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Upcoming amendments to Law on State Social Insurance

In order to improve the social security system Latvian Parliament has adopted the amendments to the Law "On State Social Insurance" at first reading on 5 May 2016. One of the planned amendments concerns transfer of state social insurance contributions of a person from the Member State to Latvia or vice versa.

There is an increasing tendency towards cases when the person who is subject to social insurance in one country performs work at the same time for a certain period and pays relevant taxes (including social security contributions) in another country. Thus, there could be a situation whereas social contributions are paid in several countries.

According to the European Parliament and the Council Regulation (EC) No. 883/2004 of 29 April 2004 and a coordination of social security systems, a resident of the Member State is subject to the law of one EU Member State only. Thus the state social insurance contributions within the same period must be carried out only in one Member State regardless of the fact that the person is employed in two or more Member States simultaneously.

The amendments stipulate that in case social contributions within EU or European Economic Area (EEA) or Switzerland have been made wrongly, the State Social Insurance Agency (SSIA) in Latvia will be able to request transfer of contributions made from relevant national authority in other country into the Latvian budget without late charges. Transfer of contribution will not change insurance amounts already granted to a person except the state’s retirement pension and early retirement pension. If due to the transfer, the estimated mandatory contributions for a calendar year exceed maximum amount paid, the contributions overpaid will not be refunded to the person.

In addition, the amendments foresee the cases when the contributions should have been paid in another EU country, EEA or Switzerland instead of Latvia. Upon request of a competent authority of another Member State, the SSIA in Latvia will be obliged to transfer contributions received to other country. Following transfer of the mandatory contribution, SSIA in Latvia will review person’s rights to continue receiving social insurance services or the amount thereof.

Further, it will be possible to transfer the mandatory contributions from Latvia to another Member State and vice versa only for the last period in line with the duration specified in A1 certificate.


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