Latvia Offers to Cover Nearly Half of Your Employees' Salary. Are You Using It?

Every founder knows the grind of attracting investment. What fewer realise is that alongside that effort, there is a significantly easier opportunity sitting and waiting: state co-financing that covers nearly half your hiring costs, with no equity given up and no new investor to convince. 

You just need to apply. Latvia offers two programmes designed to directly reduce hiring costs and strengthen the financial position of early-stage companies.

The Two Programmes Worth Knowing

I. The Startup Tax Shield (Fixed Social Payment) 

Standard payroll taxes can kill a young company's momentum. This programme lets you swap complex, variable taxes for a fixed social payment model.

• The Benefit: You pay a predictable, flat rate instead of standard social taxes for employees, allowing you to offer competitive salaries to attract the right people while keeping your total employment costs significantly lower. 
• The Result: You stabilise employment costs and keep more cash in the business during those critical early expansion stages.

What Does It Actually Save You?

The numbers make the case better than any description. Take a gross salary of €10,000 per month. Without the programme, the combined social insurance contributions and personal income tax amount to over €5,600. Under the Fixed Social Payment programme, that drops to €531.80 in fixed social insurance: a total cost saving of €5,111.44 per employee, per month.

For a more typical early-stage hire at €4,000 gross, the saving is €1,604.81 per month, nearly €20,000 per year, per person.

For a founding team trying to stretch every euro of runway, that is not a marginal benefit. It is a material difference in how long you can operate and how fast you can grow.

II. 45% Salary Co-Financing for Highly Qualified Employees

Need a senior developer or a CTO but can't match market salaries? The Support for Attracting Highly Qualified Employees programme bridges the gap: with a current deadline of 30 April 2027.

• The Benefit: The state covers up to 45% of eligible salary costs for your top-tier specialists.
• The Result: You get 100% of the talent for nearly half the financial impact.

How the Benefit Is Calculated

The co-financing is not based on the employee's actual salary, it is calculated against a fixed hourly rate set by the Ministry of Economics, based on profession category. The benefit equals 45% of that standard rate multiplied by the actual hours worked.

To make it concrete: a programmer (classified under ICT Senior Specialists) carries a standard rate of €31.44 per hour. If they work 160 hours in a month, the eligible cost is €5,030.40 of which the grant covers €2,263.68. Per year, that is over €27,164 back into your business for a single hire.

The full approved rate list is available here.

Is Your Startup a Match?

These programmes are designed for high-growth companies developing, producing, or scaling innovative products and business models. If that describes what you are building, there is a strong chance you already qualify.

1. The Professional Foundation

You're ready to apply if you are a Latvian-registered capital company with:

• No significant tax debts or ongoing insolvency proceedings 
• A clean record regarding applicable sanctions 
• For the Highly Qualified Employees program, activity must be aligned with Latvia's RIS3 priority sectors: which cover most technology, innovation, and knowledge-intensive industries. Excluded are primary agriculture, fisheries, aquaculture, gambling, traditional real estate, fossil-fuel-related activities, and standard financial intermediation (innovative fintechs are explicitly within scope)

2. The Innovation Milestone

You don’t need to be profitable to apply, but you do need to prove your potential as a startup. You qualify if you can show one of the following:

• Investor Validation: You’ve secured capital from a qualified Venture Capital investor of at least €15,000 - €30,000. This counts even if the investment was made at the parent or subsidiary company level.
  
  • A qualified investor covers more ground than most founders assume. It includes alternative investment funds, accredited accelerators, and business angels (both individuals and legal entities) provided they meet minimum investment track record thresholds: typically €30,000 - €60,000 deployed into early-stage companies over the past 3-5 years, with a minority stake retained. If you have received investment from a fund, accelerator, or angel investor, there is a strong chance they qualify.
• Product Readiness: You have a prototype or MVP (Minimum Viable Product) that a real user can interact with and are ready for initial customer testing.

Why Acting Now Is the Smartest Move

Both programmes operate within the EU de minimis state aid framework, which caps total public support at €300,000 per company over a rolling three-year period. That ceiling is cumulative: every month you delay is headroom you don't recover.

There is also a realistic prospect that the I45% Salary Co-Financing for Highly Qualified Employees program will be extended beyond its current terms. That might sound like a reason to wait. In practice, it isn't. Companies that apply now lock in support during the current cycle and preserve more of their de minimis allowance for whatever comes next. Companies waiting for certainty start later and receive less - even if they qualify in full.

Waiting until your runway is tight is a mistake. The smarter move is to build these programmes into your 12-month hiring strategy today.

If you'd like to explore whether these programmes are a fit for your company, we are happy to schedule a first call and discuss the opportunity in more detail. From there, Venture Faculty can support the full process through to submission - so you stay focused on building and fundraising. Get in touch at hello@venturefaculty.io.

The information in this article is general and not intended as legal advice. It is for information purposes only and does not reflect any particular situation or circumstances and should not be relied upon as a source of professional advice.

Authors: Jēkabs Senkāns, Lawyer at Venture Faculty

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