Employee from Ukraine - resident or non-resident?
Employee from Ukraine - resident or non-resident?
A person from Ukraine has been issued a residence permit in Latvia until February 23, 2024 with the right to work without restrictions, as well as a Latvian personal identity code. Is a person from Ukraine a resident or non-resident of Latvia? How to find out?
If the right to work is not limited
A residence permit or visa entitles any foreigner to legally reside in Latvia. A person who has received both a residence permit and a visa may be granted the right to work for a specific employer or the right to work without restrictions. There are also cases when the right to work has not been granted to a foreigner, for example, a tourist visa has been issued.
If a foreigner has been issued a residence permit with the right to work without restrictions, then the foreigner may immediately enter into employment by signing an employment contract. On the other hand, the employer must register the Ukrainian citizen in the electronic declaration system (EDS) of the State Revenue Service (SRS) as an employee, as there is no need to prepare documents for requesting employment rights or obtaining a visa. When hiring a civilian citizen of Ukraine, the employer or its responsible accountant must submit information to the SRS EDS that the employment relationship has been initiated, indicating the code "11".
Criteria for determining the status
From the tax point of view, Ukrainian citizens can be both residents of Latvia and non-residents who are employed by Latvian companies. It is important to point out that no special norms or guidelines have been issued that would determine whether the specific foreigner has already obtained Latvian resident status or is still a non-resident, as it is not possible to check the status before starting employment without the foreigner's involvement.
According to Article 14, Part 2 of the Law "On Taxes and Fees", a natural person will be considered a resident if:
this person's declared place of residence is in the Republic of Latvia; this person stays in the Republic of Latvia for 183 days or more in any 12-month period starting or ending in the tax year;
this person is a citizen of Latvia who is employed abroad by the government of the Republic of Latvia.
The Law "On the Convention of the Government of the Republic of Latvia and the Government of Ukraine on the Prevention of Double Taxation and Tax Evasion Regarding Income and Capital Taxes" contains the criteria that determine whether a given citizen of Ukraine can become a tax resident of Latvia. In accordance with Article 4, Clause 1 of this law, the term "Resident of a Contracting State" means any person who, in accordance with the legislation of this State, is subject to taxation on the basis of his permanent residence, residence, place of effective management, place of incorporation (registration) or to any other criterion of a similar nature.
On the other hand, the Law "On the Convention between the Government of the Republic of Latvia and the Government of Ukraine" Article 4, Clause 2, subparagraph a) states that a person will be considered a resident of the contracting country where his permanent residence is located; if his habitual residence is in both Contracting States, that person will be considered a resident of the Contracting State with which he has closer personal or economic relations (centre of vital interests).
In the event that it is not possible to determine the person's contracting country in which the center of vital interests is located, or if the person does not have a permanent residence in either of the two contracting countries, the person will be considered a resident of the country of habitual residence, in accordance with Article 4, Clause 2, subparagraph b) of the law.
In addition, if the person's habitual residence is considered to be both contracting states or it is not in any of them, it will be considered a resident of the country of which the person is a citizen according to Article 4, Clause 2, subparagraph c) of the law.
According to Article 4, Clause 2, subparagraph d) of the law, if a person is a citizen of both contracting countries, the competent authorities of the countries shall resolve this issue by mutual agreement. This norm is not applicable to the specific case, because the person was issued a residence permit in Latvia.
It is important to remember that even if a foreigner qualifies according to the norms to obtain Latvian resident status, the status will not be granted without submitting an application. If a foreigner meets the above-mentioned norms and wants to obtain Latvian resident status, he must submit an application to the SRS, requesting to be granted Latvian resident status. Upon receiving a response from the SRS that Latvian resident status has been granted, you can use the benefits granted to Latvian residents. The employer can request a statement from the SRS on what benefits are applicable to the employment of a Ukrainian citizen.
Considering that in the description of the situation, the Ukrainian citizen has a valid residence permit, it is also mandatory to have a declared place of residence in Latvia. Clause 73.5 of Cabinet of Ministers Regulation No. 564 "Regulations of Residence Permits" stipulates that upon receiving a temporary residence permit, a foreigner must submit documents confirming the expected place of residence in Latvia so that it can be declared in the system.
How to get information?
In order for the employer to find out whether a Ukrainian citizen is a resident of Latvia, the labor de
If the right to work is not limited
A residence permit or visa entitles any foreigner to legally reside in Latvia. A person who has received both a residence permit and a visa may be granted the right to work for a specific employer or the right to work without restrictions. There are also cases when the right to work has not been granted to a foreigner, for example, a tourist visa has been issued.
If a foreigner has been issued a residence permit with the right to work without restrictions, then the foreigner may immediately enter into employment by signing an employment contract. On the other hand, the employer must register the Ukrainian citizen in the electronic declaration system (EDS) of the State Revenue Service (SRS) as an employee, as there is no need to prepare documents for requesting employment rights or obtaining a visa. When hiring a civilian citizen of Ukraine, the employer or its responsible accountant must submit information to the SRS EDS that the employment relationship has been initiated, indicating the code "11".
Criteria for determining the status
From the tax point of view, Ukrainian citizens can be both residents of Latvia and non-residents who are employed by Latvian companies. It is important to point out that no special norms or guidelines have been issued that would determine whether the specific foreigner has already obtained Latvian resident status or is still a non-resident, as it is not possible to check the status before starting employment without the foreigner's involvement.
According to Article 14, Part 2 of the Law "On Taxes and Fees", a natural person will be considered a resident if:
this person's declared place of residence is in the Republic of Latvia; this person stays in the Republic of Latvia for 183 days or more in any 12-month period starting or ending in the tax year;
this person is a citizen of Latvia who is employed abroad by the government of the Republic of Latvia.
The Law "On the Convention of the Government of the Republic of Latvia and the Government of Ukraine on the Prevention of Double Taxation and Tax Evasion Regarding Income and Capital Taxes" contains the criteria that determine whether a given citizen of Ukraine can become a tax resident of Latvia. In accordance with Article 4, Clause 1 of this law, the term "Resident of a Contracting State" means any person who, in accordance with the legislation of this State, is subject to taxation on the basis of his permanent residence, residence, place of effective management, place of incorporation (registration) or to any other criterion of a similar nature.
On the other hand, the Law "On the Convention between the Government of the Republic of Latvia and the Government of Ukraine" Article 4, Clause 2, subparagraph a) states that a person will be considered a resident of the contracting country where his permanent residence is located; if his habitual residence is in both Contracting States, that person will be considered a resident of the Contracting State with which he has closer personal or economic relations (centre of vital interests).
In the event that it is not possible to determine the person's contracting country in which the center of vital interests is located, or if the person does not have a permanent residence in either of the two contracting countries, the person will be considered a resident of the country of habitual residence, in accordance with Article 4, Clause 2, subparagraph b) of the law.
In addition, if the person's habitual residence is considered to be both contracting states or it is not in any of them, it will be considered a resident of the country of which the person is a citizen according to Article 4, Clause 2, subparagraph c) of the law.
According to Article 4, Clause 2, subparagraph d) of the law, if a person is a citizen of both contracting countries, the competent authorities of the countries shall resolve this issue by mutual agreement. This norm is not applicable to the specific case, because the person was issued a residence permit in Latvia.
It is important to remember that even if a foreigner qualifies according to the norms to obtain Latvian resident status, the status will not be granted without submitting an application. If a foreigner meets the above-mentioned norms and wants to obtain Latvian resident status, he must submit an application to the SRS, requesting to be granted Latvian resident status. Upon receiving a response from the SRS that Latvian resident status has been granted, you can use the benefits granted to Latvian residents. The employer can request a statement from the SRS on what benefits are applicable to the employment of a Ukrainian citizen.
Considering that in the description of the situation, the Ukrainian citizen has a valid residence permit, it is also mandatory to have a declared place of residence in Latvia. Clause 73.5 of Cabinet of Ministers Regulation No. 564 "Regulations of Residence Permits" stipulates that upon receiving a temporary residence permit, a foreigner must submit documents confirming the expected place of residence in Latvia so that it can be declared in the system.
How to get information?
In order for the employer to find out whether a Ukrainian citizen is a resident of Latvia, the labor de