Expense Reimbursement Policy in Latvia

Modified on: Thu, 20 Nov, 2025 at 2:13 PM

Managing business travel expenses in Latvia requires compliance with local tax regulations and proper documentation. Below is an overview of what employers and employees should know.

Invoice Requirements

Best practice: Obtain invoices showing supplier name, amount, date, description, and link to the business trip.
For VAT recovery, invoices must include: date, unique number, supplier and customer details, VAT number, description of goods/services, net amount, VAT rate, and total amount.
Simplified invoices allowed for transactions under €150; receipts may suffice for minor expenses like parking.

Mileage Reimbursement

No Fixed Rate: Latvia does not set a statutory mileage rate. Employers and employees typically agree on a reasonable per-kilometre rate in the employment contract or company policy.
Tax Treatment: Mileage allowances are generally tax-free if they are reasonable, properly documented, and relate to business travel. Excessive or unjustified amounts may be treated as taxable income.
Parking & Tolls: These are reimbursed separately with receipts and should not be included in the mileage rate.

Business Travel Costs

Transport: Airfare, bus, train, tram, taxi, and rental car costs are reimbursable when incurred for business purposes and supported by receipts.
Accommodation: Hotel costs are reimbursable within defined maximum norms. For example, public sector caps are around €120 per night in Riga and €60 elsewhere in Latvia; international caps vary by country (e.g., Germany €220, Austria €200).
Insurance: Travel-related insurance (medical, luggage, liability) can be reimbursed if linked to the business trip.
Meals & Incidentals: Covered under per diem allowances (see below).

Per Diem Allowances

Domestic Travel: €8 per day for official travel within Latvia.
International Travel: Rates vary by country (e.g., Lithuania €30, Estonia €40, Germany €50, Austria €50). Hotel caps also apply (e.g., Germany €220, Austria €200).
Tax Treatment: Per diems within Cabinet Regulation No. 969 limits are tax-free. If meals or accommodation are provided, per diem is reduced by 30%. Excess amounts are taxable.

Entertainment & Gifts

Representation Expenses: Deductible up to 5% of previous year’s gross wages. Beyond this, subject to Corporate Income Tax (CIT) at 20%.
Employee Benefits: Entertainment or gifts for employees may be treated as taxable benefits unless clearly documented as business-related.

Health & Wellness

Employer-paid health or wellness costs unrelated to business travel are generally considered taxable benefits.

Key Compliance Tips

Document Business Purpose for all expenses.
Keep Receipts & Invoices meeting VAT requirements.
Apply Per Diem Rules and adjust for provided meals/accommodation.
Monitor Representation Expense Caps to avoid extra tax.
Ensure Mileage Rates Are Reasonable and supported by logs.

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