Employer of Record (EOR) in Latvia: 2025 Guide
Introduction to EOR in Latvia
Expanding your business internationally can be a rewarding but complex process. Navigating labor laws, managing payroll, and staying compliant with local regulations in a new country like Latvia requires specialized knowledge and resources. This is where Employer of Record (EOR) services can play a crucial role in simplifying your expansion.
In this guide, we will cover all the essential elements you need to know about using an Employer of Record in Latvia.
Latvia at a glance - EOR & Hiring
Capital
Riga
Population
1,848,837
Currency
Euro (EUR)
Language
Latvian
Ease of doing business index
19th place
GDP per Capita
$22,520 USD (2024)
Average workweek
40 hours
Payroll Cycle
Monthly
Tax due date
1 June
Corporate tax
20%
Employer contributions
23.59% to 24.09%
Average employee tax rate
20% to 31.4%
What is an Employer of Record
An Employer of Record (EOR) is a valuable partner for businesses looking to hire internationally without the need to establish a local entity. The EOR acts as the legal employer for your hires, managing all employment-related responsibilities such as payroll, compliance with labor laws, and benefits, while you retain control over the day-to-day tasks of your employees.
For companies seeking to expand into Latvia, collaborating with an EOR can significantly simplify the process. Instead of dealing with the time-consuming and complicated task of setting up a legal entity in Latvia, you can access the country’s skilled, multilingual workforce while the EOR takes care of everything from payroll processing and legal compliance to managing local employment contracts.
Your EOR partner ensures that the hiring process is smooth and that you stay compliant with Latvian regulations, allowing you to focus on growing your global team efficiently.
Much more in-depth guide on what an Employer of Record is here.
Pros and Cons of EORs vs. setting up a legal entity
As with anything, both options come with advantages and disadvantages. Here, we highlight the key benefits and drawbacks of using an Employer of Record (EOR) versus setting up a legal entity, allowing you to see the differences clearly and make an informed decision.
| Factor | Employer of Record (EOR) | Legal Entity Setup |
|---|---|---|
| Setup Time | ✓ Quick setup in days. | ✘ Takes months to establish. |
| Initial Cost | ✓ Low upfront costs. | ✘ High initial investment required. |
| Ongoing Cost | ✓ Moderate (EOR fees + employee costs). | ✘ Variable, often higher ongoing costs (operational, compliance). |
| Complexity | ✓ Low, as EOR manages administrative tasks. | ✘ Requires local expertise and moderate administrative work. |
| Compliance Management | ✓ Handled by EOR (payroll, taxes, social security). | ✘ Responsibility falls on the company, needing legal expertise. |
| Language Barrier | ✓ Managed by EOR (local language issues handled). | ✘ Less of an issue in many countries, but may require local support. |
| Scalability | ✓ Highly flexible, easy to add or remove employees. | ✘ Less flexible, requires legal procedures for changes. |
| Local Expertise Required | ✓ Minimal, EOR provides necessary guidance. | ✘ Extensive local expertise and advisors required. |
| Risk | ✓ Lower, EOR assumes employer liabilities. | ✘ Higher, company bears legal and financial risks. |
Why Use an Employer of Record in Latvia?
Expanding your business into Latvia is a smart choice. Latvia is a well-educated, productive country with a strong and growing market. The country offers easy access to skilled, multilingual talent, making it an attractive option for businesses looking to expand internationally. However, navigating Latvia’s employment laws and labor market can be challenging, and that’s where an Employer of Record (EOR) can help you overcome these hurdles.
Here’s why Employer of Record (EOR) services can be a game-changer for your business in Latvia:
Simplified Compliance
Navigating Latvia’s labor laws can be complex. EORs manage all compliance-related tasks, ensuring your business adheres to local regulations effortlessly. Employment laws and tax regulations in Latvia are subject to change, so partnering with an EOR helps you stay up-to-date and compliant without the hassle of tracking every change yourself.
Cost-Effective Expansion
Setting up a local entity in Latvia can be costly and time-consuming. EOR services provide a cost-efficient alternative by managing all employment responsibilities, such as payroll, benefits, and compliance. This saves you money and resources, allowing you to focus on scaling your business without the burden of establishing a legal presence in Latvia.
Access to Latvian Talent
Latvia boasts a highly educated and multilingual workforce, fluent in Latvian, Russian, and English. EOR services make it easier to tap into this skilled talent pool without needing to build a full HR infrastructure locally. By using an EOR, you can attract and manage top talent while avoiding the need for a physical office or legal entity in Latvia.
Administrative Relief
Handling payroll, taxes, and employee benefits in a foreign country like Latvia can be overwhelming. An EOR takes care of these administrative responsibilities, ensuring that your employees are paid accurately and on time, while also managing employee benefits and compliance with local labor regulations. This allows your internal team to focus on higher-level business priorities.
Risk Management
EORs assume the legal responsibilities associated with employment in Latvia, significantly reducing your business’s risk exposure. They ensure compliance with local labor laws, reducing the potential for costly fines or legal disputes. By streamlining processes, an EOR makes your expansion into Latvia smoother and more efficient, allowing you to focus on growth and success.
Now that we’ve explored some of the key reasons to use an Employer of Record in Latvia, let’s take a look at the top EOR providers available in the country to help you make the best choice!
The best EOR providers For Latvia
Many trusted Employer of Record (EOR) providers operate in Latvia, offering seamless workforce management and ensuring compliance with Latvia’s labor regulations. Here is a selection of the top-ranked EOR services in Latvia:
- Multiplier: Renowned for its extensive global employment services, providing tailored solutions for businesses expanding internationally.
- Deel: Features a highly intuitive platform that simplifies the process of hiring, onboarding, and managing international teams across various regions.
- Oyster HR: Delivers a fully automated global employment platform, enhanced by robust local expertise to ensure compliance and smooth operations.
- Remote: Specializes in providing flexible, modern employment solutions, designed to streamline global hiring with advanced technology and compliance support.
Lano: Known for its scalable global employment solutions, Lano offers businesses an all-in-one platform for managing payroll, compliance, and workforce expansion across multiple countries.
Horizons: Provides expert global hiring and EOR services, focusing on simplifying international expansion while ensuring compliance with local labor laws and regulations in each market.
- Infotree Global: Offers comprehensive global employment solutions, providing businesses with efficient EOR services that ensure compliance and seamless workforce management across multiple regions.
- Papaya: Offers standard payroll and workforce management services, with automated solutions that help businesses handle basic compliance needs across a limited number of countries.
How Does EOR Service Work in Latvia?
Using an Employer of Record (EOR) service in Latvia makes hiring and managing employees easy without needing to establish a local entity or hire a team of legal and HR professionals. Here’s how it works:
Consultation and Contracts
The EOR begins by consulting with you to understand your specific needs and prepares employment contracts that comply with Latvian labor laws. These contracts ensure that all legal requirements are met right from the start.
Onboarding and HR Support
The EOR handles everything from gathering necessary employee documents to setting up payroll. They also provide ongoing HR support to ensure smooth management of employee relations in Latvia.
Payroll, Benefits, and Compliance
The EOR takes care of payroll, benefits, and ensures full compliance with Latvian tax and employment laws, so you don’t have to worry about staying up-to-date with evolving regulations.
Termination Handling
If needed, the EOR manages the termination process, ensuring that it complies with Latvian labor laws. This helps you avoid the legal complexities of termination, which can be challenging without local expertise.
Difference Between EOR and PEO
While both Employer of Record (EOR) and Professional Employer Organization (PEO) services help businesses manage their workforce, the two models differ significantly in Latvia. Understanding these differences is key to choosing the best solution for your company’s global expansion.
The EOR is the Legal Employer
In Latvia, an EOR takes on full legal responsibility for your employees. This includes managing employment contracts, handling payroll, and ensuring compliance with Latvian labor laws. The EOR becomes the official employer, simplifying local labor and tax regulations. In contrast, with a PEO, the client company remains the legal employer, sharing some HR responsibilities with the PEO provider but still needing a local entity.
To use a PEO you Need to Have an Entity in Latvia
A PEO typically requires the client to establish a local entity in Latvia, making it better suited for companies with a long-term commitment to the Latvian market. An EOR, however, allows you to hire employees without the need for a legal entity, making it an ideal option for businesses looking to test the market or operate with minimal overhead.
The Services Provided are Different
Both EOR and PEO services in Latvia offer payroll, benefits management, and compliance oversight. However, an EOR is often more suitable for companies that prefer a completely outsourced solution for managing local employment law complexities. EORs handle everything from tax filings to employee onboarding, offering a hands-off approach for businesses that do not want to manage HR compliance directly.
Learn more about the Difference between PEO and EOR
Top providers such as Deel and Multiplier offer both EOR and PEO services, giving businesses the flexibility to expand internationally while managing payroll, compliance, and workforce administration smoothly.
Understanding EOR Pricing Models
When considering an Employer of Record (EOR) service, understanding the various pricing models is crucial. Each of them has its benefits and drawbacks. Here’s a concise overview of common EOR pricing models:
Charges a percentage of the employee’s salary.
Pros: Transparent, aligns with employee compensation.
Cons: Costs can rise with higher salaries.
Percentage-Based Fees are most common with small to medium EORs and Employers of Record that take a more personal and custom approach. Percentage-Based Fees is one of the most common pricing models.
Fixed monthly fee per employee.
Pros: Predictable costs, easier budgeting.
Cons: May be less cost-effective for lower-salary employees
Flat Monthly Fees are common with large global EORs.
These Employers of Record often are well established players on the market, such as Multiplier.
Flat fee model is one of the most common pricing models along with Percentage-Based Fees.
Fees based on salary tiers or number of employees.
Pros: Flexible, potentially cost-effective.
Cons: Can be complex to predict exact costs.
Often paired with one of the other pricing models, for example the percentage-based fee becomes lower the more employees you onboard. However it can be found as a stand-alone pricing model, but not as comon.
Tailored pricing based on specific needs.
Pros: Customizable, tailored to requirements.
Cons: Requires detailed discussions, less initial transparency.
Custom pricing is very rare among the biggest players on the market. More knowledge about EOR is often needed to get a good deal working with a custom model.
Charges based on actual usage.
Pros: Pay for what you use, flexible.
Cons: Harder to budget long-term.
Pay-As-You-Go is probably the rarest pricing model and is more often seen in variants of Employer of Record solutions. You are not very likley to encounter this type of pricing structure.
Doing Business in Latvia - A Detailed Overview
Latvia, situated at the crossroads of Northern and Eastern Europe, offers growing opportunities for businesses looking to establish a foothold in the Baltic region. The country’s stable economy, innovative industries, and skilled workforce make it an attractive option for global companies. Its membership in the European Union further enhances its appeal for international trade and investment.
Key Economic Overview
In 2023, Latvia’s GDP was approximately $45 billion, reflecting consistent growth, driven primarily by logistics, manufacturing, and technology sectors. Latvia maintains an annual growth rate of 3.5%, and its inflation rate is stabilizing at around 2.6%, showcasing economic resilience. As a member of the EU, Latvia benefits from strong export partnerships, particularly in the IT and logistics sectors, contributing to a healthy trade balance.
Benefits of Doing Business in Latvia
Latvia’s corporate tax rate is a flat 20%, making it competitive within the region. Latvia’s modern infrastructure, including well-developed transportation networks and advanced digital infrastructure, ensures seamless operations for businesses looking to set up operations in the country.
The government of Latvia encourages investment, especially in innovation and technology sectors, offering various incentives like tax relief and R&D grants to support foreign investments. These factors make Latvia an attractive location for businesses that prioritize sustainable growth and innovation in fields such as IT, logistics, and green technologies.
Latvia’s Workforce and Employment Landscape
Latvia boasts a highly skilled and multilingual workforce, making it an attractive option for companies across a range of industries. The country’s labor force consists of around 900,000 people, with strong capabilities in IT, engineering, manufacturing, and finance sectors. Latvia’s commitment to education and vocational training has resulted in a highly qualified workforce, contributing to its growing reputation as a regional hub for technology and innovation.
Working Hours and Leave Policies
Standard working hours in Latvia are set at 40 hours per week, with a legal entitlement to at least 20 days of paid annual leave. Overtime is regulated and compensated at rates determined by employment contracts, often at 150% of the standard rate. Employees in Latvia are entitled to up to 1.5 years of parental leave, with flexible options for taking time off during this period. These laws ensure a good balance between work and personal life for employees.
Labor Market and Contracts
Employment contracts in Latvia must be written and detailed, clearly outlining key information such as salary, working hours, and job responsibilities. A probationary period of up to three months is standard, after which both the employer and employee must provide notice periods ranging from 2 weeks to 3 months, depending on the employee’s length of service. Unlike in some European countries, collective bargaining agreements (CBAs) are less widespread in Latvia, but industry-specific agreements can offer additional protections.
Payroll and Taxation in Latvia
Latvia’s tax and payroll regulations are transparent and designed to ensure that both employees and employers meet their obligations. The income tax rate for most employees is 20% for income below €20,004 annually, and 23% for income exceeding that amount. Employers are required to contribute 23.59% to 24.09% to social security funds, covering healthcare, pensions, and unemployment insurance. This system ensures robust social protections while maintaining competitive business costs.
Employer Contributions
In Latvia, employers contribute a portion of an employee’s gross salary towards various social funds, ensuring employees are covered under the country’s welfare system, which includes healthcare, pensions, and unemployment benefits. The mandatory employer contributions typically range from 23.59% to 24.09% and cover:
- Pension Contributions: 20% of the employee’s salary goes towards the state pension fund, split between the employee (7%) and the employer (13%).
- Health Insurance: Part of the employer’s contribution funds Latvia’s universal healthcare system.
- Unemployment Insurance: Employers contribute to cover unemployment benefits.
These contributions ensure employees have access to social security services, healthcare, and long-term support during retirement or unemployment.
Employee Tax Obligations
Employees in Latvia are taxed on a progressive scale:
- 20% on annual income up to €20,004.
- 23% on income between €20,004 and €78,100.
- 31.4% on income above €78,100.
In addition, employees contribute 10.5% of their salary to social security, which funds pensions, sickness insurance, and unemployment benefits.
Employee Benefits in Latvia
Latvia’s legal framework provides a range of mandatory employee benefits, ensuring workers enjoy a good quality of life and work-life balance. These benefits include paid leave, public holidays, and social security coverage.
Paid Leave and Public Holidays
In Latvia, employees are entitled to at least 20 days of paid annual leave. The country also observes 14 public holidays, including Independence Day and Midsummer’s Day, which are non-transferable if they fall on a weekend.
Parental Leave and Childcare Support
Latvia offers generous parental leave options, with parents entitled to up to 1.5 years of paid leave. This can be taken flexibly and can be shared between both parents, ensuring robust support for working families.
Latvia’s social and labor policies ensure employees are well-protected, making it an attractive market for businesses looking to expand globally.
Sick Leave
Employees in Latvia who are unable to work due to illness receive 75% of their salary during the first 10 days, paid by the employer. After that period, the Latvian Social Insurance Agency (VSAA) covers up to 80% of the employee’s salary from day 11 onward, ensuring workers continue to receive support during illness or injury. This provides security and support to employees while they recover.
Navigating the Hiring Process in Latvia
Latvia’s hiring process is structured and transparent, emphasizing compliance and fair treatment of candidates. Companies commonly use online job portals, recruitment agencies, and university partnerships to find qualified talent. With a multilingual and well-educated workforce, companies can source skilled employees across industries like IT, manufacturing, and logistics.
Ensuring Compliance through EOR Services in Latvia
Hiring and managing employees in Latvia requires strict compliance with local labor laws and tax regulations. Employer of Record (EOR) services, like those provided by Multiplier and Deel, simplify this process. They ensure compliance by handling essential tasks such as payroll management, contract creation, tax filings, and employee terminations. By managing these responsibilities, EORs reduce legal risks, allowing companies to focus on growth while staying compliant with Latvian labor regulations.
Simplifying Latvian Work Culture and Language Barriers with EOR
Latvian work culture emphasizes efficiency, collaboration, and maintaining a healthy work-life balance. For foreign companies, understanding these cultural nuances and overcoming potential language barriers can be challenging. EOR services help streamline this process by managing local HR practices and ensuring that all employment contracts are aligned with Latvian cultural expectations and legal requirements. By leveraging the expertise of providers like Multiplier and Deel, companies can build productive teams while overcoming the complexities of Latvian employment laws and language requirements.
Total Cost of Employment in Latvia
When calculating the total cost of employment in Latvia, employers need to factor in salaries, taxes, social security contributions, and additional benefits. Employers are required to contribute 23.59% to 24.09% of an employee’s gross salary towards social security, covering pensions, health insurance, and unemployment benefits. By using an EOR service, companies can ensure that their employees are well-supported and that they operate within Latvia’s legal and social frameworks, making hiring smooth and compliant.
Typical Employer Costs
Employers in Latvia should budget for contributions on top of the employee’s salary, typically ranging from 23.59% to 24.09%. These contributions go towards social security, covering:
- Pension Contributions
- Health and Sickness Insurance
- Unemployment Insurance
In addition to these, employers must account for paid leave, overtime, and other contractual obligations, which vary depending on employment agreements and specific industry regulations under Latvian labor laws.
Latvian Total Cost of Employment Calculator
We have developed a simple Total Cost of Employment Calculator for Latvia to help you estimate the full employment costs, including EOR fees. This calculator allows you to get a rough idea of what hiring an employee in Latvia would cost, factoring in social security contributions, taxes, and any additional benefits required by law.
It also breaks down how much the employee will receive net, after all taxes and contributions are deducted, giving you a clearer picture of the overall cost and the value of using EOR services in Latvia.
Total Cost of Employment Calculator
Results
Gross Pay
Gross Monthly Salary: EUR
Deductions
Income Tax (20% up to €1667, 23% beyond): EUR
Employee Social Security (10.5%): EUR
Net Salary: EUR
Employer Costs
Holidays (14 days): EUR
Annual Leave (20 days): EUR
Sick Leave (14 days): EUR
Total Time Off Cost: EUR
Employer Social Security (23.59%): EUR
Approx. EOR Fee: 200 EUR
Challenges of Hiring in Latvia
Hiring in Latvia presents several challenges, much like any other country. Understanding these obstacles is essential for businesses aiming to build and manage a successful workforce in Latvia.
Key Hiring Challenges
Latvian labor laws are highly regulated, especially when it comes to employment contracts, working hours, and employee protections. Employers must adhere to specific rules on probation periods, notice periods, and termination processes, which can sometimes be complex. While Collective Bargaining Agreements (CBAs) are not as prevalent in Latvia as in other European countries, they can still apply in certain industries, affecting hiring practices.
Additionally, managing payroll and tax obligations in Latvia can be challenging due to the country’s social security contributions and progressive tax system. These regulations make it essential for businesses to remain compliant with local laws, including contributions to pension and unemployment insurance funds.
Recruitment can also be competitive in high-demand sectors like IT, engineering, and finance. Businesses must navigate a multi-step hiring process to attract top talent, which often involves thorough assessments and competitive salary offerings.
Cultural Considerations
Latvia’s work culture values efficiency and clear communication, but with a more hierarchical structure than in some Western European countries. Leadership tends to be top-down, especially in traditional sectors, though more modern industries like IT are shifting toward flexible and collaborative work environments.
While Latvia is improving its work-life balance, there are still challenges. Flexible work options and teleworking are growing but not widespread across all industries. Employers are increasingly adopting policies that emphasize remote work and parental leave, driven by EU directives, but long working hours may still be expected in certain fields.
To navigate these complexities, partnering with an EOR can help foreign companies ensure compliance with Latvian labor laws while also adapting to the country’s cultural expectations regarding paid leave and employee benefits.
Benefits of Using an EOR in Latvia
For companies looking to expand into Latvia, partnering with an Employer of Record (EOR) simplifies the hiring process and ensures compliance with local labor laws. Here are the key advantages:
Risk Mitigation
By handling terminations, severance, and ongoing compliance, an EOR minimizes the risk of employment disputes and legal penalties. They ensure full adherence to Latvian labor regulations, protecting your business from potential liabilities and fines.
Cost-Effectiveness
Using an EOR removes the need to set up a local legal entity, which significantly reduces costs. EORs manage payroll, social security contributions, and tax filings, streamlining your administrative workload while ensuring full compliance with Latvian laws.
Fast Market Entry
An EOR allows businesses to hire employees quickly without the delays of establishing a local entity. They handle work permits, onboarding, and ensure compliance with Latvian employment regulations, helping you establish a local presence efficiently and focus on growing your business.
Choosing the Right Employer of Record in Latvia
Choosing the right Employer of Record (EOR) for your business in Latvia is crucial to ensure compliance with local laws, streamline operations, and support your growth strategy. At the beginning of this article, we highlighted some of the best EOR providers operating in Latvia. All of them offer highly reputable services, but if we narrow it down to the top 5, here’s our list based on factors like compliance expertise, cost-effectiveness, and HR support.
Latvian Labor Law Expertise
Ensure the EOR is well-versed in Latvian employment laws, covering tax regulations, social security, and worker protections to avoid non-compliance and costly mistakes.Service Flexibility
Opt for an EOR offering a full suite of services, including payroll processing, benefits management, and contract handling, all tailored to your company’s specific needs in Latvia.Cost Transparency
Verify that the EOR’s pricing model aligns with your budget, with no hidden fees, and that their service costs fit the scale of your Latvian operations.Technology and Efficiency
Choose an EOR with a robust, automated platform for payroll, compliance tracking, and reporting, ensuring scalable solutions to support business growth.Customer Support
Ensure the EOR provides responsive, localized support in Latvia with help available across different time zones to handle any issues swiftly.Local Presence
Select an EOR with a strong local presence or partnerships in Latvia to ensure quick resolution of regulatory or operational challenges.
These EOR providers simplify the process of entering the Latvian market, ensuring that your business stays compliant while offering flexibility and cost-effective solutions.
Top 5 EOR Providers for Latvia
- Multiplier: Renowned for its extensive global employment services, providing tailored solutions for businesses expanding internationally.
- Deel: Features a highly intuitive platform that simplifies the process of hiring, onboarding, and managing international teams across various regions.
- Oyster HR: Delivers a fully automated global employment platform, enhanced by robust local expertise to ensure compliance and smooth operations.
- Remote: Specializes in providing flexible, modern employment solutions, designed to streamline global hiring with advanced technology and compliance support.
Lano: Known for its scalable global employment solutions, Lano offers businesses an all-in-one platform for managing payroll, compliance, and workforce expansion across multiple countries.
Multiplier
Deel
Remote
Oyster HR
Learn More
We encourage you to visit their websites and learn more about them all, to see which fits you best
Lano
Explore EOR Guides in Neighboring Markets
Conclusions
Expanding your business into Latvia with the help of a trusted Employer of Record (EOR) is a smart, strategic move. This guide has covered how EOR services can simplify your entry into the Latvian market by managing compliance, payroll, and HR tasks, ultimately saving you time and resources. With an EOR, you can focus on growing your business while leaving the complexities of Latvian labor law and regulatory compliance to experts.
Choosing the right EOR provider is crucial to ensuring a smooth and compliant expansion. The best EORs in Latvia can help you hire efficiently, manage payroll, and stay compliant with local regulations, all without needing to set up a legal entity. With top-rated providers like Deel, Multiplier, and Remote, you have reliable options to meet your specific business needs.
If you’re ready to streamline your international expansion into Latvia, selecting the right EOR provider will make all the difference. Find a provider that best fits your company’s goals, and let them handle the legal and administrative burdens, so you can focus on what really matters: growing your business.
Frequently Asked Questions (FAQs)
Why should I use an EOR service in Latvia?
How does the EOR process work in Latvia?
What are the benefits of using an EOR service?
How do I choose the right EOR provider in Latvia?
What are the costs associated with using an EOR service in Latvia?
Can an EOR help with employee benefits and insurance?
How quickly can I start employing through an EOR in Latvia?
Is it legal to use an Employer of Record in Latvia?
Can the EOR handle both full-time and part-time employees in Latvia?
How do EOR services in Latvia manage employee benefits and pensions?
Are there specific regulations for hiring foreign employees through an EOR in Latvia?
What happens if an employee needs to be terminated in Latvia?
Can an EOR in Latvia assist with employee onboarding and training?
How do I get started with an EOR in Latvia?
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