If you’re tired of navigating labyrinthine tax codes and want a straightforward, data-driven path to running your own business in Latvia, you’re not alone. Many entrepreneurs and digital nomads feel the pinch of state-imposed costs and crave more autonomy. In 2025, Latvia’s sole proprietorship options offer a refreshingly accessible route to business freedom—without the bureaucratic headaches of forming a full-fledged company.
Understanding Sole Proprietorship Status in Latvia: Key Options for 2025
Latvia recognizes two main forms of individual business status:
- Individuālais komersants (IK) – Individual Merchant
- Saimnieciskā darbība – Self-Employed Person
Both statuses empower you to invoice clients and operate as a business without creating a separate legal entity. For freelancers and small-scale entrepreneurs, Saimnieciskā darbība is the most popular and flexible choice.
Availability and Registration: Who Can Apply?
Latvia’s system is refreshingly open: any regular citizen can register as a sole proprietor. The process is handled by the State Revenue Service (VID), and there’s no need for complex paperwork or minimum capital requirements.
Taxation for Sole Proprietors in Latvia (2025)
Latvia offers two main tax regimes for sole proprietors, each with its own optimization potential. Here’s a breakdown of the current rates and thresholds:
| Tax Regime | Income/Turnover Threshold | Tax Rate (2025) |
|---|---|---|
| General Personal Income Tax | Up to €20,004 (~$21,700) |
20% |
| General Personal Income Tax | €20,004.01 – €78,100 (~$21,700 – $84,800) |
23% |
| General Personal Income Tax | Above €78,100 (~$84,800) |
31% |
| Micro-Enterprise Tax | Up to €25,000/year (~$27,100) |
25% on turnover |
| Micro-Enterprise Tax | Above €25,000/year (~$27,100) |
40% on turnover |
Note: Social security contributions are mandatory under both regimes.
Pro Tip #1: Choose the Right Status for Your Needs
- For freelancers and digital nomads with modest turnover, Saimnieciskā darbība is typically the most flexible and cost-effective.
- If you expect higher turnover or want to operate under a business name, consider Individuālais komersants (IK).
Pro Tip #2: Optimize Your Tax Regime
- Estimate your annual turnover. If you’ll stay under €25,000 (~$27,100), the Micro-Enterprise Tax regime offers a flat 25% rate on turnover—simple and predictable.
- If your expenses are high or you expect to exceed €25,000, the general personal income tax regime may allow for more deductions and lower effective rates.
- Remember: crossing the €25,000 threshold triggers a steep jump to 40% tax on turnover under the micro-enterprise regime.
Pro Tip #3: Register Efficiently
- Visit the State Revenue Service (VID) portal for step-by-step registration guidance.
- For Individuālais komersants (IK), see the official registration page.
- For Saimnieciskā darbība, use the dedicated registration service.
Case Example: Freelancer Tax Optimization in Latvia
Imagine a digital consultant earning €18,000 (~$19,600) in 2025. By registering as a self-employed person and opting for the general personal income tax regime, they pay 20% on income, plus social security. If their turnover is below €25,000 and they prefer simplicity, the micro-enterprise tax regime offers a flat 25%—but without the ability to deduct expenses. The choice depends on your business model and expense structure.
Summary: Key Takeaways for 2025
- Latvia’s sole proprietorship statuses—Individuālais komersants (IK) and Saimnieciskā darbība—are widely accessible and practical for international entrepreneurs.
- Flexible tax regimes allow for tailored optimization, with clear thresholds and rates for 2025.
- Registration is streamlined and can be completed online via the State Revenue Service.
- Social security contributions are mandatory, so factor them into your planning.
For more details, consult the official resources:
- Self-Employed Persons – State Revenue Service
- Micro-Enterprise Tax – State Revenue Service
- Individual Merchant (IK) Registration
- Self-Employed Registration
Latvia’s approach to sole proprietorship in 2025 is a rare blend of accessibility and flexibility—ideal for those who value both freedom and efficiency in their business journey.