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.
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.
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.
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.
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.
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.