Background information

The allowance for idle time for self-employed was first introduced in March 2020 (see case in the COVID-19 EU PolicyWatch database ). With the situation getting better, the state of emergency declared in Latvia on 13 March 2020 as a result of the global COVID-19 pandemic came to an end on 10 June 2020. The allowance was available up to 30 June 2020.

In September 2020, COVID-19 spread rate rose sharply and, from 9 November 2020 the state of emergency was declared again, and different restrictions re-introduced.

On 28 November 2020 the Government adopted new regulations Nr. 709 “On support for taxpayers for downtime to continue their activities during the COVID-19 crisis”. These regulations set out the criteria and procedures for the provision of idle time support to taxpayers – employees and self-employed.

The amount and eligibility criteria of the allowance for the idle time for self-employed has been changed compared with its predecessor, as well as the minimum amount introduced.

Content of measure

The allowance for the idle time for self-employed is intended as an assistance measure for self-employed operating in normal tax regimes, micro enterprise tax regime and patent fee payers tax regime. The allowance first was available from 9 November 2020 till 9 January 2021.

Self-employed are eligible for support if their income has decreased by at least 20% if compare with average income in August, September, and October 2020.

The amount of the benefit for a self-employed person under the general tax regime is 70% of the average income from economic activity of the relevant person for the third quarter of 2020. For a self-employed person under the micro enterprise tax regime the benefit is 50% of the average income from economic activity for the third quarter of 2020. It is defined that the allowance should be at least €330, and it should not exceed €1,000.

Patent fee payers are a specific tax regime for self-employed. If the income of the economic operator does not exceed €15,000, and it does not employ other persons, it can choose to pay a patent fee instead of personal income tax and social contributions.

It has to operate in the following sectors:

• leather and textile crafts;
• manufacture and repair of clothing and footwear, repair of watches and locks, other household services;
• production of handicraft products;
• florists;
• photography, video recording and audio recording services;
• beauty services;
• private household services;
• home care services

Patent fee is €100 per month in the capital city and €50 in rural areas. Patent fee payers can receive the benefit in the amount of €400, if its income has decreased by at least 20% if compared with the average income in August, September, and October 2020.

Use of measure

From 1 December 2020 to 7 January 2021, the State Revenue Service has paid idle time benefits in the total amount of €1,110,342 to 4,045 self-employed persons as well as benefits in the total amount of €289,176 to 1,033 patent payers.

Of all idle time benefits paid to the self-employed from 1 December 2020 to 7 January 2021, 60% went to those whose NACE code is 'other services' and another 10% do not indicate the type of main activity, 10% work in the arts, entertainment and leisure sector and 6% provide professional, scientific or technical services.

Of the idle time benefits to patent payers, 75% were for hairdressers and beauty professionals, 6% for non-professionals, 4% for photographers, art photographers, cinematographers or audio operators, and 4% for reduced patent payers in various sectors.

From 1 December 2020 to 11 April 2021, the State Revenue Service has paid idle time benefits in the total amount of €9,787,830 to 10,214 self-employed persons as well as benefits in the total amount of €1,240,630 to 1,475 patent payers.

Of all idle time benefits paid to the self-employed from 1 December 2020 to 11 April 2021, 39.4% went to those whose NACE code is 'other services' and another 15.4% do not indicate the type of main activity, 8.6% work in the arts, entertainment and leisure sector and 6.5% were educators.

Of the idle time benefits to patent payers, 62.4% were for hairdressers and beauty professionals, 8.4% has not indicated profession, 7.5% for reduced patent payers in various sectors, and 7.2% for photographers, art photographers, cinematographers or audio operators.

From 1 December 2020 to 18 July 2021, the State Revenue Service has paid idle time benefits in the total amount of €16,260,777 to 11,070 self-employed persons as well as benefits in the total amount of €1,908,460 to 1,540 patent payers.

Of all idle time benefits paid to the self-employed from 1 December 2020 to 18 July 2021, 39.7% went to those whose NACE code is 'other services' and another 16.5% do not indicate the type of main activity, 8.6% work in the arts, entertainment and leisure sector and 6.2% were educators.

Of the idle time benefits to patent payers, 61.8% were for hairdressers and beauty professionals, 8.8% has not indicated profession, 7.6% for reduced patent payers in various sectors, and 7.1% for photographers, art photographers, cinematographers or audio operators.

From 1 December 2020 to 29 August 2021, the State Revenue Service has paid idle time benefits in the total amount of €16,395,324 to 11,075 self-employed persons as well as benefits in the total amount of €1,918,540 to 1,540 patent payers.

Target groups

Workers	Businesses	Citizens
Self-employed	Does not apply to businesses	Does not apply to citizens

Actors and funding

Actors	Funding
National government	National funds

Social partners

Social partners' role in designing the measure and form of involvement:

	Trade unions	Employers' organisations
Role	Consulted	Consulted
Form	Direct consultation outside a formal body	Direct consultation outside a formal body

Social partners' role in the implementation, monitoring and assessment phase:

• Unknown
• Main level of involvement: Peak or cross-sectoral level

Involvement

Peak level social partners’ organisations normally are informed on Government decisions. Regarding COVID-19 measures social partners participate in working groups and depending on their capacities are involved in consultations and negotiations.

Views and reactions

Latvian Employers’ confederation informed that employers are in favour of raising the minimum threshold for idle time benefits to €500, but believe that the maximum amount of benefits and wage subsidies should be reviewed, taking into account the employee's social security contributions as well as dependents.

Sources

• 28 November 2020: The regulation on idle time support and wage subsidy enters into force (lvportals.lv)
• 28 November 2020: regulations Nr. 709 On support for taxpayers for downtime to continue their activities during the Covid-19 crisis (likumi.lv)
• 08 January 2021: The SRS has paid downtime and wage subsidy support in the amount of 11.1 million euros (www.vid.gov.lv)
• 12 January 2021: Support for businesses for downtime and part-time employees will be available as long as economic activity is restricted (www.mk.gov.lv)
• 13 January 2021: Employers are urging to improve the criteria for receiving crisis support (www.db.lv)
• 27 July 2021: Statistics on support from the State Revenue Service (www.vid.gov.lv)
• 15 September 2021: State Revenue service statistics 15 September 2021 (www.vid.gov.lv)