Latvia Tax Changes 2027: Higher Non-Taxable Minimum and a 10% Tax for Small Side Businesses
Two changes are already in law: a €570 monthly non-taxable minimum and a new beginner micro-enterprise tax from 1 April 2027. Income tax rates and social contributions stay; the minimum wage is still open.
Headline change
Monthly non-taxable minimum from 1 January 2027, adopted
Latvia 2026 vs 2027: key tax parameters
| Parameter | 2026 | 2027 | Status |
|---|---|---|---|
| Non-taxable minimum | €550 a month (€6,600 a year) | €570 a month (€6,840 a year) | Adopted |
| IIN up to €105,300 a year | 25.5% | 25.5% | Adopted (unchanged) |
| IIN above €105,300 a year | 33% | 33% | Adopted (unchanged) |
| Surcharge on total annual income above €200,000 | +3% | +3% | Adopted (unchanged) |
| VSAOI (social contributions), employee / employer | 10.50% / 23.59% | 10.50% / 23.59% | Adopted (unchanged) |
| Maximum contribution base | €105,300 a year | €105,300 a year | Adopted (fixed for 2025–2027) |
| Minimum monthly wage | €780 | €820 or €835 | Pending |
| Beginner micro-enterprise tax | None | 10% of turnover, from 1 April | Adopted |
| Standard micro-enterprise tax (MUN) | 25%, turnover up to €50,000 | 25%, turnover up to €50,000 | Adopted (unchanged) |
| Self-employed minimum VSAOI base | €780 a month | Equal to the 2027 minimum wage | Pending |
2026 values match the TaxRavens calculator. Sources: income tax law (likumi.lv 56880), Micro-enterprise Tax Law art. 7.2 (likumi.lv 215302), state social insurance law (likumi.lv 45466), Cabinet Regulation No. 656 on the minimum wage.
Take-home pay: 2026 vs 2027
| Monthly gross | Net 2026 | Net 2027 | Difference |
|---|---|---|---|
| €2,000 in both years | €1,473.80 | €1,478.90 | +€5.10 |
| Minimum wage: €780 → €820 (option) | €660.33 | €692.11 | +€31.78 |
| Minimum wage: €780 → €835 (option) | €660.33 | €702.10 | +€41.77 |
TaxRavens calculation: tax-resident employee at the main workplace with a tax book, no dependants, VSAOI 10.5%, non-taxable minimum €550 in 2026 and €570 in 2027 (adopted). At €2,000: VSAOI €210, IIN 25.5% × (2,000 − 210 − 550) = €316.20 in 2026 and €311.10 in 2027. The two minimum-wage rows are the options under discussion; neither is decided.
Employees
A small gain for everyone, a bigger one at the minimum wage
The €20 rise in the non-taxable minimum is worth €5.10 a month at any typical salary. Rates and the €105,300 threshold for the 33% rate stay where they are, so for most employees this is the only adopted change on the payslip so far.
Minimum wage: it is set by amending Cabinet Regulation No. 656, and no 2027 version had been published by 15 October 2026. The 2025–2027 budget framework assumes €820; the formula of 46% of the 2025 average wage (€1,815) gives €835. The welfare ministry discussed both options with social partners on 29 April 2026.
On the minimum wage, take-home pay would be €692.11 at €820 or €702.10 at €835, against €660.33 in 2026.
Self-employed: new 10% beginner micro-enterprise tax
Who can use it from 1 April 2027
The <strong>iesācēju mikrouzņēmumu nodoklis</strong> (beginner micro-enterprise tax) was added to the Micro-enterprise Tax Law by a law of 17 September 2026. It is 10% of turnover and covers only "small economic activity":
Sales to private individuals only (B2C), with turnover up to €12,000 a year.
Not VAT-registered and no employees.
No other business, and none registered in the previous two tax periods.
All receipts go through a special business-income account, and the 10% is withheld automatically.
Break a condition and an extra 15% rate applies from that day, plus a two-year ban from the regime.
Who it suits, and the trade-off
It fits tutors, craftspeople and hobby sellers whose customers are private people. On €10,000 of B2C turnover you pay €1,000, against €2,500 under the standard 25% micro-enterprise tax. The catch: the whole tax goes to IIN and includes no social contributions, so as far as the law text shows, it builds no pension or social insurance rights. It also cannot be used for B2B freelancing, such as IT contracts with companies.
The standard micro-enterprise tax (25%, turnover up to €50,000) does not change.
In the general regime, the minimum monthly contribution base equals the minimum wage, so it rises once the 2027 figure is set.
Expats and non-residents
Nothing new in 2027
Non-residents still do not get the non-taxable minimum, with one exception: EU/EEA residents who earn more than 75% of their income in Latvia. If you become a Latvian tax resident, the €570 minimum applies once you file your tax book with your main employer.
What is still pending
FAQ
What is the non-taxable minimum in Latvia in 2027?
€570 a month (€6,840 a year), up from €550. It is already in the income tax law and saves €5.10 a month at the 25.5% rate. Tax residents get it at their main workplace with a tax book.
What is Latvia's beginner micro-enterprise tax?
A new 10% tax on turnover from 1 April 2027 for small businesses that sell only to private individuals, with turnover up to €12,000 a year, no employees, no VAT registration and no other business. It includes no social contributions.
What will the minimum wage be in Latvia in 2027?
It is not decided. The budget framework assumes €820, and the 46%-of-average-wage formula gives €835. The decision comes with an amendment to Cabinet Regulation No. 656, likely in November or December 2026.
Do income tax rates change in Latvia in 2027?
No. IIN stays at 25.5% up to €105,300 a year and 33% above, with a 3% surcharge on total income above €200,000. Employee social contributions stay at 10.5%.
