Latvia is one of the Baltic States that is rapidly growing and offers a number of opportunities for investments. The country has a stable economy and good financial infrastructure. Local entrepreneurs pay comparatively low taxes and can operate a company easily. If you think about this jurisdiction as your target one, this overview may facilitate while making your choice.
Forms of Legal and Business Presence
If you intend to establish your presence in Latvia, it is easy to accomplish that in one of these forms:
- Limited Liability Company – a vehicle where the liability of founders (shareholders) is limited to the value of the investments made. The statutory capital of this entity should be at least EUR 2,800 and 50 % of which should be paid at the time of establishing.
- Joint-Stock Company – a more advanced vehicle designated mainly for involving funding and entering the stock markets. The share of this entity can be freely transferred. The minimum statutory capital of this vehicle constitutes EUR 35,000.
- General Partnership – a formation that is not an entity and can be formed by at least two persons who bear the entire and joint liability for all partnership’s undertakings.
- Limited Partnership – like the previous one formation, this type of a partnership is not a legal entity and can be formed by (i) at least one partner who bears the unlimited liability for the results of the joint commercial activity and (ii) at least one partner whose liability is restricted to the amount of the contribution made.
- Branch – this commercial formation of a foreign company performs the same types of activities. Registration is required in this case.
- Representative Office – this formation does not have a separate legal personality and is not able to conduct business in Latvia. It is designated mainly to explore local commercial opportunities and promote a non-resident entity in Latvia.
Registration Requirements and Steps
In order to register a company in Latvia, these preliminary steps should be passed:
- Drafting your business plan with certain commercial objectives to fulfil in this country and/or worldwide.
- Collecting data about founders, beneficial, owners and the future management of a prospective vehicle.
- Arranging the registered office for the future legal person.
- Depositing the amount of the statutory capital.
- Drafting the Memorandum and Articles of Association.
- Lodging the package of required documents to the Register of Enterprises.
- Registration for tax and social security purposes.
- Opening a corporate bank account.
- Obtaining licenses and permits (optional).
Legal and Regulatory Framework
Latvian legal system has been entirely tightened to the EU approaches that ensure the comparatively fast process of the company formation and operation. The main local state authorities that should be dealt with during the company registration and operation are the Register of Enterprises, the State Revenue Service, the Financial and Capital Market Commission, the Investment and Development Agency of Latvia. If certain licenses are necessary to actually start a business, other local authorities may be involved.
Advantages of the Jurisdiction
Business incorporation in Latvia may be promising in view of these potential advantages to benefit:
- Well-developed financial sectors, information technology, transportation, tourism, real estate sectors
- Plenty of incentives, including tax
- Good protection of intellectual property rights
- Qualified local employees
Tax System of Latvia
If you want to start a company in Latvia, you may need to be aware of the next tax highlights the jurisdiction has:
- Corporate income tax (CIT) rate – 20% (paid only if the profit is distributed)
- Personal income tax rate – 31 %
- VAT rate – 21 %
- Withholding tax rates – (1) general for non-residents: (i) dividends –0 %, (ii) interests – 0 %, (ii) royalties – 0 %, (2) for non-residents in tax havens: (i) dividends – 20 %, (ii) interests – 20 %, (ii) royalties – 20 %,
- Capital gains tax rates – (i) corporate – equals to the standard CIT rate, (ii) individual – 20 %.
How Prifinance Specialists May Assist You
If you intend to create a company in Latvia, Prifinance specialists may guide you through this process and subsequently support your Latvian company during its operation. Reach us for more precise suggestions and discussions on the matter.