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Latvia Social Contributions Guide 2026

Latvia's social security system provides comprehensive coverage for pension, health, unemployment, and accident insurance. The total employee contribution is approximately 10.5% of gross salary, while the employer contributes approximately 23.6%. The system is based on a three-pillar pension model with a mandatory state pension (first pillar), mandatory funded pension (second pillar), and voluntary private pension plans (third pillar). The minimum monthly contribution floor is EUR 700.

Overview — Social Security in Latvia

Latvia's social security system is administered by the State Social Insurance Agency (VSAA, Valsts sociālās apdrošināšanas aģentūra). The system covers all employees and self-employed persons residing or working in Latvia. Contributions are calculated as a percentage of gross salary up to an annual contribution ceiling. The social security system provides benefits for pensions, healthcare, unemployment, maternity and paternity, disability, occupational accidents, and family allowances. Latvia's social contribution rates are among the higher rates in the Baltic region, with a combined employer-employee burden of approximately 34.1%.

Employee Contributions — ~10.5%

Employees contribute approximately 10.5% of gross salary, broken down as follows:

  • Pension insurance: 7.0% of gross salary (funds the state pension system, part of the first and second pillars)
  • Health insurance: 2.5% of gross salary (covers medical care, hospitalisation, and health services)
  • Unemployment insurance: 0.5% of gross salary (covers unemployment benefits)
  • Disability insurance: 0.5% of gross salary (covers disability pensions and benefits)

Total employee contribution: 7.0% + 2.5% + 0.5% + 0.5% = approximately 10.5%.

Employer Contributions — ~23.6%

Employers contribute approximately 23.6% of the employee's gross salary:

  • Pension insurance: 13.0% of gross salary
  • Health insurance: 7.0% of gross salary
  • Unemployment insurance: 1.5% of gross salary
  • Accident insurance (workplace): 0.5% to 1.5% depending on risk category (average ~0.5% for low-risk industries)
  • Parental insurance: 0.5% of gross salary
  • Disability insurance: 0.5% of gross salary
  • Maternity and sickness insurance: 0.5% of gross salary

Total employer contribution: 13.0% + 7.0% + 1.5% + 0.5% + 0.5% + 0.5% + 0.5% = approximately 23.6%.

Contribution Floor and Ceiling

  • Monthly floor: Social contributions must be paid on a minimum of EUR 700 per month. If the actual salary is below EUR 700, contributions are still calculated on EUR 700 (the minimum floor). This applies to full-time employment.
  • Annual ceiling: Social security contributions are capped at an annual contribution ceiling (plafond). For 2026, the ceiling is approximately EUR 78,100 of gross annual salary. Earnings above this ceiling are not subject to further social contributions.

Three-Pillar Pension System

Latvia operates a three-pillar pension system, similar to other EU countries:

  • First pillar — State pension (Pillar 1): Mandatory pay-as-you-go state pension (Valsts pensija) funded by employee and employer contributions. Provides a defined-benefit pension at retirement age. The pension is calculated based on contribution years and insured salary.
  • Second pillar — Mandatory funded pension (Pillar 2): Part of the employee's pension contribution (6% of gross salary) is directed to a mandatory funded pension account, invested in private pension funds. The contributor chooses a fund manager upon entering the system.
  • Third pillar — Private pension (Pillar 3): Voluntary private pension plans with tax incentives. Contributions are deductible from taxable income up to 10% of gross income (maximum EUR 4,000 per year).

Self-Employed Contributions

Self-employed persons must pay social contributions at the same combined rate as employed persons (approximately 34.1% of declared income). The minimum contribution is calculated on EUR 700 per month regardless of actual income. Contributions are paid in quarterly advance payments (prognozētie maksājumi). Self-employed persons may opt for reduced coverage (pension and health only) at a reduced rate.

FAQs

Are social contributions tax-deductible?

Yes, employee social security contributions (10.5%) are fully deductible from taxable income for personal income tax (IIT) purposes. This reduces the effective tax burden on employment income.

What happens if my salary is below EUR 700 per month?

If you work full-time and your contractual salary is below EUR 700, your employer must still pay social contributions based on the EUR 700 floor. The employee portion is also calculated based on EUR 700, and the difference may be deducted from your net salary.

Can I choose my second pillar pension fund?

Yes, participants in the mandatory funded pension (second pillar) can choose among licensed private pension fund managers. If no choice is made, the state assigns a default fund. Changes can be made periodically.

Disclaimer

This guide provides general information about Latvia social contributions for the 2026 tax year. Contribution rates and ceilings may change. Always consult with a qualified Latvian tax advisor (nodokļu konsultants) or VSAA directly for advice specific to your situation. InvestmentKit does not provide tax advice.