COMPANY IN LATVIA

Latvia has a special position among the Baltic countries. This small country has access to the European market and the EU financial leverage. Moreover, it is located in geographical proximity to the CIS countries. As such, the registration of a company in Latvia opens up prospects for two markets at once.

What form of business is it better to register?

Advantages for business

• non-residents are allowed to register a company;
• no need to deposit the authorized capital into a bank account;
• minimum amount of the authorized capital is 2,000 Euros (installments are possible);
• founders can be either individuals or legal entities;
• wide scope for tax optimization;
• several favorable forms for registering a company are available: SIA (similar to LLC) and AS (similar to JSC).

Registration in Latvia is possible both in person and remotely. The founders can open a temporary bank account. It must be noted that there are no restrictions on the number of possible founders in Latvia.

Specifics of taxation in Latvia

Latvia is not an offshore, but it does its best to facilitate business operations. This is especially evident in taxation with the following specifics:

• corporate tax rate is 20% of the distributed profit;
• dividends are exempt from taxation;
• compulsory social insurance contribution is 23.59% for companies and 10.5% for employees;
• income tax ranges from 20% to 31% (there are benefits for residents);
• value added tax (VAT) rate is 21%.

Attention: corporate tax applies only to distributed profits. Retained earnings are not taxed. There is a system of reduced rates for certain industries within the VAT framework:

• pharmaceuticals – 12%;
• agricultural products – 5%;
• export – 0%.

Financial, insurance, educational, medical, and some other services are exempt from VAT. The threshold for registration as a taxpayer is 40 thous. Euros. As such, Latvia offers many preferential regimes for big sectors of the economy, which you can use when launching your business in the country.

What documents are required?

The following documents are required to register a company in Latvia:

• memorandum of association;
• charter;
• application.

These documents are included in the standard package. Additional certificates can be required: register of members, agreement of board members, and notice of legal address.

Additional requirements

Special attention must be paid to the procedure for obtaining a legal address. You will also need to draw up a lease agreement for a legal address when registering a company. Accordingly, the consent of the landlord is also required.

The Latvian government also regulates the issue of the names of organizations. The name of the company must be in Latin and must not be already registered. There is a special service at www.lursoft.lv for self-checking the name for registration suitability.

All information about the founders is public in Latvia. Beneficiaries must disclose their passport details. All submitted documents must be executed in Latvian. In addition, they need to be notarized and then apostilled (for residents of other countries).

The minimum wage in Latvia is 500 Euros. Payroll is compulsory – the company cannot operate without paying wages.

Regardless of the chosen registration method (remotely or by contacting in person), the Cortax experts help with the translation of the certified documents into Latvian and ensure the smooth opening of a business in Latvia.

Stages of the company registration

The registration is carried out stage by stage. Cortax helps arrange the following:

• Preparation of all necessary documents with their translation.
• Choice of name, type of activity, member list, and other elements.
• Choice of organizational and legal form (SIA is similar to LLC, and AS is similar to JSC).
• Opening a temporary bank account to deposit the authorized capital, if necessary.
• Submission of the documents to the Register of Enterprises.
• Obtaining the Decision of the Register and opening a permanent account in the bank.

The Register of Enterprises in Latvia has abandoned the practice of issuing registration certificates since 2014. State institutions and banks in Latvia do not require entrepreneurs to present a registration certificate. This certificate can be ordered for a separate fee during company registration or afterwards, if necessary.