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  office(at)bridgewest.eu

+372 51 50 803
office(at)bridgewest.eu

Company Registration in Latvia

Updated on Tuesday 12th October 2021

 
Latvia is one of the Baltic States and one of the European countries to have experienced a significant percentage of growth and development. Most of the country’s sectors are well or very-well developed and investors are looking towards the opportunities offered by the landlocked state because of its easy company formation procedure, low taxes and access to an affordable and qualified workforce.
 
 
 Quick Facts  
  Types of companies

Limited Liability Company

 Joint Stock Company

Branch

Sole proprietorship 

Partnership 

Minimum share capital for LTD Company 

EUR 2,800

Minimum number of shareholders for Limited Company 

 1
Time frame for the incorporation (approx.) 

4 weeks

Corporate tax rate

15% 

Dividend tax rate 

20%

VAT rate 

21%, a reduced rate of 12% also applies to certain goods

Number of double taxation treaties (approx.) 58
Do you supply a registered address?   Yes 
Local director required   No 
Annual meeting required  Yes
Redomiciliation permitted  Yes
Is accounting/annual return required?  Yes 
Foreign-ownership allowed  Yes 
Any tax exemptions available? 

- Individual shareholders are exempt from 10% dividend tax

- Offshore companies are exempt from paying withholding taxes on interest payments in Latvia

Tax incentives

- Large investments tax deduction

- Deferred tax payments

- Special economic zones

- Donation relief

- Tax reduction for research and development

 
Our agents specialize in company formation in Latvia and have had extensive experience in working with both local and foreign investors for business projects in all of the major industries in the country.
 
Latvia offers a welcoming business climate, with no restrictions on foreign ownership or the types of companies that can be incorporated by non-residents. The company incorporation is a reasonably simple process and having the help of our agents can prove useful, especially for first-time investors or for those who are not accustomed to working with Latvian authorities.
 
Before commencing the actual company registration, investors need to choose between one of the available types of companies in Latvia. This is a decision based on the available capital, the number of investors and the desire to further expand the company in the future. 
 
Investors may choose to incorporate a corporation or capital company, a partnership or start a business as a self-employed individual. Our team of Latvia company formation agents can help you understand the particularities of each business structure and choose the business form based on your needs. If you need information on company formation in Latvia, our advisors can guide you.
 

Types of legal entities that can be used to open a company in Latvia

 
Latvia is a very appealing European destination to open a company in, one of the reasons being the variety of legal entities available for registration and the fact that these can be used for the creation of both small and large-sized enterprises.
 
The following types of legal vehicles can be used for company registration in Latvia:
 
 
1.       the sole proprietorship or sole trader which is the simplest enterprise that can be set up by a single businesspersons;
2.       the limited liability company which is categorized into private and public entities, each with its characteristics;
3.       the partnership which is also divided into the general and limited partnership;
4.       the branch office which can be used by foreign companies seeking to establish operations they can fully control;
5.       the subsidiary which is available for foreign businesses looking for flexible ways of expanding their activities in Latvia.
 
 
What need to be considered when setting up a business in Latvia is companies require to have at least one shareholder and one or more directors, depending on their size.
 
As you can see, company formation in Latvia relies on various business forms that can be used for numerous activities in and outside the country.
 

Corporations in Latvia

 
A corporation in Latvia is a business form that has legal capacity and identity, separate from that of its founders. The shareholders are only liable to the extent of their capital investment and they can also be non-Latvian residents. 
 
The types of corporations in Latvia are as follows:
 
 
The requirements for the incorporation of these business forms will vary in terms of minimum share capital and the management structure. Both the LLC and the JCS may be formed by one or more investors, natural or legal persons, residents or non-residents.
 
Our team of company formation agents in Latvia can give you complete details about the incorporation process and about the laws governing legal entities in the country.
 
If you decide to open a company in Latvia and need assistance, you can rely on our professional team in this country.
 

Partnerships in Latvia

 
The partnership is a business structure that may be suitable for two or more investors that share similar business goals and are willing to share the profits and duties for the business. it is not a legal entity in the same manner in which a corporation is considered one, however, it may still own property and assets in its name and not that of its founders.
 
There are two types of partnerships in Latvia, the general partnership (PS) and the limited partnership (KS). In the general partnership all members are fully liable for the business while in the limited one, at least one member is fully liable while the other(s) are only liable to the extent of their investment.
 

Self-employed individuals in Latvia

 
Entrepreneurs can also choose to do business in Latvia as natural persons with liability for their business. These are the individual merchant and the self-employed individual. These business forms benefit from the lightest reporting requirements and do not need to be registered unless their annual turnover exceeds a certain amount. 
 
Foreign companies can establish their presence in Latvia through a representative office or through a branch.
 
 

Easy company formation in Latvia

 
Company formation in Latvia is subject to a set of procedures. The steps for company formation are briefly described below and one of our experts can help you throughout any of these stages:
 
  • - choosing a suitable type of company: there are four main types of business entities in Latvia: the sole trader, the limited liability company (SIA), the joint stock company (SA), the branch and the representative office. All of these business forms have their own characteristics and are suited to particular businesses according to their size. Our company formation experts can help you choose the legal entity type that suits your needs.
  • - drawing up the articles of association: in terms of constitutive documents, a company in Latvia will require the Memorandum of Association (Decision to found the company) and the Articles of Association – these contain all of the details about the company.
  • - deposit the share capital: this step also includes opening a bank account in Latvia where this minimum, share capital (according to the type of company) will be deposited.
  • - register the company with the Registry of Enterprises: the final step, this consists of submitting all of the needed documents (the company’s constitutive documents, founder’s identification documents, forms, etc) to the Register of Enterprises.
 
Our agents can help you open a company even if you cannot be present in the country at all times. We can handle part of the procedures through a special power of attorney.
 
Once they are registered, companies can start their commercial activities and handle any other subsequent activities such as hiring employees – a step during which our agents can also help you with relevant information. Depending on the chosen business field, some sector-specific special permits and licenses may be needed. We can help you apply for these.
 
The corporate management requirements, as well as the accounting and auditing requirements, will vary according to the chosen type of company, with simpler business types like the sole trader having the fewer requirements and the joint stock company subject to more cumbersome requirements.
 
Company registration in Latvia is not complicated, however, for a quick incorporation procedure, you can count on us.

 

Company registration steps in Latvia

 

If you decide to open a business in Latvia you need to complete various steps, however, with the help of our local representatives these are easy to understand and go through. Here is what you need to know:
 
  • -  at first, you need to choose and reserve a trading name which must be unique (our agents can guide you on the selection of the name);
  • -  then, the company’s statutory documents must be drafted and notarized – these are represented by the Articles of Association and are only required for limited liability companies;
  • -  the registration of the selected business form implies filing the documents with the Trade Register and obtain the Certificate of Registration;
  • -  the company must also be registered for taxation, for the VAT, and for social security purposes with the tax authorities.
 
Apart from these, a company must also apply for various business licenses in accordance with the type of activities to undertake.
 
Among the aspects to consider about company registration in Latvia is for the business to have a legal address in this country in order to be considered a resident. There is also the possibility of setting up non-resident companies, however, these cannot take advantage of fiscal benefits.
Also, the company needs to have a local bank account in which the share capital must be deposited, and which after commencing the operations can be used for financial transactions.
 
If you want to open a company in Latvia and need more information on the formalities to complete, our agents are at your disposal with details explanations on how to proceed.

 

Share capital requirements for company registration in Latvia

 

Foreign investors who want to open a business in Latvia must consider the amount of money necessary to operate in this country. While for certain legal entities, certain requirements are imposed by the law, for others (partnerships and sole traders) there are no such impositions.
 
From a share capital investment point of view, the private limited liability company is most advantageous as it requires a minimum amount of 2,800 euros out of which 50% must be paid upon incorporation.
 
In the case of a public company, the minimum share capital is set at 35,000 euros, however, this is a rather low amount of money compared to other European and EU countries.
 
 

The Company Registry in Latvia

 
The Company Registry in Latvia is called the Register of Enterprises of the Republic of Latvia and it is the public institution responsible for registering companies, traders, representative offices, and branches. Other types of establishments are also registered here, including mass-media associations or foundations.
 
The Register may be accessed by individuals who wish to know more about companies that have already been registered in the country. The basic information will include the type of company, its registered office and assigned registration number, the date of registration and other information. Individuals may obtain information about registered companies in Latvia by filling in a form and paying a fee.
 
One of our agents who specialize in company formation in Latvia can help you with a thorough company search as this may be relevant to a company due diligence procedure.
 

Taxation in Latvia

 
Latvia has a low corporate income tax rate, one of the country’s strongest points for investors. The standard rate in 2018 is 20%, with certain expenses subject to an effective tax of 25%. Other taxes for companies include the real estate tax, the value-added tax, the natural resources tax and other such as social security contributions.
 
With a wide range of advantages for investors, reduced investment and labor costs (compared to other EU) countries and economic stability, Latvia is a competitive business location.
 
Those who want to open a business in Latvia can choose between several legal entities they can use in order to operate on the local market.
 

Tax incentives in Latvia

 
Latvia also has a tax incentive programme and it is part of its Special Economic Zones. These are the following:
 
  • - Riga Free Port, 
  • - Ventspils Free Port,
  • - Liepaja Special Economic Zone, 
  • - Rezekne Special Economic Zone,
  • - Latgale Special Economic Zone.
 
Business formation and entrepreneurial activities, in general, are promoted and encouraged in these regions and the main tax incentives available are related to tax exemptions. For example, some of the advantages for companies set up in the Free Zones and Free Port areas include a complete exemption from the real estate tax, the corporate income tax, the withholding tax on dividends and the fees for intellectual property usage for non-residents.
 
Other incentives for doing business include those for labor: grants for creating new jobs, pre-hiring training and raising the qualification of employees but also those related to research and development activities.
 
We invite you to reach out to our agents who specialize in company formation in Latvia to find out more about the manner in which these tax exemptions apply and which companies can qualify.
 

Annual reporting requirements in Latvia

 
The Annual Accounts and Consolidated Annual Accounts Act are the available sources of regulation for preparing and submitting the annual accounts. The types of companies that are expected to comply with these are the commercial companies, the cooperative companies, the European interest grouping and other European commercial companies registered in Latvia. Companies are classified into four categories for accounting purposes and if two out of the three existing criteria are met two years in a row, then that company can be reclassified accordingly. The classification criteria include the net revenue, the total balance sheet and the average number of employees per a given financial year.
 
Latvia has much to offer to foreign investors, starting with a good geographical location and advanced transport infrastructure, followed by an attractive trade and customs policy and a generally welcoming and supportive business environment. Business owners have access both to a welcoming business climate but also to a large number of skilled employees. Latvia offers all of the key elements for developing a new company into a successful business.
 

Foreign investments in Latvia

 
Top foreign direct investments in Latvia are in the following sectors: the services and the financial sector, retail and wholesale, real estate, manufacturing, agriculture, construction, transportation as well as professional and consulting services and other activities.
 
Foreign entrepreneurs will find it easy to invest in Latvia not only because they are presented with an important market and location advantage but also because the country has harmonized its legislation with that of the European Union.
 
One of our agents can give you detailed information about the tax incentive regime that offers a convenient degree of reduction for the corporate tax and the special free zones in Latvia, including Riga.
 
Foreign investments represent an important share of the country’s Gross Domestic Product, as the number of overseas entrepreneurs operating here are attracted by the Latvia’s legislation that favors them.
 
According to recent statistics:
 
  • -  Foreign Direct Investments (FDIs) inflow increased to 16.7 billion USD in 2020;
  • -  manufacturing was the industry attracting most foreign investments between 2010 and 2020 when it reached 1.9 billion euros;
  • -  most investments came from Sweden which accounted for a total of 16.4% of the FDI in 2020;
  • -  in 2020, financial and insurance services attracted most of these investments with a total quota of 24%.
 
Contact our company formation agents in Latvia for more information on how to open a business in the country and the main regulations as per your chosen business sector.
 
 
 

 

Meet us in Riga


Call us now at +372 51 50 803 to set up an appointment with our lawyers in Riga, Latvia. Alternatively you can incorporate your company without traveling to Latvia.

As a Bridgewest client, you will benefit from the joint expertize of local lawyers and international consultants. Together we will be able to offer you the specialized help you require for your business start-up in Latvia.

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