Economic activity (saimnieciskā darbība)

Economic activity (saimnieciskā darbība) is any systematic, independent activity carried out for payment. For an individual, Latvian tax law treats activity as economic when transactions are regular, revenue from a transaction exceeds EUR 14,229 a year, or its substance shows systematic work for payment.

The Commercial Law defines economic activity broadly; commercial activity is the open kind a merchant carries out in its own name for profit. The Law On Personal Income Tax adds that it includes producing goods, performing work, trade, services, professional activity and managing real estate.

One of three tests is enough: three or more transactions in a tax year, or five or more over three years; revenue from a transaction above EUR 14,229 a year; or economic substance pointing to systematic activity for payment. An individual must register with VID as a performer of economic activity before starting.

Economic activity can be carried out as a person registered with VID, as a sole proprietor (IK), or through a capital company. Capital income is not economic activity as long as the related costs are not treated as business costs.