Approximately 270 thousand Latvians work part-time, receiving royalties or remuneration for hours worked or working in a micro-enterprise. All of these people have been affected by the tax reform that came into force in July. It has been criticized by both employees and entrepreneurs, so let’s explain what is really wrong with the system of compulsory social security contributions and what will happen next. “Delphi Business“asked six business representatives – what has changed
The Law “On State Social Insurance” came into force on July 1, 2021, and it stipulates that the employer must pay social tax for each employee from the minimum monthly salary, which is 500 euros per month. Yes, even if the employee works part-time or only works a few hours a day.
Due to the new conditions, it is no longer advantageous for entrepreneurs to hire people on a part-time basis, as the amount of social security contributions is the same as for full-time employees. It has been four months since the law was passed, so let’s look at how entrepreneurs have adapted.
Work until exhaustion?
Baibai Circene owns a small company – “Sabiles cider”. On his farm, she runs apple cider, as well as organizes concerts, cultural events and various excursions. There is a lot of work, but it is seasonal, unstable and unpredictable.
“Employee workload depends on various factors – season, season, even weather! When there are orders, we also need labor, standard working hours from eight to five do not suit us,” she says. “Until July 1, we worked that way. When we were at work, we called people, they arrived, worked certain hours and went about their business. After July 1, I can’t afford to hire employees for a few hours because I have to pay a lot more in taxes than they actually do. It may also be the case that social security contributions for such an employee exceed his salary. That is absurd! “
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