According to the modifications made to the Law on State Social Insurance as of 2017, the minimal levy from state social insurance contributions (SSIC) has been defined. The new regulation’s emphasis is on ensuring the quality of life in the event of social risk and protecting the rights of state social insurance system participants whose income exceeds Latvia’s minimum wage. The revised method provides that, for an employee whose monthly wage does not exceed the minimum salary, SSIC will be determined from the minimum required contribution. Since a transitional phase was established in 2017, the minimum mandatory fee is now equal to three-quarters of the minimum monthly wage. The payments were made beginning in 2018 using the full minimum wage.

Alterations to the SSI legislation

Modifications to the Law went into effect on July 1st, 2021, and these amendments include the least necessary State social insurance contributions (minimum contributions).

The least object of contribution

Three minimal monthly incomes determined by the Cabinet of Ministers serve as the minimum contribution object each quarter. In 2021, the minimal object of contributions will be 1,500 Euros since the minimum monthly wage will be 500 Euros. The employer (including the self-employed and micro-enterprise taxpayer) is responsible for making the required payments for their workers if the remuneration is less than the minimum salary of 500 euros per month or 1,500 euros per quarter as set out by the Cabinet of Ministers.

Establishing workers’ minimal contribution 

The income is added together to see whether it meets the minimum requirement, even if the employee works for many businesses or is simultaneously employed and self-employed. If a person works both as an employee and as a self-employed individual, only the employer is required to provide minimal payments. If an employee works for many companies and their combined income falls short of the required minimum payments, each company will be required to make a contribution based on the person’s wage and the amount of time they have had the employee status with them.

The minimal contributions’ calculation

The State Social Insurance Agency (SSIA) calculates the least extra payments that the employer and self-employed must make within three months of the end of the quarter, and they are required to notify the State Revenue Service (SRS) until the twentieth day of the third month. The smallest contributions must be recalculated by SSIA three months after the end of the calendar year, taking into account the subject of the minimum mandatory contributions for that year. SSIA must then notify SRS of any overpaid minimum contributions made by the employer and the self-employed person. To comply with the legislative obligation of the least contributions, the employer will need to make payments for each quarter. Notifications about minimum contributions will thus generally be made on a quarterly and yearly basis. SRS will use the Electronic Declaration System to submit the details of the computed minimum contributions (EDS).

Exceptions to the state’s required social insurance contribution

The following workers are exempt from making the least contributions:

  • a person with group I and II disabilities
  • A person whose salary or spouse’s salary tax book has a child under 3 registered
  • a prisoner who is employed while serving their prison sentence
  • a person who is entitled to the State old age pension or has received it
  • Taxpayers with three or more 18-24-year-olds enrolled in any form of education
  • A person with a disabled child on their or their spouse’s tax return
  • under-24 students in higher, vocational, comprehensive, or special education
  • a person who works for an employer listed in the Registry of Social Services Providers
  • a person facing social exclusion who works for a high-status employer
  • a person who provides a kid up to the age of 18 with a State-funded attendant