Latvia's Business Risk State Fee for 2027: What's Actually Changed?
If you're an employer in Latvia, this fee already looks familiar — it shows up every month next to your social insurance contribution report, and most business owners simply pay it without thinking twice. On September 11, 2026, the official gazette "Latvijas Vēstnesis" published new Cabinet of Ministers regulations setting the amount of this fee for 2027. Whenever new regulations appear, the first question is usually the same: will this cost more next year?
Key takeaways
Cabinet Regulation No. 533, adopted on September 8, 2026, sets the business risk state fee for 2027 — the rate stays at €0.36 per month per employee, unchanged since the euro was introduced in 2014 (and, in substance, since 2006).
Every employer pays the fee for each employee with whom an employment relationship exists — except seasonal agricultural workers, who are taxed under a separate regime.
The fee must be calculated and paid by the 23rd of the following month, together with the mandatory social insurance (VSAOI) report.
Collected funds go to the Employee Claims Guarantee Fund, which protects workers if their employer becomes insolvent.
The new regulation takes effect on January 1, 2027.
What the business risk state fee actually is
The business risk state fee is a small but mandatory monthly payment employers make for each employee. Its purpose isn't to fund the general state budget — the money is earmarked and flows into the Employee Claims Guarantee Fund, administered by the Insolvency Control Service, which in turn operates under the Ministry of Justice.
The fund's job is straightforward but important: if a company becomes insolvent and can't pay wages, severance, or other employment-related amounts owed to staff, employees can file a claim through the insolvency process administrator, and the fund covers these claims up to a set limit. In other words, this fee is a collective safety net for all employees in Latvia, financed jointly by employers.
The legal basis for the fee is the Law "On the Protection of Employees in Case of Employer Insolvency," Article 6, paragraph four, which requires the Cabinet of Ministers to approve the fee amount for the following year through a separate regulation each year.
Source: Law "On the Protection of Employees in Case of Employer Insolvency"
What's actually changing for 2027
The short answer is: practically nothing. The new Cabinet Regulation No. 533 of September 8, 2026, keeps the same rate that has now been in force for well over a decade.
Looking further back, the fee was last substantively changed in 2006:
Period | Fee rate (per employee, per month) |
|---|---|
2003 (fee introduced) | LVL 0.75 |
2004–2005 | LVL 0.35 |
2006–2013 | LVL 0.25 |
2014 (euro introduced) — to date | €0.36 |
In 2014, when Latvia adopted the euro, the LVL 0.25 rate was converted at the official exchange rate (1 EUR = 0.702804 LVL) and rounded to €0.36 — a technical currency conversion, not a substantive change. Since then the rate has stayed exactly the same every year, including 2017, 2019, 2020, 2022, 2023, 2025 and 2026, and is now confirmed again for 2027. In other words, the last real change to this fee happened almost 20 years ago.
Each year, the Cabinet of Ministers assesses whether the Employee Claims Guarantee Fund has sufficient reserves to cover expected claims, and only adjusts the rate when the calculations show it's necessary. Over the past two decades the fund's financial position has stayed stable, so the rate remains unchanged — a sign of predictability for employers, not a formality to skip over.
The one thing that does change is that the regulation is formally re-adopted every year, because the previous year's regulation expires at year-end. So even though the rate stays the same, employers shouldn't assume the fee simply continues automatically — it is always reconfirmed for each new year.
Who pays it and when exceptions apply
The fee is calculated and paid by the employer, never deducted from the employee's salary — unlike, for example, personal income tax or the employee's share of social insurance contributions. It must be calculated for every employee with whom an employment relationship exists during the reporting month, regardless of full-time or part-time status, fixed-term or open-ended contracts, or whether the employee happens to be on leave.
The one exception: employees for whom the employer pays the seasonal agricultural worker income tax (15%, but not less than €0.70 per working day) — the business risk state fee doesn't apply to them, since their employment already falls under a separate, specifically regulated tax regime.
In practice: if you have even one employee under a standard employment contract, the fee is due for them every month the relationship continues — even in a month when their pay was minimal or they were on sick leave.
How and when to pay
Administration of the fee is built into the VSAOI (mandatory state social insurance contributions) system, so no separate declaration is needed:
Calculate the fee for every month an employment relationship existed.
Report the amount in the employer's report (the VSAOI report), filed through VID's Electronic Declaration System (EDS).
Pay the fee by the 23rd of the following month — the same deadline as the VSAOI contributions themselves, so for most employers it fits into an existing payment cycle without extra administrative work.
If you're unsure how this fee appears on your VSAOI report, or want to make sure it's correctly included in your monthly payroll tax calculation, see our guide on payroll taxes for employers, which walks through the full monthly tax picture.
Where the collected money goes
VID transfers the collected fee amounts to the Employee Claims Guarantee Fund monthly, by the 25th — the fund sits within the Ministry of Justice's budget sub-program (19.01.10.00). This process is automatic and doesn't directly involve the employer: you pay the fee to VID, and the system handles the rest.
Every quarter, VID reports to the Ministry of Justice and the Ministry of Finance on the number of employers and employees, calculated revenues, and actual revenues collected — this is what allows the government to reassess the fee rate each year.
Practical example
Suppose SIA "Ozolvēji" employs five people under standard employment contracts, plus one seasonal agricultural worker during the summer months.
Calculation | |
|---|---|
Employees under standard contracts | 5 |
Fee per employee, per month | €0.36 |
Total fee per month | 5 × €0.36 = €1.80 |
Seasonal agricultural worker | fee not applicable (separate tax regime) |
SIA "Ozolvēji" reports and pays €1.80 every month by the 23rd of the following month, alongside its VSAOI report — a negligible amount for any business, but as with any VID payment, a late payment can still trigger a late payment surcharge (0.05% per day on the unpaid amount, capped at 40% of the debt). For a full rundown of deadlines and penalties, see our article on VID deadlines and penalties.
Common mistakes
Leaving the fee out of the budget for hiring a new employee. The amount is small, but it's still part of total labor costs — if you're planning to hire your first employee, our guide to hiring your first employee in Latvia covers the full picture.
Assuming the fee continues automatically. Since the regulation is re-adopted every year, it's worth checking annually that your payroll software is using the current rate.
Confusing it with the solidarity tax or other VSAOI components. The business risk state fee is a separate, small payment — it isn't part of the 23.59% employer VSAOI rate and doesn't affect the employee's salary calculation.
FAQ
Does the business risk state fee affect the employee's net salary?
No. The employer covers this fee entirely from its own funds, and it has no effect on the employee's gross or net salary calculation.
Does the fee apply to a board member without an employment contract?
If the board member has an employment relationship (an employment contract), the fee applies just as it would for any other employee. If the board member is paid under an authorization (mandate) agreement, check how the fee applies against the wording of Cabinet Regulation No. 533 and with your accountant — a mandate agreement is not in itself an employment relationship.
What happens if an employer doesn't pay the fee on time?
The same VID late-payment rules that apply to VSAOI contributions apply here — a late payment surcharge of 0.05% per day on the unpaid amount (capped at 40% of the debt), until the debt is settled.
Does a self-employed person or sole trader with no employees need to pay this fee?
No. The fee only applies to individuals with whom an employment relationship exists. If you have no employees, this fee doesn't concern you.
Why has the rate stayed at €0.36 for several years?
Because the Employee Claims Guarantee Fund has enough reserves to cover expected employee claims — the Cabinet of Ministers reviews the fund's balance every year and only changes the rate when the numbers show it's necessary.
Where can I check that the fee is correctly reflected in my VSAOI report?
The VSAOI report is prepared and filed through VID's Electronic Declaration System (EDS). If you're unsure how to use EDS, see our explainer What is EDS.
Conclusion
The new Cabinet regulation on the business risk state fee for 2027 doesn't change anything material in day-to-day practice — the rate stays at €0.36 per employee per month, just as it has for several years. Still, it's a good annual reminder to double-check that every small fee and levy tied to your employees is correctly reflected in your payroll accounting — especially if your headcount or payroll software has changed during the year. If you'd rather have someone else track these changes instead of doing it yourself between client meetings and invoices, get in touch with us — we keep track of every regulatory change so you don't have to.
Legal sources and references
Law "On the Protection of Employees in Case of Employer Insolvency" (Article 6, paragraph four)
Cabinet Regulation No. 533 of September 8, 2026, "Latvijas Vēstnesis", 2026, No. 175
Is your company's payroll accounting fully up to date, including all the small but mandatory fees? Get in touch with Balansis — we'll help you get everything in order, from VSAOI reports to your annual report.
Last updated: September 2026. Information based on the Law "On the Protection of Employees in Case of Employer Insolvency" and Cabinet Regulation No. 533 of September 8, 2026, on the 2027 fee. This article is a general explainer and doesn't replace individual tax advice. Every company's situation differs — consult an accountant or tax specialist before making decisions.
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