- mandatory State social insurance contributions, personal income tax, business risk fee for micro-enterprise employees;
- corporate income tax, if a micro-enterprise complies with the features of a corporate income tax payer;
- personal income tax of a micro-enterprise owner for the income part of economic activities of the micro-enterprise.
A micro-enterprise tax payer calculates and pays micro-enterprise tax and does not calculate or pay personal income tax, corporate income tax, risk fee in budget separately, as well as does not make mandatory contributions.
- What is a micro-enterprise and what is empowered to choose to pay micro-enterprise tax
- individual merchant;
- individual enterprise, farms and fish farms;
- natural person, which is registered in the State Revenue Service (SRS) as a performer of economic activities;
- person is not a member of partnership;
- limited liability company.
- income from economic activities — turnover — per calendar year does not exceed EUR 40 000;
- members of a limited liability company are only natural persons;
- board members of a limited liability company are only micro-enterprise employees;
- number of micro-enterprise employees at any time does not exceed five (number of employees does not include employees who are absent or dismissed);
- income of a micro-enterprise employee does not exceed EUR 720 per month.
A micro-enterprise is entitled to obtain the status of a micro-enterprise tax payer if it has agreed with all the employees of the micro-enterprise on the imposition of micro-enterprise tax in writing. This agreement may be included in the employment contract as an individual provision.
- Restrictions for a micro-enterprise tax payer and a micro-enterprise employee
An employee of a micro-enterprise tax payer shall not be entitled to apply the untaxed minimum and personal income tax exemptions for the period when he/she has been an employee of a micro-enterprise tax payer.
A natural person as an employee of a micro-enterprise tax payer may be employed only by one micro-enterprise at the same time.
The State Revenue Service shall not register a worker of a micro-enterprise as an employee in a micro-enterprise if he or she is already employed by another micro-enterprise.
When paying micro-enterprise tax, 80 % of micro-enterprise tax shall go to mandatory State social insurance contributions; thereby, they are considerably smaller than those which would be made according to the general procedure as a self-employed person, by applying the rate of 32,15 %, or as an employee, by applying the rate of 35,09% to the object of mandatory State social insurance contributions. That may considerably affect the amount of State social insurance services — pension and allowances.
- How micro-enterprise tax payers are registered
- simultaneously with registration with the corresponding register of the Register of Enterprises, by applying for the status of a micro-enterprise tax payer;
- by a natural person at the same time with registration as a performer of economic activities, by submitting an application to the SRS for obtaining the status of a micro-enterprise tax payer;
- by a sole trader, individual enterprise, farm or fish farm, natural person registered as a performer of economic activities, or limited liability company by 15 December of the pre-taxation year, by submitting an application to the State Revenue Service.
The State Revenue Service, within five working days after the day an application on the status of a micro-enterprise tax payer was received, or after receiving information from the Register of Enterprises, makes a decision on the registration of a micro-enterprise tax payer or a decision on the rejection of registration, if the State Revenue Service has information at its disposal regarding that the applicant does not comply with the criteria specified in the Micro-enterprise Tax Law.
- Micro-enterprise tax object and applicable rate
The object of micro-enterprise tax is the turnover of micro-enterprise. The micro-enterprise tax rate in 2018 for the micro-enterprise turnover is 15%.
If the micro-enterprise did not have turnover in the taxation period (calendar year) or the calculated amount of the micro-enterprise tax does not exceed 50 euros, a micro-enterprise taxpayer shall pay the micro-enterprise tax into the budget in amount of 50 euros.
- Tax payment procedure if the criteria set for a micro-enterprise tax payer are exceeded
If the turnover of a micro-enterprise exceeds EUR 40 000 per year, a tax rate of 20 % shall be applied to the amount that exceeds the referred to turnover.
If the number of employees in a micro-enterprise, which pays micro-enterprise tax, unjustifiably exceeds five employees per quarter, two percentage points for each additionally employed employee shall be applied to the applicable tax rate.
- if its turnover of the taxation year has grown in comparison with the turnover of the pre-taxation year or the turnover of the year before the pre-taxation year, but the turnover growth does not exceed 30 % in comparison with the turnover of the pre-taxation year or the turnover of the year before the pre-taxation year;
- if the number of employees of a micro-enterprise within the taxation year exceeds five and the number of employees of the micro-enterprise in the taxation year has increased by one or two employees in comparison with the pre-taxation year and in the pre-taxation year in comparison with the year before the pre-taxation year.
- Declaration and payment of micro-enterprise tax
Payer Account Micro-enterprise tax, which is paid by payers who comply with the Corporate Income Tax Law LV75TREL1060000721000 Micro-enterprise tax, which is paid by natural persons registered as performers of economic activities LV41TREL1060000722000 Micro-enterprise tax, which is paid by other performers of economic activities who comply with the Personal Income Tax Law LV07TREL1060000723000
By the fifteenth day of month following the quarter, a micro-enterprise submits a Micro-enterprise Tax Declaration to the State Revenue Service.