General information about company formation in Latvia:

  • Benefits
  • Key regulatory conditions
  • Main legal types of companies
  • Requirements to share capital
  • Key information on taxes

Business tasks that can be solved by forming a company in Latvia:

  • Legally optimise taxes
  • Protect intangible assets
  • Facilitate trade with European and international clients
  • Serve as a holding company
  • Hold real estate and movable assets
  • Obrain residence permit in Latvia

General information on company formation in Latvia

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Benefits of company formation in Latvia

Company formation in Latvia has a number of benefits both for Western European and Eastern businesses. Company formation in Latvia for Western European businesses may be interesting because of the following advantages:

  • comparatively low taxes and salaries;
  • ease of access to vast Russian market;
  • availability of western thinking and Russian speaking labor.

Businesses from Russian and other ex-Soviet countries are interested in company formation in Latvia due to the following advantages:

  • absence of currency regulations makes it easier to make payments to and accept payments from the Western countries;
  • relatively stable and predictable legislation system allows to use Latvian companies for protection of capital and intellectual assets;
  • availability of English and Russian speaking labor;
  • opportunity to get residence permit in Latvia that opens opportunity to travel throughout the Europe.

Add to this such generally attractive benefits like:

  • easy process of company registration in Latvia;
  • very good flight connections to Europe, Russia and other ex-Soviet countries;
  • holding regime favorable for getting and paying dividends.

Another important benefit of Latvia is existence of number of tax treaties (double taxation avoidance agreements). Latvia signed such treaties with more than 50 countires, including almost all european countries, USA, Canada, China, as well as CIS countries, including Russia.

Key regulatory conditions for company registration in Latvia

Company formation in Latvia is relatively simple and fast.

  • All companies in Latvia are being registered in one state institution – Latvian Enterprise Register.
  • The procedure of company registration in Latvia usually takes 3 working days. There is also an opportunity for company registration in Latvia in one day. There is also opportunity to register a company in Latvia without visiting Latvia.
  • There are no restrictions for foreign citizens to be owners or members of the Boards of Latvian companies.
  • Latvian legal system does not provide a system for nominal ownership.

Main legal types of companies in Latvia

The most frequently used legal form for company formation in Latvia is a limited liability company (SIA). The main legal forms can be briefly listed as follows:

  • Limited Liability Company;
  • Joint Stock Company (AS);
  • Individual Trader (IK);
  • Representative Office of Foreign Company;
  • Branch of Foreign Company.

Share capital requirements

Standard minimal amount of share capital is EUR 2,800. The law allows to pay at the registration only half of the minimal amount of the share capital. The rest should be paid in during one year from the company registration in Latvia. It is possible also to register a company with decreased share capital, and pay in as little as only EUR 1. Registration of a company with decreased share capital is allowed only for companies with up to five shareholders who are private persons.

Key information on taxes in Latvia

The key taxes that one should be aware of when starting a business in Latvia can be described as follows (applicable exceptions and nuances are not disclosed in this article for simplicity of presentation):

  • Value Added Tax – 21%;
  • Corporate Income Tax – 15%;
  • Social Security Contributions – 34.09%;
  • Personal Income Tax from payroll – 24%.

Regarding payroll taxes, the difference between expense to the Latvian company and net amount received by employee is roughly 1.8 times.

Information and actions required for company registration in Latvia

The following information is required for company registration in Latvia:

  • Company name;
  • Data on shareholders;
  • Share capital amount and split between the shareholders;
  • Data on members of the Board and their rights to represent the company (separately or together);
  • Legal address (we can provide it along with mail processing services, if required);
  • Brief description of the company’s business.

The shareholders and members of the Board of the Company will be required to approve their signatures on the company registration documents at a Latvian Sworn Notary. Latvian residents can approve their signatures also in the Latvian Enterprise Register. It is possible instead of approving the documents at a Latvian Sworn Notary to approve the registration documents by a secure electronic signature. Also, residents of some countries can approve the registration documents at a sworn notary in their country.

Expenses on company formation and maintenance

  • Legal fee for preparation of registration documents and assistance in the registration process;
  • Notary fees for approval of signatures;
  • State Duty;
  • Fee for obligatory publication in the Latvian official newspaper;
  • Fees for opening bank account.

There are no specific state duties for company maintenance in Latvia. Key expenses on the company maintenance after registration can be listed as follows:

  • Rent of legal address;
  • Accounting;
  • Corporate Income Tax in the amount of EUR 50 for the companies that do not have profit and do not pay other taxes.

Please refer to our price list for costs related to company formation and purchase of ready-made company in Latvia.

Purchase of ready-made company

Sometimes, it is faster and easier to purchase an already registered company, than to register one. Such company may already be registered for VAT and have operating bank account that allows to start operations immediately and provide the requisites of the company to business partners even before official registration of change of ownership. For more information, please see Purchase of ready-made company in Latvia.

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