Latvia to introduce special tax regime for start-up micro-businesses
Latvia's parliament approved legislative amendments in September that create a start-up micro-enterprise tax regime from 1 April 2027. It aims to curb the shadow economy and ease tax payment for small-scale activity.
The Saeima, Latvia's parliament, approved amendments to several laws in September that provide for a start-up micro-enterprise tax regime taking effect on 1 April 2027. It is intended for people who produce and sell goods or provide services to other residents on a small scale, and is aimed especially at the early stage of a business.
Who the regime is for
According to the Ministry of Finance, the new arrangement is meant to reduce the shadow economy, make paying taxes easier and cut administrative requirements. The ministry says the regime suits nannies, coaches, private tutors, beauty specialists, people doing small repair jobs, sellers of handicrafts and others in similar lines of work.
The publication notes that a business often begins with a few clients after regular working hours, a couple of private lessons a week, or attempts to sell self-made items. Income at this stage may be small and irregular, yet the question arises of how to formalise the activity legally without getting caught up in complicated bureaucracy.
Questions still to be answered
The news portal Delfi Bizness promises to explain several practical issues: why the decision to introduce a new type of tax was made, how it will work and how the tax will be calculated. It also looks at what service providers and sellers should do now, whether 1 April 2027 is the date by which everyone must already be registered, and which institutions offer a business activity account.
Other topics include whether registration is needed for people who sell flowers or foraged berries only once or rarely, whether there is a minimum income threshold, what the criteria are and whether there will be a transition period. The portal also addresses what to do if large expenses eat up much of the income while tax is calculated on turnover, whether extra checks and penalties are planned, and whether people on childcare leave or receiving unemployment benefits will be able to register for the status.
The detailed answers are not available in this publication, so the exact rules will need to be checked in official sources closer to the date the regime takes effect.
