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To combat the shadow economy in the construction sector and more effectively monitor work hours and employee records at smaller construction sites, the Saeima, in its final reading on December 4, approved amendments to the Law on Taxes and Duties. These changes aim to make it harder to hide unregistered workers or underreported work hours, thereby reducing under-the-table payments.
The amendments were developed in line with the Shadow Economy Reduction Plan for 2024–2027 and mandate broader application of the Electronic Work Time Tracking System (EDLUS). Starting January 1, 2025, EDLUS will be required at all construction sites with a project value of at least €170,000 (currently, EDLUS is mandatory for projects valued at €350,000 or more). The new requirements will apply to construction projects for which a note confirming compliance with construction commencement conditions is made, or an explanatory memorandum is accepted after this date.
During the preparation of the shadow economy reduction plan, it was concluded that smaller projects—such as residential construction, minor renovations, or refurbishments of public and industrial buildings—do not currently implement effective measures to limit the shadow economy. The plan therefore includes specific actions to reduce the shadow economy at smaller construction sites. Lowering the EDLUS threshold is not expected to impose an excessive burden, as maintaining EDLUS at construction sites costs approximately €100 to €200 per month per site.
Additionally, the amendments reduce the permissible discrepancy between work hours registered in the State Revenue Service’s (VID) Electronic Declaration System (EDS) and those recorded in EDLUS from the current 30% to 15%. This provision will take effect on January 1, 2026.
EDLUS was introduced at construction sites in 2019 and has already demonstrated its effectiveness at larger sites. These sites have seen a decrease in violations detected by VID and an increase in declared income. This promotes lawful employment, boosts state tax revenues, and ensures better social guarantees for workers. Since 2017, the share of the shadow economy in the construction sector has decreased by 10%.