Establish a Subsidiary in Latvia

Quick Facts
Applicable legislation (home country/foreign country)	Foreign country
Best used for	Limited liability of shareholders Taxation system
Minimum share capital	EUR2,800
Time frame for the incorporation (approx.)	4 weeks
Management (local/foreign)	Foreign
Local representative required	No
Local bank account	Yes
Independence from the parent company	No
Liability of the parent company	Limited liability
Corporate tax rate	15%
Possibility of hiring local staff	Yes

 

Our team of company formation agents in Latvia can help you establish your presence on the market by opening a subsidiary.

 

 

The subsidiary is a means of expanding a foreign business by creating an autonomous legal entity in the country where the company will establish its presence. Unlike the branch, which is fully dependable on the parent company, the Latvian subsidiary will be a separate business structure that is incorporated and registered as any other resident company.

 

The subsidiary in Latvia will be taxed as all other registered companies in the country, at the usual 15% rate. Permanent establishments that have been operating in the country for less than one year may use a simplified regime in which the company only pays tax on 20% of its profit. One of our company formation agents in Latvia can give you more information on this taxation regime.

 

 

The joint-stock company and the private limited liability company are two business types that may be used to incorporate a subsidiary. The LLC or SIA is a suitable business form for small or medium companies, while the joint-stock is preferred by larger corporations.

 

Both types of companies have a minimum share capital and for the purpose of registration, the founders must submit the company documents, application forms and personal identification documents with the Latvian Commercial Register.

 

1. choose a company name: the name must be unique and it can contain only Latin or Latvian letters.
2. incorporation documents: the SIA must have its Articles of Association and the Memorandum of Association drafted.
3. minimum capital: it is necessary to deposit the minimum share capital for the new SIA into a bank account opened for the company.
4. register the business: once all the documents are complete, the SIA is registered with the Commercial Register. Registered companies are promulgated through a public announcement. Registration fees apply.
5. register for tax purposes: additional registration for VAT purposes may be needed according to the commercial activities of the company.

Subsidiaries operating in selected business fields in Latvia in 2022 will need to obtain additional special permits and licenses, which means that an additional step will be needed. The procedure of company incorporation in Latvia seems simple, but it is recommended to get in touch with a company formation specialist to get things done quickly.  If you are planning to open a company in Latvia, please have a look at these benefits. Because of its advantageous location between important eastern markets and EU member states, Latvia is well-positioned to facilitate commerce between the east and the west. This highlights the need for a well-developed logistics network and transit services. The closeness of Latvia to the Schengen member countries at the EU's external borders has had a significant positive impact on the country's GDP. In addition, Latvia has built rail connections that connect the Baltic nations to the rest of Europe.

 

Benefits of opening a subsidiary in Latvia

 

Obligations for subsidiaries in Latvia

 

• - All subsidiaries in Latvia must have a registered office;
• - Upon incorporation, the parent company will need to provide a resolution/decision for incorporating a subsidiary in Latvia and other relevant information about its registration in the country of origin;
• - Subsidiaries must submit annual financial statements and in the case of large companies, an external auditor must prepare a report on these statements. Besides this, if you seeking assistance to understand the Latvian accounting requirements, our agents can assist you. One of the most crucial aspects of our accounting services is payroll and payroll tax compliance. For both local businesses and workers of international employers who are engaged in Latvia, our Latvian accountants perform all the essential payroll and payroll tax computations.

 

Corporate tax for subsdiaries

 

What are some of the other applicable requirements for the subsidiary in 2022?

At the level of 2022, all subsidiaries in Latvia must have a registered office. Upon incorporation, the parent company will need to provide a resolution/decision for incorporating a subsidiary in Latvia and other relevant information about its registration in the country of origin. 

 

Subsidiaries must submit annual financial statements and in case of large companies, an external auditor must prepare a report on these statements. 

 

Why should a person invest in Latvia?

 

• - Undoubtedly the Latvian authorities offer their investors a quick and uncomplicated registration process for companies. But obviously, these procedures are not easy enough to get understood by a layperson. To cut this hassle, the services of our consultants are available to help you out in the whole procedure;
• - The state of Latvia provides modern commercial platforms and modern infrastructure for setting up a subsidiary in Latvia. The modern approach is very necessary these days and this country tries its best to comply with the modern requirements. Such steps of the Latvian authorities make this place worth investing for foreign investors;
• - So far the most important aspect of Latvia is its location. The strategic location of this country allows the investors to have access to the western and eastern marketplaces.

 

Most attractive industries in Latvia

 

1. Manufacturing industries (11.7%);
2. Insurance and financial activities (24%);
3. Real estate (15.3%);
4. Wholesale and retails (16%).

 

 

Foreign Direct Investments (FDI) in Latvia

 

 

For more information about the requirements for a subsidiary in Latvia, please do not hesitate to contact us.