The restriction of competition and social security

If an individual receives a compensation for restriction of competition, it is subject to personal income tax and social security payments. The draft states that during the restriction period that person is socially insured for all types of social insurance.

Cancellation of social security payments

The state budget and the social security budget pay social security payments for certain groups of people, in order to ensure social insurance record accumulation and compensate for periods during which the person is not employed, such as recipients of maternity, paternity, parental allowances, persons who receive unemployment benefits, the disabled and other groups. In practice the amount of cases increases when such a person is employed abroad and social security payments are paid in a foreign country.

The draft contains a provision that, after being informed about person’s employment or insurance abroad, the State Social Insurance Agency cancels social contributions paid from the state budget and special budgets.

Employment in several countries

If a person is employed simultaneously in several countries of European Union Member States or European Economic Area country or Switzerland, social security contributions should be paid in only one of the countries. Despite this, in practice there are cases where social security contributions on behalf of the employee are made in all counties of employment. The draft lays down the procedure for transfer the contributions already made from another Member State to the Latvia, if national competent authorities have agreed that the person should be insured Latvian or Latvia transfers contributions to another country, if the country in which the person has to be socially insured, is not Latvia.

The draft contains other provisions, for instance, amended list of persons which are not obliged to compulsory social insurance, rights for the self-employed persons to amend social security reports, refund of overpaid social benefits, etc.

Contacts of Advisory unit

If you have any questions or need more detailed information, please contact:

Ina Spridzāne (ina.spridzane@leinonen.lv, tel. 67358635) or Kristine Erele (kristine.erele@leinonen.lv tel. 67358600).

If you are interested in the news of tax, employment and other business-related legislation in Estonia and Lithuania, please visit:

http://leinonen.lt/news/news-2015 un http://leinonen.ee/news/news-2015