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Employee posting to another EU or EEA member state and travel allowances.

Pursuant to Section 14 of the Labor Law (LL), posting of an employee shall mean the cases where, in connection with the provision of international services, the employer posts an employee to another state, if:
  • The employer has entered into a contract with a person for whose benefit the work will be performed.
  • The employer posts an employee to a branch or to an undertaking in another state, which is part of the group of companies.
  • A work placement service provider as an employer posts an employee to the recipient of the work placement service for whose benefit and under whose management the work will be performed.
An employer who posts an employee to perform work in another European Union (EU) Member State, European Economic Area (EEA) State, irrespective of the law applicable to the employment contract and employment relationships, has a duty to ensure for such posted employee the fulfilment of employment provisions in compliance with the laws and regulations of the respective state or collective agreements which have been recognised as generally binding (Section 142 of the LL). The employer has to make sure whether in the state where the employee is posted other duties exist, for example, notifying state authorities of the posting.

Salary and mandatory elements of salary also shall be determined in line with the laws and regulations or practice of the state where the employee is posted. Therefore, the employer, before posting the employee to perform work to another state, has to familiarise with the laws and regulations of employment effective in the respective state, including regulations in regard to minimum salary[1], payment for overtime, vacation, etc. It should be clarified whether effective collective agreement (for example, in the field of construction) exists that regulates salary in entire industry. Moreover, this information should be provided to the employee along with other essential posting information in writing.

After assessment of regulations of salary, it is important to assess the regulations of application of income tax to the remuneration of employees. If the employee is posted to a state with which Latvia has concluded the tax convention, the provisions of tax convention concluded with the respective state should be assessed.

The provisions of applying income tax in regard to the remuneration of directors and similar payments are provided in Article 16 of the Convention. The section stipulates that to remuneration of specific positions income tax can be applied in the other contracting state.

For example, if the employee who performs the duties of director is posted to Norway, in line with the tax convention, there can be a duty to pay income tax in Norway based on the remuneration. Therefore, the laws and regulations of Norway should be assessed. If, however, the employee in the same position is posted from a Norwegian company to Latvia, income tax is applied to the remuneration in Latvia regardless whether the employee would be actually in Latvia to perform his/her duties or work would be performed remotely from Norway.

In other cases, the conditions of applying income tax are stipulated in Article 15 of the Convention. Pursuant to Article 15 of the Convention, income tax can be applied in the other state (to which the employee is posted), if the work is performed in the other state. Regardless of this condition, in line with the tax convention, income tax will be applied to the remuneration for work performed in other country in the first state, if all three conditions are met:

1) Receiver of the remuneration has been in the other state not more than 183 days over any 12-month period;

2) The remuneration is paid by the employer or authorised representative that is not a resident of the other state; and

3) The remuneration is not paid using the permanent representation or permanent basis that the employer uses in the other state.

Travel allowance
Upon posting an employee to perform work in another European Union Member State or European Economic Area State, the provisions regarding official trips, including regarding reimbursement of expenses of an official trip, shall be applicable accordingly, unless the Labour Law provides otherwise (Section 142 of the LL). The employer pays the posted employee daily allowance that amounts to 30% of the maximum daily allowance provided in the laws and regulations governing the compensations related to business trips.

If the employment contract or collective agreement do not provide otherwise, the employer is not obliged to pay daily allowance to the posted employee, if one of the following applies:
- The employee is ensured catering three times a day;
- The remuneration for work payable to the employee equals the remuneration paid to comparable employee in the state to which the employee is posted.

If the employer, pursuant to the law, employment contract or collective agreement, pays daily allowance to the employee, in any case it is considered compensation of expenses rather than part of salary (Section 142 of the LL).

The amounts of business trip daily allowances are stipulated in Cabinet Regulations No. 969 “Procedures for Reimbursement of Expenses Relating to Official Travels” dated 12 October 2010. If daily allowance is paid in line with the limits stipulated in Cabinet Regulations No. 969, personal income tax and compulsory state social security contributions are not payable. This is pursuant to Article 4.1 of Cabinet Regulations No. 969 and Section 9 Paragraph One Clause 16.1 of the Law On Personal Income Tax. However, if the amount of paid daily allowance exceeds the limit, the difference is considered the benefit of the employee and personal income tax and compulsory state social security contributions are applicable.

Other expenses of the employee
In addition to salary and daily allowance, the duty of the employer stipulated in Section 76 of the Labour Law shall be considered, i. e., the employer has the obligation to reimburse those expenses of an employee which, in conformity with the provisions of the employment contract, are necessary for the performance of work or have been incurred with the consent of the employer, especially expenses related to the employee’s business trip. These expenses can include, for example, travelling and accommodation expenses.

Based on the above conditions, let’s view the following example.
Example: The Norwegian company has a subsidiary in Latvia, SIA “A”. SIA “A” posts a construction specialist to perform work at its parent company in Norway. SIA “A” has concluded employment contract with the natural person and gross salary provided in the contract is EUR 2,500. Travelling expenses and accommodation expenses for the rent of apartment will be covered.

Based on the available information[2] the minimum hourly rate of professional construction specialists in Norway amounts to NOK 209.70 (or EUR 20.60 as at 9 March 2021). Assuming that the employee would work 160 working hours per month, the minimum salary of the employee should be EUR 3,296.

Consequently, as in this case the employee is posted to work in Norway for three months, SIA “A” will continue to pay salary to the employee, we assume that SIA “A” does not have a permanent representation in Norway. Therefore, based on the provisions of the tax convention, income tax applicable to the salary of the posted employee shall be payable in Latvia.

In addition, the employer has to pay 30% of EUR 65 that is the set limit of daily allowance in Norway. Monthly expenses of the posted employee are summarized in the table below, comparing expenses that SIA “A” might incur, if the employee is not posted to Norway:

  Expenses of SIA “A”
  Works in Latvia Posted to Norway
Gross salary of the employee 2,500 3,296
Compulsory state social contributions    
Employer’s part 23.59% 589.75 777.53
Employee’s part 10.50% 262.50 346.08
PIT 23% (salary register has not been submitted) 522.50 688.86
Net salary 1,715.00 2,261.06
Daily allowance 0 585
Employer’s monthly expenses 3,089.75 4,658.53

If the employee in the above situation would perform work in Norway for more than 183 days over any 12-month period, SIA “A” might incur an obligation to pay salary taxes in Norway.




Jānis Ozoliņš

Jānis Ozoliņš

Head of Tax & Legal

Mobile: +371 23 995 384

Email: janis.ozolins(at)

Inga Jomanta

Senior Tax Advisor

Mobile: +37123995382

Email: inga.jomanta(at)

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