial entities subject to standard registration requirements and any sector-specific restrictions on regulated activities.

Entity types available to foreign investors

A foreign investor in Latvia can establish one of the following commercial forms under the Commercial Law:

• Limited liability company (Sabiedrība ar ierobežotu atbildību, SIA): The most common form for foreign subsidiaries, with equity consisting of the total nominal value of shares, founders permitted as both natural and legal persons, and minimum equity of EUR 2,800 payable in cash or property contributions
• "Micro" SIA with no minimum capital requirement: A simplified SIA form available subject to specific conditions, including a limited number of founders who must all be natural persons
• Joint stock company (Akciju sabiedrība, AS): A public or private company with share capital, used for larger capital-raising or where share offerings are required, with shareholder registration and management board requirements set under the Commercial Law
• Branch of a foreign company: A legal extension of the parent company, registered with the Register of Enterprises and operating in Latvia under the parent's legal personality
• Representative office of a foreign company: A non-commercial division used for market research, liaison, and representation activities, with no independent legal personality and no permission to conduct revenue-generating commercial activities

Registration framework

Applications for entity registration are submitted to the Register of Enterprises of the Republic of Latvia, with foundation documents completed in Latvian. The standard review time is 1 to 3 working days from the date of submission for SIA registration, with the timeline subject to extension under the Administrative Procedure Law where additional review is required.

Incorporating in Latvia carries downstream weight beyond the initial Register of Enterprises filing, including ongoing registrations with the State Revenue Service for PIT withholding, VAT, and VSAOI contributions before payroll can be operated.

Most foreign companies expecting fewer than five Latvian hires find that this timeline and the multi-agency compliance load outweigh the value of having a local legal presence at that scale.

Skuad acts as the legal employer in Latvia, so foreign companies can hire and pay employees without entity setup, multi-agency registrations, or ongoing local compliance overhead. The incorporation decision can be revisited once the local team reaches a size that justifies it.

Book a demo to see how Skuad supports Latvia hiring without incorporation.

Professional Employer Organization (PEO) vs EOR

Foreign companies expanding into Latvia often consider two outsourced employment models. The Professional Employer Organization (PEO) and the Employer of Record (EOR). The two differ in legal structure and in where they are recognised regulatorily.

A PEO is a regulatory construct defined most clearly in the United States. Per the Internal Revenue Service, a PEO is an organisation that performs federal employment tax withholding, reporting, and payment functions related to workers performing services for a client, with the client typically remaining the Common Law Employer for most purposes.

The PEO model is a co-employment arrangement, with the PEO and the client both holding employment-related responsibilities. The PEO assumes specific functions (federal employment tax in the US model), and the client retains day-to-day direction and core employment decisions.

An Employer of Record's local entity acts as the legal employer of the worker for statutory purposes in the country where the worker is engaged.

The client retains day-to-day direction of the worker, decisions on compensation, decisions on the role and responsibilities, and the option to terminate the engagement, subject to local employment law. The client does not need to set up a local entity, and is not registered as an employer in the country.

The two models split along legal employer responsibility, regulatory recognition, and operational fit.

EOR services in Latvia simplified

Latvia's employment framework leaves no room for the first-hire shortcut. The Labour Law, multi-agency tax and social insurance regime, and immigration framework all apply from day one.

Getting any of these wrong triggers State Labour Inspectorate penalties, State Revenue Service back-tax assessments, and Latvian court exposure under Sections 101 to 112 of the Labour Law.

Book a demo to see how Skuad supports hiring in Latvia.

FAQs

1. What is an Employer of Record in Latvia?

An Employer of Record in Latvia is a third party with its own local entity that legally employs your workforce on your behalf. It supports employment contracts under the Labour Law, PIT withholding to VID, VSAOI contributions, and OCMA permit sponsorship.

2. How much does an Employer of Record in Latvia cost?

EOR pricing in Latvia typically ranges from USD 199 to USD 700 per employee per month. On top of the platform fee, you cover the employee's gross salary plus employer VSAOI contributions at 23.59% and Solidarity Tax above the EUR 105,300 cap.

3. Can a foreign company hire in Latvia without setting up a local entity?

An EOR legally employs the worker through its existing Latvian entity and sponsors the OCMA residence permit for third-country nationals, avoiding SIA setup and VID/VSAA registrations.

4. What are the risks of misclassifying employees as contractors in Latvia?

The State Labour Inspectorate and Latvian courts apply a substance-over-form test on direction, supervision, and integration. A reclassified worker triggers VID back-tax assessments of unpaid PIT and VSAOI contributions, plus Labour Inspectorate fines.

5. When should a company use an EOR instead of setting up an SIA in Latvia?

An EOR fits foreign companies hiring fewer than five Latvian employees or testing the EU market. Setting up an SIA requires EUR 2,800 minimum equity, foundation documents in Latvian, and ongoing registrations with VID and VSAA.

6. How quickly can an EOR onboard a new hire in Latvia?

An EOR can onboard an EU, EEA, or Swiss citizen in one to two weeks since free movement applies. Third-country national hires take longer because of the 10-working-day NVA vacancy posting, the OCMA invitation, and the NVA labour market test opinion.