Positioned at the crossroads of northern and eastern Europe, the Baltic state of Latvia is rapidly making the most of its recently-acquired status as a member of the EU. Foreign investment is rising strongly and Latvian authorities have taken steps to streamline the regulations governing Latvian company formation.
The range of possible business entities has been reduced from thirteen to five, bringing the commercial landscape more into line with established EU standards.
A summary of Latvian Corporate Taxes is available here.
Frequently Asked Questions about Latvia
What are the most common types of formation in Latvia?
The following forms of entities are the most popular to incorporate in Latvia:
– Limited Liability Company (SIA)
– Public Liability Company (A/S)
– Branch
– Representative Office
What are the main features of a Limited Liability Company in Latvia (SIA)?
– The most common business vehicle in Latvia
– Minimum share capital is €3,090, at least half to be paid up
– Minimum number of directors is one
– No restrictions on foreign shareholders
– Accounts should be maintained in line with statutory requirements
What are the main features of a Public Liability Company in Latvia (A/S)?
– This is the most popular format for larger companies that wish to raise public capital
– Minimum share capital is €35,572, which must be fully paid up before registration
– There is a two-tier system comprising management and supervisory boards
– Accounts to be audited and filed with authorities
What are the main features of a Branch in Latvia?
– Foreign-owned Branches are taxed at the same rate as Latvian companies
– Reporting and audit requirements are same as for Latvian companies
– Profits can be repatriated without Withholding Tax
– Dividends transferred abroad are subject to a 10% Withholding Tax
What are the main features of a Representative Office in Latvia?
– Representative Offices are not allowed to trade or do business
– They are only permitted to advertise and promote their company
– They are generally regarded as an effective low-cost means of establishing a presence
What is the regulatory environment like in Latvia?
– The Latvian government is committed to a free-market economy and liberal business environment
– Member of the WTO and has ratified most international treaties
– Latvian companies and property with few restrictions
– Resident companies taxed on worldwide income; non-residents on Latvian-earned income only
Are there financial incentives available in Latvia?
Latvia offers a range of investment incentives, many with EU backing. The types of incentives on offer include the following:
– Tax credits for capital investment projects
– Free ports and special economic zones
– Tax relief for small enterprises
How easy is it to close a Latvian company?
Please contact us in order to discuss closing your company in Latvia.
How easy is it to recruit staff in Latvia?
Latvia’s economic success since the end of the Soviet era owes much to the motivation of its young, go-ahead workforce. Latvians have enthusiastically embraced free-market reforms and although labour costs have begun to rise, remain generally low.
There are a number of recommended recruitment agencies in the capital Riga through which we can arrange your staffing requirements.
What about banking facilities in Latvia?
Latvia’s banking system is well advanced, certainly by Baltic standards, and offers all the facilities that are likely to be required by international investors wishing to set up business in Latvia.
Few of the local banks are well established internationally, however, and we recommend that you take specialist advice on opening a bank account. We will be happy to help you with this.
For assistance with opening a bank account in Latvia, please contact us.
