How much does it really cost to hire in Latvia in 2026?
One precise number drives the Latvia hire: employer social insurance runs at 23.59% of gross pay. The employee carries another 10.5% from their own salary. Stack the €780/month wage floor on top and Latvia's employer add-on is one of the more predictable in the Baltics, because the rate is flat across the whole salary.
· Latvia guide
Illustration · Riga, Latvia
Hiring in Latvia adds a flat employer charge on top of gross salary. The key number is the employer social insurance rate. It is 23.59% of gross pay. The employee pays a further 10.5% from their own wage. The rate does not change as salary rises.
The wage floor is €780/month for a full-time role. Income tax is the employee's cost, not yours. You withhold it and pass it on. The first €550/month of pay is free of income tax in 2026.
Every employee gets 4 weeks of paid annual leave. You fund the first days of sick pay yourself. You pay 75% of average earnings on days 2 and 3, then 80% from day 4 to day 9. The state takes over from day 10. There is no required 13th-month salary in Latvia.
The headline on what a Latvia hire actually costs
Start with gross salary. Add employer social insurance at 23.59% of the full gross. That single charge is the bulk of your statutory cost in Latvia.
The table below shows illustrative totals at a EUR 60,000 annual salary. These are computed from corroborated rates and labelled illustrative. They are not exact figures.
Latvia's main employer cost is one line. You pay social insurance at 23.59% of gross salary, on top of the wage itself. The employee pays 10.5% from their own pay, which you withhold and remit. The rate is flat, so a senior hire costs the same proportion as a junior one. Income tax is the employee's cost. You calculate it, deduct it, and pass it to the State Revenue Service. It never lands on your side of the ledger as cash.
| Line | Illustrative cost on EUR 60,000 annual salary | Source |
|---|---|---|
| Gross salary | EUR 60,000 | Contract |
| Employer social insurance at 23.59% of gross | EUR 14,154 (illustrative) | State Revenue Service (VID) |
| Annual paid leave: 4 weeks (employer cost built into salary) | Included in salary | Labour Law (Darba likums) |
| Employer-funded sick pay: 75% on days 2 to 3, 80% on days 4 to 9 (event-driven) | Variable; modest per employee per year | VSAA: sickness benefit |
| Required 13th-month salary | None (not mandated in Latvia) | Labour Law (Darba likums) |
| Total illustrative employer cost | ~EUR 74,154 before the Teamed fee | ~123.6% of gross (illustrative) |
These figures are illustrative. They are computed from the 23.59% employer social insurance rate applied to the full EUR 60,000 gross. They are not exact statutory amounts for any one payroll. Income tax does not appear in the employer total because it is deducted from the employee's pay, not added to yours.
Add Teamed from $599 per employee per month and the total rises by a known, flat amount. Use the Employer Cost Calculator to run your own salary figures.
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Start with gross salary
Confirm the agreed gross salary in euros. This is the base number every other line builds on, including the flat social insurance charge.
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Add employer social insurance
Apply the employer social insurance rate to the full gross. The percentage is flat, so it does not change as the salary rises.
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Withhold the employee deductions
Deduct the employee social insurance share and income tax from pay, then remit both to the State Revenue Service. These are the employee's costs, not yours.
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Model leave and sick pay as event costs
Annual leave is built into salary. Employer-funded sick days are event-driven. Budget them as variable costs that arise when used, not as fixed monthly charges.
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Plan for termination from day one
The burden is on you to prove a dismissal was lawful. Build fair-process documentation into your hiring plan so a contested exit never becomes an open-ended bill.
Income tax, the employee's cost that you withhold
Latvia uses a progressive income tax with three rates. You withhold it from each salary and remit it. It is the employee's cost, not an employer add-on.
The first €550/month of pay is free of income tax in 2026. Above that, the rate starts at 20%.
Income tax in Latvia is calculated, deducted, and paid by the employer on the employee's behalf. It does not add to your cost in cash terms. It becomes a problem only when a deduction is wrong or a payment is late. Getting the withholding right every month is the real employer obligation here.
The 2026 income tax rates
Latvia runs three progressive rates for 2026. A monthly basic non-taxable minimum of €550/month reduces the taxed portion of lower salaries. The rates below apply to annual income.
| Annual taxable income band | Rate |
|---|---|
| Up to EUR 20,004 | 20% |
| EUR 20,004.01 to EUR 78,100 | 23% |
| Above EUR 78,100 | 31% |
Source: Law On Personal Income Tax
The top rate of 31% applies to the slice of annual income above EUR 78,100. It is the employee's tax, not yours. Your job is to apply the €550/month allowance, withhold the right rate on each band, and remit to the State Revenue Service on time. Latvia also requires you to pay wages at least twice a month, unless you and the employee agree on a single monthly pay run.
Leave and sick pay, what the law requires
Every Latvian employee gets 4 weeks of paid annual leave. You fund it in full as part of salary.
You also pay the first days of sick leave yourself. You pay 75% of average earnings on days 2 and 3, then 80% on days 4 to 9. The state pays from day 10.
Latvia's leave entitlements sit in the Labour Law (Darba likums). You fund annual leave and the first stretch of sick pay directly.
Annual leave
The statutory minimum is 4 weeks of paid annual leave, which is 28 calendar days. It is built into salary, so it is not a separate line on a cost model, but it does mean a hire works fewer weeks than they are paid for. Unused leave is paid out when employment ends.
Public holidays
Employees are not required to work on public holidays set by law, under the Law On Festive, Commemorative and Celebration Days. Where work on a public holiday is genuinely needed, the employee earns a supplement of at least 100% of their normal rate, or rest on another day. The working day before a public holiday is shortened by one hour.
Sick pay
Sick pay starts with the employer. You pay at least 75% of average earnings on the second and third day of incapacity, then at least 80% from the fourth to the ninth day. From the tenth day the State Social Insurance Agency (VSAA) pays the benefit, at 80% of the average insurance wage. State benefit runs for up to 26 weeks of continuous incapacity. Budget your share as an event-driven cost, not a fixed monthly charge.
Maternity and paternity leave
Latvia provides maternity leave split around the birth and paternity leave for fathers shortly after a birth, both under the Labour Law and the maternity and sickness insurance rules. These are paid through the state social insurance system rather than as a direct employer cash cost. Confirm the current day counts and benefit levels with VSAA before planning a specific case, as the precise durations depend on the circumstances of the birth.
How Teamed handles Latvia employment costs for you
Teamed becomes your legal employer of record in Latvia for from $599 per employee per month, with zero FX mark-up in any currency.
Social insurance, income tax withholding, leave, sick pay, and the full Latvia compliance stack run on one platform.
Real HR and legal experts handle your Latvia hires from the first offer letter through every State Revenue Service remittance and annual return. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Every employer cost passes through at cost, itemised on every invoice. You see the social insurance line, the leave liability, and the sick pay you funded. Nothing sits hidden inside the management fee.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Latvia contractor who converts to employment keeps their record. That same employee can graduate from EOR to your own Latvian entity without switching systems. EOR is the right structure for a first Latvia hire, until it isn't. Teamed tells you when the model no longer fits. Start from the Latvia hiring overview or run the Employer Cost Calculator to see the full picture.
Frequently asked questions
What does it cost to hire an employee in Latvia in 2026?
On top of gross salary, the employer pays social insurance at 23.59% of gross pay. The rate is flat, so it stays the same proportion at every salary level. The employee separately pays 10.5% from their own wage, which you withhold and remit. There is no required 13th-month salary. Add Teamed from $599 per employee per month for the full employer-of-record service.
How does Latvia's employer social insurance rate work?
The employer pays 23.59% of an employee's gross employment income under the general risk scheme. The employee pays 10.5% on the same gross. The percentage is flat across the whole salary, so a senior hire costs the same proportion as a junior one. This makes Latvia simple to model compared with markets where the rate steps up by band.
Who pays income tax in Latvia, the employer or the employee?
Income tax is the employee's cost. You calculate it, deduct it from pay, and remit it to the State Revenue Service. It does not add to your employer cost in cash terms. The first €550/month of pay is free of income tax in 2026. Above that, the rate starts at 20% and rises to 31% on the highest band.
How much paid annual leave do Latvia employees get?
Every employee is entitled to 4 weeks of paid annual leave, which is 28 calendar days. You fund it in full as part of salary. Unused leave is paid out when employment ends. It does not show as a separate cost line, but it does mean a hire works fewer weeks than they are paid for across the year.
Who pays for sick leave in Latvia?
You fund the first stretch yourself. The employer pays at least 75% of average earnings on the second and third day of incapacity, then at least 80% from the fourth to the ninth day. From the tenth day the State Social Insurance Agency pays at 80% of the average insurance wage, for up to 26 weeks of continuous incapacity.
Does Latvia require a 13th-month salary or annual bonus?
No. Latvian law does not mandate a 13th-month or 14th-month salary, nor any compulsory annual bonus. Any such payment is discretionary or contractual. The employer must pay wages at least twice a month, unless you and the employee agree on a single monthly pay run, and must issue a written pay calculation each time.
The flat social insurance rate is what makes Latvia easy to model. The employer share does not climb as salary rises, so a senior hire costs the same proportion as a junior one. The line to watch is not the contribution. It is the employer-funded sick days and the open-ended remedy if a dismissal is found illegal. Plan for both before you sign the offer.
In Latvia the employer pays a flat social insurance rate on gross pay, so the cost stays the same proportion at every salary.
Add the four weeks of paid leave and the employer-funded sick days, and you have the whole picture.
Know the flat rate. Know the wage floor. Know who funds the first nine sick days before you hire.
Social insurance, the one charge that drives your cost
The employer pays 23.59% of gross salary into state social insurance. The employee pays a further 10.5% from their own wage.
The rate is flat. It applies to the whole salary. A higher salary does not change the percentage you pay.
Employer social insurance
The state social insurance contribution is the core of your Latvia employer cost. You pay 23.59% of an employee's gross employment income under the general risk scheme. The employee pays 10.5% of the same gross, which you deduct at source and remit. The contribution funds pensions, unemployment, sickness, and other state insurance. The percentage is the same at every salary level, which makes the cost simple to model for a senior hire.
Employer share: 23.59% of gross employment income. Employee share: 10.5%, deducted from pay. The rate is flat across the whole salary under the general risk scheme.
Source: State Revenue Service (VID), taxes and contributions
The business risk state fee
Latvian employers also pay a small fixed business risk state fee for each employee each month, alongside social insurance. It is a flat per-head amount set by regulation, not a percentage of pay. Treat it as a minor, predictable line rather than a cost driver. The exact monthly figure is set annually, so confirm the current amount with the State Revenue Service before budgeting to the cent.
The solidarity charge on very high pay
Latvia applies an additional solidarity charge on income above the annual social insurance ceiling. It only affects very high earners and is shared between employer and employee. The exact ceiling and split for 2026 are not yet independently confirmed, so we do not state a number here. For most hires it does not apply at all. Where a salary is high enough to reach it, model the charge with current State Revenue Service guidance rather than a rule of thumb.