Glossary

Micro-enterprise (mikrouzņēmums)

In Latvian: Mikrouzņēmums

Companies Updated

A micro-enterprise (mikrouzņēmums) under the Latvian Micro-enterprise Tax Law is a sole proprietor, individual enterprise, farm or fishery, or an individual registered with VID as performing economic activity, that is not VAT-registered. It may choose to pay the micro-enterprise tax at 25% of turnover.

The micro-enterprise tax covers the owner's state social insurance contributions and personal income tax on business revenue. The tax period is the calendar year, and the tax is calculated on turnover, not on profit.

The status can be taken on when registering the business, or from 1 January of the next year by applying to VID by 15 December. The applicant confirms that turnover will not exceed the VAT registration threshold. A micro-enterprise that becomes VAT-registered loses the status from the next tax period, except under the special registration in Section 139.2 of the VAT Law.

An SIA cannot pay the micro-enterprise tax, because the definition covers only natural persons and their businesses. A micro-enterprise in this sense is not the same as a micro company (mikrosabiedrība) under the annual reports law.

Example

A web developer registered with VID as performing economic activity chose the micro-enterprise tax. His turnover for the year is EUR 18,000, so the tax is 25% of EUR 18,000, or EUR 4,500, however high his costs were.

Legal basis

This explanation is for information and does not replace tax or legal advice. The law in its current consolidated text prevails.