Latvia is a country that offers a number of advantages to investors, including competitive costs for setting up a business, talented workforce and accessibility to other countries in the region. The subsidiary
is one of the ways in which foreign companies can expand their business operations in the country. This structure will offer a set of advantages when compared to the other typical form of business organization for foreign entities, the branch.
When they decide to establish their presence on the Latvian market, investors will need to pay attention to the particularities of opening and managing a business entity, whether it is a branch or a subsidiary.
What are the main characteristics of the subsidiary in Latvia?
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.
What are the steps for opening a subsidiary in Latvia in 2021?
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.
Below are the main steps for opening a subsidiary in Latvia in 2021:
choose a company name: the name must be unique and it can contain only Latin or Latvian letters.
incorporation documents: the SIA must have its Articles of Association and the Memorandum of Association drafted.
minimum capital: it is necessary to deposit the minimum share capital for the new SIA into a bank account opened for the company.
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.
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 2021 will need to obtain additional special permits and licenses, which means that an additional step will be needed.
What are the taxes for subsidiaries in Latvia?
, the subsidiary in Latvia
will be taxed as all other registered companies in the country, at the usual 20% rate. Other taxes for companies in Latvia include the payroll tax, real estate tax, social security contributions, stamp duty. Our company formation agents in Latvia
can give you more information about the taxation regime.
What are some of the other applicable requirements for the subsidiary in 2021?
At the level of 2021, 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.
For more information about the requirements for a subsidiary in Latvia
, please do not hesitate to contact us