Considering starting a microenterprise in Latvia or already running one? This is for you! Microenterprise tax is a simplified tax regime designed to make your life easier. Here’s what you need to know:
š What’s Included in Microenterprise Tax?
Microenterprise tax bundles multiple taxes into a single payment:
Mandatory State social insurance contributions
Personal income tax
Business risk fee for micro-enterprise employees
Corporate income tax (if applicable)
Personal income tax for the micro-enterprise owner
š§ Who Can Opt for Microenterprise Tax?
If you are one of the following entities, you have the right to become a microenterprise and choose to pay microenterprise tax:
Individual merchant
Individual enterprise, farms, and fish farms
Natural person registered in the State Revenue Service (SRS) as an economic activities performer
A person who is not a member of a partnership
Limited liability company
To choose microenterprise tax, you must meet the following criteria:
Your annual turnover is not more than EUR 40,000
If you have a limited liability company, it should only have natural persons as members and microenterprise employees as board members
The number of microenterprise employees does not exceed five at any time
The income of a microenterprise employee does not exceed EUR 720 per month
A microenterprise can qualify for microenterprise tax status if all employees agree in writing to impose microenterprise tax. This agreement can be included in the employment contract as an individual provision.
š« Restrictions:
A microenterprise that pays microenterprise tax cannot simultaneously pay personal income tax or patent fee for income from economic activities.
An employee of a microenterprise tax payer cannot apply untaxed minimums and personal income tax exemptions while employed with a microenterprise tax payer.
A natural person can only be employed by one microenterprise at a time.
š Tax Rates:
Ready to explore the benefits of microenterprise tax in Latvia? Feel free to reach out to us, BL GrÄmatvedÄ«ba, for expert guidance on tax-related matters and setting up your business!
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