State social insurance compulsory contributions to be charged from minimum salary

As of year 2017, the minimum charge from state social insurance contributions (SSIC) has been defined according to the amendments to the Law “On State Social Insurance”.  The aim of the new regulation is to focus on quality of life to be ensured in case of occurrence of social risk and protection of interests of members of the state social insurance system which income exceeds the minimum salary in Latvia.

The new procedure foresees that SSIC will be calculated from the minimum compulsory contribution for the employee whose monthly salary does not exceed the minimum salary. A transitional period will be defined during year 2017 thus the minimum compulsory charge will be three quarters of the minimum monthly salary. In year 2018, the payments will have to be made from full minimum salary.

For employees of micro-enterprises, a minimum compulsory charge will be three eights of the minimum monthly salary, but in year 2018 – from the full minimal salary.

If the calculated salary will be actually less than the minimum payment charge, the difference of SSIC shall be paid by the employer.

The person receiving salary from several employers, minimum compulsory contribution shall be ensured by the employer who has employee’s payroll tax book. If the payroll tax book has not been submitted to any of employers, the minimum compulsory contribution will have to be ensured by the employer who has reported information of a recruited employee. The employer will be notified about it via the electronic declaration system.

Whereas the person receiving minimal salary from several employers and one of the employer makes payments of SSIC from minimum compulsory contribution, the payments will be summed. The overpaid amount of SSIC will be refunded to an employer.

If a person is the employee of number of micro-enterprises, contributions made will not be summed. However, as of year 2017, the employee of micro-enterprises will be entitled to join voluntarily the state social insurance selecting contributions to make that would not exceed the minimal monthly salary.

The compulsory contribution charges will not apply to (1) seasonal farm workers paying income tax, (2) resident employee of foreign employers, (3) foreign employees of foreign employer, (4) disabled persons, (5) persons recruited 3 months for the first time, (6) students under the age of 24 and others. For the said groups, the SSIC will be administrated as before.

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