Hiring at a Glance

Latvia is an EU jurisdiction (EUR-based) where day-to-day employment compliance is strongly tied to tax authority reporting: employee onboarding must be registered very close to the start time, and payroll tax reporting is routed through the national tax authority with defined monthly due dates. A typical employment cost stack includes progressive wage taxation (25.5%/33% plus an additional 3% on very high annual income), and statutory social insurance at 34.09% of the contribution base, split between employer (23.59%) and employee (10.50%). An EOR is operationally valuable when a foreign company wants speed (no entity overhead) and wants to offload Latvia-specific payroll reporting mechanics and deadlines. 

Employment conditions are governed by Latvia’s Labour Law; standard working time is 8 hours per day and 40 hours per week, with overtime constrained as an average limit over an accounting period (commonly up to four months). Overtime and work on holidays require a statutory supplement of not less than 100% of the hourly/daily wage rate (i.e., “double pay” supplement), and night work requires a supplement of at least 50%. 

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Key characteristics of talent market

The most practically relevant feature of Latvia’s talent market, from an employer-of-record operations lens, is that payroll compliance is tightly integrated with tax administration through the national reporting system: employee registration timing is strict, and employer monthly reporting/payment deadlines are fixed. For internationally oriented hiring, the most common location anchor is Riga (where many private-sector roles cluster), and the tax authority’s electronic workflows (employee registration, employer report, and tax payments to the unified tax account) largely define the monthly cadence. 

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Most In-Demand Skills in 2026

Within the evidence set available here, Latvia-specific 2026 shortage-occupation lists were not identified in an official, machine-readable form (so this section is necessarily more analytical than statutory). Demand signals that can be evidenced include persistent salary-market anchoring around software roles (used here as a proxy for sustained demand in engineering/IT), and a university pipeline strongly weighted toward engineering, health sciences, and research universities in Riga. Consequently, the most defensible 2026 “in-demand” cluster for Latvia in this dataset is software engineering and adjacent technical roles (data engineering / platform, cloud operations, cybersecurity), with a secondary cluster in regulated health disciplines linked to the medical university pipeline. 

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Top Universities Supplying Talent

Latvia’s most visible talent suppliers in international ranking ecosystems include Riga Technical University, University of Latvia, and Riga Stradiņš University. QS ranking pages and university communications place Riga Technical University in the QS World University Rankings 2026 band (#761–770), and list University of Latvia in the QS WUR Latvia listing (banded), alongside Riga Stradiņš University and other institutions. 

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Salary Benchmarks for Roles

Because statutory law does not define market salaries, the most repeatable “benchmark” approach is to anchor on externally reported salary distributions. Here, the most directly evidenced ranges are for software engineering roles (PayScale and Levels.fyi). For non-technical roles (finance managers, product managers), comparable robust Latvia-specific distributions were not captured within the available sources, so they are marked as “not sufficiently evidenced here.”

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Employer of Record vs Legal Entity Setup in Latvia

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To legally hire employees, a company must

The operational sequence typically starts with business registration and tax-system access, then employee registration, then monthly payroll processing. A company is commonly registered as an SIA (limited liability company) through the business registry, and the entity’s tax interactions are performed through the tax authority system; the Enterprise Register of Latvia notes that VAT and certain tax statuses can be requested alongside registration in the business register. 

Before an employee starts work, the employer must submit “Information regarding employees” to the State Revenue Service: electronically, the guidance specifies submission “no later than one hour before” the employee commences work (paper submissions have a different timing rule). Changes in employee status must also be filed within a defined post-change window (three working days in the guidance). 

On an ongoing basis, the employer must file periodic payroll reporting and pay withheld/assessed amounts to the unified tax account, using the tax authority’s Electronic Declaration System infrastructure and service-specific reporting forms; Latvia’s compliance “shape” is therefore dominated by (a) strict start-date registration and (b) periodic employer reports and payments. 

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Cost of Entity Setup

Latvia’s most common foreign-investor employment vehicle is a limited liability company (SIA). The business registry highlights that an SIA exists both in the standard form and as a “low equity” variant below €2,800, implying that statutory capital requirements can be structured differently depending on the chosen SIA type.

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What Hiring Through an EOR Means in Latvia

An Employer of Record (EOR) in Latvia becomes the legal employer registered with the State Revenue Service (Valsts ieņēmumu dienests – VID) and the Latvian social insurance system, while the employee works exclusively for your company. You manage the employee’s daily responsibilities and performance, but the EOR assumes all statutory employer obligations under Latvian law.

Employment in Latvia is governed primarily by:

• Darba likums (Latvian Labour Law)
• Law on State Social Insurance
• Personal Income Tax Law
• Cabinet Regulations on minimum wage and working time
• EU employment and working-time directives

Foreign companies cannot legally employ workers in Latvia without:

• A registered Latvian legal entity
• Registration with VID
• Social insurance enrollment for employees
• Payroll tax compliance

An EOR provides this entire employer infrastructure without requiring you to establish a Latvian company.

An EOR in Latvia handles:

• Labour Law-compliant employment contracts
• Payroll processing in EUR
• Personal income tax (PIT) withholding
• State social insurance contributions (VSAOI)
• Paid leave and public holiday compliance
• Notice and termination handling
• Labour inspection coordination
• Work permits and immigration support (for non-EU employees)

This model is ideal for companies that want to hire in Latvia without managing EU-level compliance, payroll tax reporting, and strict termination protections directly.

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Risk Involved in Both Models

Latvia follows EU labour standards and has strict employee protections regarding notice, overtime, and dismissal procedures.

Key characteristics:

• Mandatory written employment contracts
• Strict probation and termination rules
• High social insurance contribution rates
• Strong data protection compliance (GDPR)
• Active Labour Inspectorate oversight

Compliance failures can result in:

• Retroactive social insurance payments
• Fines from VID
• Labour court disputes
• Administrative penalties

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EOR Vs. Entity: When to use What?

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Why an EOR Is the Most Efficient Way to Hire in Latvia

Latvia has become a strong hub for IT services, fintech, logistics, and multilingual customer support. However, hiring is governed by EU labour protections, high social insurance costs, and formal termination requirements.

An EOR is not simply a payroll processor. It is the legal employer recognized by Latvian authorities, responsible for:

• Labour Law compliance
• Social insurance reporting
• Payroll tax filings
• Paid leave and overtime administration
• Termination handling

This allows foreign companies to operate in Latvia without assuming direct employer compliance risk.

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#1. EOR Manages State Social Insurance Contributions (VSAOI)

Latvia requires employers to pay state social insurance contributions (VSAOI).

Employer contributions are approximately 23–24% of gross salary, while employees contribute around 10–11%.

VSAOI covers:

• Pension insurance
• Unemployment insurance
• Disability insurance
• Health insurance
• Maternity and sickness benefits

Errors can lead to:

• VID audits
• Retroactive payments
• Interest penalties

An EOR ensures accurate calculation, withholding, and reporting.

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#2. EOR Handles Personal Income Tax (PIT) Withholding

Latvia operates a progressive income tax system.

The EOR ensures:

• Correct tax band application
• Application of employee tax allowances
• Monthly and annual reporting compliance

Incorrect tax filings can result in fines and administrative sanctions.

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#3. EOR Controls Working Time and Leave Compliance

Latvian law mandates:

• Maximum 40-hour workweek
• Minimum 4 weeks of paid annual leave
• Overtime compensation rules
• Public holiday observance

EU Working Time Directive violations can trigger penalties.

An EOR ensures:

• Leave tracking compliance
• Overtime documentation
• Proper payroll adjustments

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#4. EOR Minimizes Termination Risk

Termination in Latvia requires:

• Valid legal grounds
• Notice periods (typically 1 month)
• Proper documentation
• Severance payments depending on tenure

Improper dismissal can result in:

• Court-ordered compensation
• Reinstatement claims

An EOR manages the entire termination process to reduce litigation risk.

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EOR vs. PEO in Latvia: How to Decide the Right Hiring Model?

A PEO in Latvia cannot legally employ workers on behalf of foreign companies.

PEO services provide administrative support only, meaning:

• The client remains the legal employer
• The client must register with VID
• The client bears labour liability

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For foreign companies seeking risk-managed hiring in Latvia, EOR is the preferred model.

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Payroll, Taxes, and Monthly Compliance

Latvia applies progressive personal income tax to employment income, with the tax authority publishing a 25.5% rate up to the annual threshold (€105,300) and 33% above it, plus an additional 3% rate from annual income over €200,000. 

Mandatory state social insurance contributions are published by the tax authority at a standard total of 34.09%, split 23.59% employer and 10.50% employee, up to the maximum contribution object (also shown as €105,300 per year in the same official guidance). 

For the monthly cycle, Latvia’s official materials show a timing ambiguity that must be handled carefully. One service description states the employer report is due by the 17th of the following month and payment by the 23rd, while the mandatory contributions page (updated in early February 2026) indicates employer reporting “monthly, by the 23rd date of the following month” with payment by the 23rd as well. In practice, payroll operators should confirm the live deadline shown in the electronic filing system for the specific employer report version (especially after early‑2026 updates). 

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Salary Structure: Where Most Compliance Issues Begin

Latvia’s most frequent compliance breakpoints are (a) working-time supplements and (b) timing of employee registration. Night work requires at least a 50% supplement, and overtime/holiday work at least a 100% supplement, so mis-tagging hours (ordinary vs night vs holiday) directly changes statutory pay and, by extension, the tax and social contribution base. 

Separately, Latvia’s onboarding rule that employee information must be filed electronically no later than one hour before work begins makes “late hire registration” a high-risk event—especially for same-day starts, interns, and short-term hires—because the employer is pushed to file before the employee performs any work. 

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What Monthly Payroll Operations Actually Involve

A practical monthly workflow starts with time and pay-variable closure (hours, overtime, night work, allowances), then gross-to-net calculations (employee social insurance, PIT, allowances), then employer-side calculations (employer social insurance), followed by the legally required submissions and payments through the tax authority workflow. The employer’s report and payment deadlines should be treated as the “hard stops” for Latvia payroll operations, with extra care taken around whichever of the official deadline statements applies to the employer’s filing version in the current month. 

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Step-by-Step Onboarding Process With an EOR in Latvia

Hiring in Latvia involves tax registration, social insurance enrollment, and strict labour documentation.

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1. Verify EOR Registration with VID

Confirm the EOR is registered with:

• State Revenue Service (VID)
• Social insurance system

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2. Determine Contract Type

Latvia recognizes:

• Indefinite contracts
• Fixed-term contracts (limited circumstances)

Improper use of fixed-term contracts can create legal exposure.

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3. Validate Salary and Minimum Wage

EOR ensures:

• Salary meets national minimum wage
• Social contributions are properly calculated

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4. Calculate Total Cost-to-Company

Includes:

• Employer VSAOI contributions
• Payroll taxes
• Severance exposure

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5. Draft Labour Law-Compliant Contract

Contract must include:

• Job duties
• Work schedule
• Compensation terms
• Probation terms
• Termination conditions

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6. Register Employee with Social Insurance System

Registration must occur before employment begins.

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7. Establish Payroll and Leave Systems

EOR sets up:

• Monthly payroll processing
• Leave tracking
• Overtime monitoring

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8. Immigration Compliance (If Applicable)

For non-EU employees, EOR manages:

• Residence permits
• Work authorizations

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9. Execute First Payroll

Includes:

• Salary payment
• Social insurance contributions
• Tax reporting

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10. Ongoing Compliance Management

EOR oversees:

• Monthly payroll filings
• Social insurance updates
• Labour inspections

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11. Termination and Settlement Handling

EOR manages:

• Legal termination procedures
• Notice compliance
• Final settlements
• Labour court representation

Most employer disputes in Latvia arise during termination.

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Build Your Latvia Team with Bolto EOR

Hiring in Latvia requires careful management of EU labour protections, high social insurance costs, and strict termination procedures.

Bolto’s Employer of Record model absorbs:

• Labour Law complexity
• Social insurance compliance risk
• Payroll tax obligations
• Termination and litigation exposure

This allows you to expand into Latvia while maintaining operational flexibility.

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Full Legal Employer Coverage in Latvia

Bolto becomes the legal employer before:

• State Revenue Service (VID)
• Social insurance authorities
• Labour Inspectorate
• Labour courts

Bolto manages:

• Contracts and compliance
• Payroll and statutory filings
• Social insurance reporting
• Labour inspection response
• Termination execution

You manage employee performance. Bolto manages legal risk.

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Built for Fast Market Entry and Flexible Exit

With Bolto EOR:

• Hire within weeks
• Avoid company registration
• Skip tax setup complexities
• Exit without liquidation procedures

Transparent Cost Structure

Bolto provides:

• Clear statutory cost breakdowns
• Social insurance visibility
• Predictable EOR fees

No hidden liabilities, no unexpected compliance penalties.

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End-to-End Employee Lifecycle Management

Bolto manages:

• Contract drafting
• Payroll and tax reporting
• Social insurance compliance
• Leave administration
• Termination handling

You never interact directly with Latvian labour authorities.

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Designed for Risk-Controlled Expansion in Latvia

Latvia enforces strict penalties for:

• Social insurance underpayment
• Non-compliance with EU labour directives
• Improper termination

Bolto enables hiring in Latvia without inheriting employer liability risks.