Accounting for Doctors and Private Practices in Latvia — A Complete 2026 Guide

Accounting for Doctors and Private Practices in Latvia — A Complete 2026 Guide

Medical education takes six to twelve years, depending on the specialization. In none of those years are future doctors taught how to issue an invoice, what taxes a private practice pays, or what the VAT exemption for healthcare services actually covers. As a result, every doctor who decides to open a private practice runs into the same wall: the medical work is clear, but its financial side is a fog.

By 2026 the situation has changed, but it hasn't gotten simpler. The VAT exemption for healthcare services still raises the most questions, the register of medical institutions requires specific documentation, and hiring staff in a private practice creates additional tax obligations. This guide is written for doctors, dentists, family physicians, and other healthcare professionals who are starting a private practice or already running one.

Key takeaways

• Healthcare services are exempt from VAT (VAT Law, Article 52) — you can earn more than €50,000 a year and still not be a VAT payer, as long as you provide only medical treatment services

• If your practice also provides taxable services (cosmetic procedures, product sales), the €50,000 calendar-year threshold applies only to that taxable portion — not to your total revenue

• Self-employed social security contributions (VSAOI) aren't a fixed minimum regardless of income — below €780/month in income, you pay only 10% of actual income; €242.35/month (31.07% of €780) is what's owed only once monthly income reaches or exceeds the minimum wage

• An SIA can become more advantageous as income grows — roughly above €40,000–50,000 a year (the exact break-even point depends on costs and distributions; the example below calculates only the self-employed side), especially if expensive equipment or staff hiring is planned

• The business risk state fee is a fixed amount — €0.36 per month per employee, not a percentage rate

Healthcare services and VAT — an exemption that's often misunderstood

The single most important tax point every doctor in private practice needs to understand: healthcare services are exempt from VAT.

Under Article 52 of the Value Added Tax Law, VAT does not apply to medical assistance provided by medical professionals — doctors, dentists, nurses, midwives, and other certified healthcare specialists.

Source: Value Added Tax Law

This means you:

• Don't charge VAT to patients

• Can't deduct input VAT on your own purchases (equipment, instruments, rent)

• Don't need to register as a VAT payer, even if your turnover exceeds €50,000 — as long as your activity consists only of VAT-exempt medical treatment services

The third point matters a lot: for an ordinary business, VAT registration is mandatory once turnover exceeds €50,000 within a calendar year. For a doctor's private practice providing only medical treatment services, that threshold simply doesn't apply — you can earn €200,000 a year and still not be a VAT payer.

Where the VAT exemption doesn't apply

The exemption covers only medical treatment services. It does not cover:

• Cosmetic procedures that aren't medically necessary (purely aesthetic dermatology, unless there's a medical indication)

• Selling dietary supplements, cosmetics, or hygiene products

• Subletting space to other specialists

• Training or consulting services not directly related to treating patients

If your practice also provides these kinds of services, part of your activity will need to have 21% VAT applied — and this is where the accounting gets more complicated.

Partial VAT exemption — when a practice provides both medical and other services

If your private practice sells VAT-taxable goods or services alongside medical treatment, you need to be able to separate the two activities. For purchases used in both areas (rent, electricity, for example), input VAT must be split proportionally — under Article 100 of the Value Added Tax Law on the partial deduction of input tax.

For example, if 70% of your revenue comes from medical treatment (VAT-exempt) and 30% from cosmetic procedures (VAT-taxable), only 30% of the input VAT on your shared costs can be deducted.

An important nuance on the VAT registration threshold: the €50,000 calendar-year threshold applies only to the portion of your business that's VAT-taxable (cosmetic procedures, product sales), not to your total revenue including medical treatment. That means you can generate large total revenue from medical treatment and still not be a VAT payer, as long as your taxable activity (cosmetics, products) stays under €50,000 a year.

In this situation, you have two options:

• Don't register for VAT, if your VAT-taxable revenue is under €50,000 a year.

• Register for VAT and apply a proportional split of input tax, if your taxable activity exceeds the threshold or it's advantageous for recovering input VAT.

SIA vs. self-employed — which is better for a doctor?

Most doctors start their private practice as self-employed — it's simpler and cheaper. But as income grows, an SIA becomes an increasingly attractive alternative. If you want to explore this choice in a broader context (not specific to healthcare), see our article on SIA vs. sole trader vs. self-employed.

The self-employed doctor

• Registers only with VID (no need to register with the Register of Enterprises).

• Income is taxed with personal income tax (25.5% up to €105,300, 33% above that) and VSAOI.

• Self-employed VSAOI has a two-tier structure: 31.07% on the contribution base (minimum wage of €780/month), plus 10% on every euro above €780. If actual monthly income doesn't reach €780, you pay only 10% of actual income — not a mandatory minimum regardless of income level. So €242.35/month (31.07% × €780) is an amount owed only once income reaches at least the minimum wage, not a fixed "floor" payment in every case.

• No VAT obligations, as long as only medical treatment services are provided.

• Can't use the 10% personal income tax regime (notified economic activity), which is available only for certain types of activity (such as renting out real estate) — medical treatment doesn't qualify. A doctor must use the general personal income tax regime with expense deductions.

Source: State Social Insurance Law (Article 18)

The SIA for a doctor

• Registers with the Register of Enterprises (UR) as a separate legal entity. The step-by-step process is covered in our SIA registration guide.

• Profit is taxed with corporate income tax (UIN) only when distributed (20% under the standard regime, or 15%+6% under the alternative regime if all members are natural persons).

• Can pay yourself a salary (minimum €780/month if it's your only workplace) and additionally distribute dividends — for how to optimally split between salary and dividends, see this article or use our dividend calculator.

• Can deduct all practice-related expenses — rent, equipment, salaries, insurance.

• Liability is limited to the share capital — significant if professional liability risks exist.

When an SIA is advantageous for a doctor

An SIA becomes more advantageous when:

• Annual income exceeds roughly €40,000–50,000 (an indicative figure, not calculated here — it depends on costs and distributions).

• You plan to buy expensive equipment (an ultrasound machine, X-ray equipment, a dental chair) — an SIA's depreciation reduces its accounting profit (UIN is paid on distributed profit).

• You plan to hire staff — an SIA suits an employer better.

• You want to separate your personal assets from professional risk.

Practical example — tax calculation for a self-employed doctor

Suppose Dr. Ilze is a family doctor working as a self-employed individual. Her private practice earns €60,000 a year in revenue, with €12,000 a year in business expenses (rent, medical supplies, insurance).

Note: This calculation is simplified and assumes an evenly distributed monthly income — in reality, VSAOI and personal income tax are calculated from actual income in each period, not an averaged figure. For a precise calculation, work with an accountant or use our salary calculator for an indicative comparison.

This example shows the tax burden of a self-employed doctor; as income grows (roughly past €40,000–50,000 a year), some doctors choose an SIA — under the standard UIN regime, profit that isn't distributed isn't taxed at all (0%), while a self-employed person has to pay personal income tax and VSAOI on their entire annual income regardless of whether the money is withdrawn from the business or left in it.

Buying medical equipment and depreciation

Medical equipment is expensive, and its purchase cost can't be written off immediately — it must be recorded as a fixed asset and depreciated over several years.

Tax depreciation for a person carrying out economic activity (including a self-employed doctor) is governed by IIN Law art. 11.5: for fixed assets costing over €1,000, one method must be chosen for all fixed assets — either degressive (a % per year) or linear (useful life in years):

• Computing equipment and software: 35% per year or 3 years

• Medical and technological equipment: the category depends on the type of equipment — the law does not single out medical equipment; technological and energy equipment is 10% per year or 10 years, other fixed assets 20% per year or 5 years

• Furniture and office equipment ("other fixed assets"): 20% per year or 5 years

• Buildings and structures: 5% per year or 35 years

For a self-employed doctor, depreciation reduces personal-income-tax-taxable income. An SIA has no such tax categories: corporate income tax is paid on distributed profit, and the SIA depreciates assets under its own accounting policy, which reduces the accounting profit available for dividends — you can run an indicative calculation with our depreciation calculator.

An important nuance: if a doctor is a VAT payer (for example, due to a partial VAT regime under mixed activity), input VAT on equipment purchases can only be recovered proportionally to the share of taxable activity.

Hiring staff in a private practice

As your private practice grows, you may need staff — nurses, reception staff, other doctors. Hiring staff creates additional tax obligations and administrative burden.

Total employer cost for one employee with a €1,500 gross salary:

For a precise salary calculation including the non-taxable minimum and personal income tax, see our salary calculator.

On top of that:

• The employer's report must be filed by the 17th.

• Taxes (VSAOI and personal income tax) must be paid by the 23rd.

• Mandatory health checks must be arranged (at the employer's expense) — particularly important in healthcare, where these checks are specific to the field.

• Employment contracts, job descriptions, and internal work rules must be prepared and maintained.

Licensing requirements and how they interact with accounting

To provide healthcare services, a doctor needs to register a medical institution with the Health Inspectorate. Registration requires:

• A medical certificate in the relevant specialty

• An assessment of the premises' compliance (hygiene requirements, accessibility)

• A list of medical equipment and proof of its compliance

• A waste management contract (medical waste)

• Civil liability insurance

Source: Medical Treatment Law (Ārstniecības likums); Regulation on the Register of Medical Institutions

Your accounting needs to be able to show that all required certificates and licenses are valid, since their absence can lead to suspension of activity and even criminal liability. On top of that, the costs of obtaining and maintaining licenses and certificates (continuing education courses, certification fees) count as business-related expenses.

Common VID mistakes made by private practices

1. Incorrect accounting for transactions with insurance companies. Many doctors sign contracts with insurers and receive payments for treating patients. These transactions must be recorded like any other revenue, and shouldn't be mixed up with patients' out-of-pocket payments.

2. Splitting rent costs. If a doctor rents space used both for the practice and privately, the proportion needs to be separated out. Otherwise, VID can challenge the expense deduction.

3. The limit on gifts and representation expenses. Gifts to patients or dinners with business partners count as representation expenses, which for an SIA (CIT) are limited to 5% of the previous year's gross payroll; a self-employed doctor follows the PIT expense-deductibility rules instead.

4. Incorrect VAT application. Medical treatment services are VAT-exempt, but if a practice also sells cosmetics, supplements, or other products, VAT must be applied. Not knowing where the exemption ends and a taxable transaction begins is a common mistake.

5. Personal and practice expenses aren't separated. A doctor who uses the same card for both personal and practice expenses ends up with chaos by year-end. A separate bank account for the private practice is essential.

Accounting software suited to a private practice

For a small private practice with a few hundred transactions a month, standard accounting platforms work well — for example, Moneo, a popular solution for small businesses in Latvia, or Jumis (a cloud-based service). A mid-sized clinic with several doctors may be better served by Horizon Cloud, while larger clinics with a more complex cost structure might need Visma or even Microsoft Dynamics.

Key features to look for:

• The ability to separate VAT-taxable and VAT-exempt transactions (if you have partial exemption)

• A payroll module with automatic VSAOI and personal income tax calculation

• Fixed-asset tracking with depreciation calculation

• EDS integration for filing returns

Running a private medical practice is complicated not just medically, but financially. The VAT exemption, equipment depreciation, staff salaries, and licensing requirements create an environment where support from a professional accountant isn't a luxury — it's a necessity. Our team helps doctors and healthcare professionals get their accounting in order so they can focus on what they do best — treating people. Get in touch with us to learn more about our accounting services.

Frequently Asked Questions

Does a doctor's private practice need to register for VAT?

No, if you provide only medical treatment services — these are exempt from VAT regardless of turnover. VAT registration becomes relevant only if the practice also provides taxable services (such as cosmetic procedures) and the value of those transactions exceeds €50,000 within a calendar year.

Can I deduct VAT on buying medical equipment if my practice is VAT-exempt?

No, if you provide only VAT-exempt medical treatment services, you can't deduct input VAT. If part of your activity is VAT-taxable (mixed activity), you can deduct input VAT proportionally to the share of taxable activity.

Does a self-employed doctor always have to pay at least €242.35 in VSAOI per month?

No. That amount (31.07% of the €780 minimum wage) is owed only if monthly income reaches or exceeds €780. If income is lower, you pay only 10% of actual income — not a fixed minimum regardless of how much the practice actually earned.

At what income level does an SIA become more advantageous than self-employed status?

As a rough guide, an SIA can become more advantageous once annual income exceeds roughly €40,000–50,000, especially if expensive equipment purchases or hiring staff are planned. The exact threshold is individual and depends on your expense structure — it's worth calculating together with an accountant.

Do I need to register a medical institution if I work as self-employed without an SIA?

Yes. Registering a medical institution with the Health Inspectorate is required regardless of your chosen business form — it follows from the Medical Treatment Law, not from your tax status.

How is the business risk state fee calculated if I hire an employee?

It's a fixed amount — €0.36 per month per employee, paid by the employer by the 23rd of the following month. It's not a percentage rate based on salary.

Sources

• Value Added Tax Law — Article 52 (healthcare exemption), Article 100 (partial deduction of input tax)

• Medical Treatment Law (Ārstniecības likums)

• Regulation on the Register of Medical Institutions

• State Social Insurance Law

• Corporate Income Tax Law

• VID: Business risk state fee

Last updated: September 2026. Information is based on the Value Added Tax Law, the Medical Treatment Law, the State Social Insurance Law, and official materials from VID and the Health Inspectorate. Before making decisions, it's advisable to consult an accountant, since your specific situation (mixed activity, number of employees, equipment value) can change the exact calculations.