Employment collective agreement and additional employee benefits without tax liabilities  

On 15 November 2021, the Parliament [Saeima] passed amendments to the Law “On Resident Income Tax”. Along with these amendments becoming effective on 1 January 2022, conclusion of the employment collective agreement allows to exclude from the PIT taxable income not only employee’s catering expenses in the amount of EUR 480 annually (on average EUR 40 per month), but also employee’s medical treatment expenses within the same limit.

The payment for the use of medical services needs to be supported by document that shall be submitted and stored with the employer.

Employment collective agreement allows the company to recognise event expenses referred to in the collective agreement (for example, costs of tea, coffee, fruits and other beverages and snacks) as operating expenses that are not personified.

It should be noted that tax liabilities do not arise in relation to the above expenses provided that these expenses do not exceed 5% of the total gross salary of the employees calculated in the previous reporting year for which social insurance contributions have been paid. “

Recent Posts

3 days ago

7 Common VAT Mistakes in Latvia (and how to Avoid Them)

Value added tax (VAT) is a type of consumption tax used in the European Union (EU). While VAT in Latvia is paid by the final…

Continue reading
4 days ago

What do you Need to Know About Public Holidays in Latvia as a Foreign-Owned Business?

Boasting reduced corporate tax rates, outstanding trading infrastructure and three special economic zones supporting corporate growth, Latvia is a popular EU base for foreign-owned businesses.…

Continue reading
June 2, 2024

PAYMENT OF DIVIDENDS AND THEIR TAXATION

THE PROCESS Dividend is an instrument how the company distributes the profits to its shareholders. For a shareholder (business owner) the dividends are the ultimate…

Continue reading