Legislative changes in Latvia for 2026
The year 2026 does not bring major or revolutionary changes to Latvian legislation. It is a continuation of the work started in previous years. Several tax rates will change—including the minimum wage, the non-taxable minimum, and VAT—which will affect both the general public and very specific cases and industries.
Although taxes are what impact companies and the work of accountants the most, a survey conducted by Jumis Pro revealed that issues related to digitalization are what concern the majority of companies. Participants—accountants—had the opportunity to answer a question about which changes would affect their companies the most, with the option to select multiple answers.
For example, approximately 60% of the surveyed accountants noted that the requirement to use e-invoices for transactions with state institutions would have the greatest impact. Similarly, nearly 50% noted that changes to the EDS authentication procedure (where usernames and passwords can no longer be used) would also affect daily company operations. Only then followed the minimum wage and the alternative tax regime regarding corporate income tax (CIT). However, let us look at the main legislative changes in 2026 that will affect a large part of the public.
Increase in the minimum wage
For every employee, it is important to know how much they receive once the work is done. To improve the well-being and income levels of the population, starting January 1, 2026, the following will change: the amount of the minimum wage: the minimum monthly wage (gross) is being increased from €740 to €780 per month.
Who does this apply to?
The minimum wage applies to all employees who work full-time and whose contracts specify the minimum wage rate. This must be applied by all employers, regardless of the industry or the size of the company.
Fixed and higher non-taxable minimum
Raising the minimum wage is by no means the only tool the state can use to improve the standard of living for its citizens. Starting January 1, 2026, the non-taxable minimum will also change: it has been raised to €550 per month, up from the previous €510.
These changes affect every employee, and it is important for accountants to ensure that the new calculation is being used. If a company uses accounting software, it is important to verify that the provider has updated it in accordance with the latest legislation.
Jumis offers the ability to check potential salary amounts at any time -> salary calculator.
Personal Income Tax (PIT) on dividends
Legislative changes also affect companies, especially those that pay dividends to their owners. From 2026, it will be possible in Latvia to choose an alternative corporate income tax (CIT) regime. What does this mean?
- The standard regime is when a company pays corporate income tax (CIT) to the state, which is fixed at 20% of profits. If the company pays out dividends, the recipients do not have to pay any taxes on them.
- The alternative corporate income tax (CIT) regime provides for a lower CIT rate of 15% of profits. However, owners receiving dividends must pay personal income tax (PIT) at a rate of 6%.
Why might this be advantageous?
- The alternative regime allows for a reduction in CIT from 20% to 15%, meaning the company retains more capital initially, which can be reinvested into business development or other investments rather than being paid out in taxes immediately.
Who is eligible for this regime?
- Only small and medium-sized enterprises whose shareholders are natural persons; they must not operate in highly regulated sectors (e.g., the financial or energy sectors).
Important: the choice is voluntary, and many factors must be considered to ensure the alternative regime is beneficial. To apply this regime, the company must notify the State Revenue Service (VID).
Changes to value-added tax (VAT)
Some taxes affect a large portion of society, if not everyone. They are applied to goods we purchase regularly, which is why we feel changes to them most acutely. One such tax is value-added tax (VAT). In 2026, value-added tax (VAT) will change in two ways.
- Starting January 1, the special regime for books is being abolished; the 5% VAT rate will only apply to books published in Latvian or in certain EU/OECD languages. This means that books in Russian will be subject to a 21% VAT rate.
- Starting July 1, a reduced VAT rate of 12% will be applied to certain food groups. This will apply to bread, milk, fresh poultry, and eggs.
Companies operating in the publishing, retail, and wholesale sectors must pay close attention to ensuring these changes are reflected in their pricing.
Excise tax increases
In 2026, the trend will also continue excise taxes increases for alcohol, tobacco, e-cigarettes, and fuel.
- The excise duty rate for alcohol in Latvia will increase starting March 1, 2026; rates vary based on alcohol concentration. For example, the excise tax on 100 liters of wine will rise from €134 to €148.
- Excise duty rates for tobacco products are also being increased based on product type. For example, the minimum excise tax level for 1,000 cigarettes will rise from €171.90 to €197.70.
- The rate for e-cigarette nicotine liquid will be €0.35 per milliliter.
- The fuel excise tax will increase prices by a few cents per liter (approximately 2.7–3.2 cents/l, depending on the fuel type).
Natural Resources Tax (NRT)
Natural resources tax (NRT) is a tax paid on the extraction or use of various natural resources. Effective January 1, 2026, several NRT rates in Latvia will be increased:
- soil, sand, sand-gravel, sandy loam, and colored earth;
- freshwater limestone, travertine, gypsum, and fieldstone;
- disposal of municipal waste.
Exact amounts vary depending on the type of resource, as the tax is set in euros per unit (e.g., per cubic meter or ton) rather than as a percentage.
For example, the tax rate for sand and sand-gravel is increasing by approximately 25%, which is about €0.10 more per cubic meter than before. For municipal waste disposal, the NRT rate has been increased from €110 per ton to €130 per ton, representing an increase of €10–€20 per ton compared to previous years.
Who is affected?
- construction companies that use sand, gravel, and other materials;
- resource extraction companies (land and raw material extraction);
- waste management companies (as landfill service costs increase due to the NRT component);
- local governments and residents—indirectly, as these changes may affect waste management fees.
Tax administration and regulatory compliance
As part of ongoing efforts to improve the State Revenue Service (SRS) operations and business oversight, several changes have been implemented in 2026:
Higher threshold for late payments: increased from €15 to an amount exceeding debt recovery costs. This is currently around €40, though it is subject to change. However, the SRS may still apply interest for late payments.
- SRS authority
If a company offers services while bypassing tax payments, the SRS may block its website.
- Reporting obligations
Increased oversight of the construction and service sectors, particularly regarding VAT—precise reporting of every transaction in the VAT return is now required.
Who does this affect?
- All taxpayers: limited liability companies (SIA), individual merchants (IK), micro-enterprises, and sole traders.
- Particularly important for companies with high VAT turnover or those in the construction, wholesale, and food sectors.
Other significant legislative changes
E-invoices for government agencies
The transition period for e-invoices in transactions with the state and between its institutions concluded in 2025. Consequently, this requirement became mandatory as of January 1, 2026.
A Jumis Pro survey indicates that accountants remain largely uncertain about e-invoice requirements, including how to send and receive them—nearly 70% of survey participants lack clarity on this. Given that e-invoices will become mandatory for business-to-business transactions starting in 2028, there is a long road ahead to make the process understandable.
Changes to EDS authentication
As of January 1, 2026, it is no longer possible to log in to the SRS Electronic Declaration System (EDS) using a username and password. The goal is to improve security and protect data, as passwords are significantly less secure than certified electronic identification tools.
To log in to the EDS, you must now use one of the following secure identification methods:
- Smart-ID (qualified version);
- Electronic identification card (eID);
- Secure electronic signature (e.g., eParaksts or eParaksts mobile);
- Authentication via certain internet banks (temporary solution until 31.12.2026).
The year 2026 brings several changes to Latvia that affect both individuals and businesses—from increases in the minimum wage and the tax-free threshold to new requirements for VAT, excise duty, and e-invoices. To prepare for the new legislation, it is important to review your financial and accounting procedures, follow the guidelines provided by the State Revenue Service (VID), and adapt to digitalization requirements in a timely manner.
Read more about the legislative changes on the official Cabinet of Ministers website.
Frequently Asked Questions (FAQ)
What is the minimum wage in Latvia in 2026?
As of January 1, 2026, the minimum monthly gross wage is increased from €740 to €780.
What is changing regarding the tax-free threshold in 2026?
The tax-free threshold is increased from €510 to €550 per month, meaning that for most employees, a smaller portion of their salary will be subject to personal income tax.
Who is required to use e-invoices in Latvia?
Starting January 1, 2026, e-invoices become mandatory for all businesses conducting transactions with government institutions. Full mandatory B2B requirements will come into effect in 2028.
How can I log in to the VID EDS in 2026?
Usernames and passwords can no longer be used. The available secure authentication methods are:
- Smart-ID (qualified version);
- eID card;
- eParaksts or eParaksts mobile;
- Authentication via certain internet banks (temporary solution until 31.12.2026).
