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Check if you can increase the human resources of the company through self-employed

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Why do companies purchase services from the self-employed?

Legally
simplified
cooperation

Ability to smartly increase human resources

Specialist will receive more for the work done (net)

Service contract without employment obligations

Can choose more qualified specialists

An example of budgeting the costs for the service in the amount of 1000 EUR*

Service provided by a hired employee
Service provided by a self-employed
The costs budget, including the tax payments €1000

Employee’s income after taxes (net)

Gross salary €808.84
Social tax (10,5%) €84.93
Individual income tax (1456,73х23% – 153,06х20%) €144.78
Social tax (employer’s 23,59%) €190.81
State fee for entrepreneurship risk €0.36

* The example of calculations does not take into account additional factors such as, for example, dependents, benefits, or expenses.
The amount indicated in the service agreement €1000

Income of the self-employed after taxes (net)

Gross salary €1000
Social tax for €620 (31,07%) €192.63
Social tax for €380 (10%)  €38
Individual income tax (20%) €153.87

* The example of calculations does not take into account additional factors such as, for example, dependents, benefits, or expenses.

Criteria set by companies for collaboration 
with the self-employed*

An individual can be considered an employee
if at least one of the developed criteria is identified:

• Economic dependency on the person to whom the individual provides services,
• Integration of the working individual into the company to which they provide services,
• Existence of actual days off and vacations, and the process of obtaining them is linked to the company's internal rules,
• Working under the supervision or control of another person,
• The working individual is not the owner of the main assets, materials, and other assets used in economic activities.

*These criteria are important; however, in practice, they are not always straightforwardly applicable, and the occurrence of any criterion does not automatically mean transitioning from collaboration with the self-employed to an employment relationship.

Address

Vincit Online, SIA, unified reg. No. 40203249460, VAT payer's No. LV40203249460, 23 Elizabetes Street, Riga, LV-1010, Latvia

online@pats.lv