Сompany registration in Latvia: Legal aspects and advice

Company registration is the process of formalizing the status of a legal entity in accordance with the laws of a certain country. During this process, the company is officially recognized as a legal entity with its own legal capacity.

To receive this status, it is necessary to provide certain documentation and fulfill the requirements established by the state authorities. Due to registration, the entity is able to conduct commercial activities, conclude contracts, participate in court proceedings and perform other legally significant actions.

If you plan to start a business in Europe, Latvia is an excellent choice for registering your company. The Manimama team has conducted in-depth research, analyzed the main subtleties of incorporating in Latvia, and is ready to share its results and help you choose the right jurisdiction.?

What are the main advantages of incorporating a company (business) in Latvia?

1. Promising location

Latvia’s advantageous geographical position at the crossroads of trade routes between East and West makes it an ideal bridge for businesses looking to expand into the European Union markets. Additionally, its coastline along the Baltic Sea positions Latvia as a key player in regional trade, creating further development opportunities and fostering economic integration with other countries.

2. Favorable business environment

Latvia fosters a supportive business environment through a transparent legal system and minimal bureaucracy. Entrepreneurs can benefit from tax incentives and streamlined registration processes. Furthermore, Latvia guarantees stability in property rights and protection of investments, making it attractive to foreign investors. This policy aims to encourage the growth of small and medium-sized enterprises, creating opportunities for rapid development both domestically and internationally.

3. Effective registration process

The process of registering a company in Latvia is characterized by speed and convenience, thanks to minimal bureaucratic requirements and the availability of online services. Most procedures can be completed online, significantly reducing the time and effort needed to start a business. Clear and transparent documentation and registration requirements enable entrepreneurs to quickly start their operations, enabling them to focus on business growth.

4. Well-developed infrastructure

Latvia’s well-developed infrastructure provides entrepreneurs access to modern communication and technology resources, facilitating efficient business operations. High-speed internet and modern office spaces make it easy to integrate into international markets. Furthermore, the availability of energy and logistics support ensures operational stability, stimulating the company’s rapid growth.

5. Highly skilled workers

Latvia boasts highly educated professionals with strong qualifications in various fields, including IT, engineering, and finance. The country offers professional training and education programs that enable employees to continuously enhance their skills in line with market demands. As a result, businesses gain access to talented experts capable of driving innovation and efficiency in their operations.

6. Strong International Cooperation and Access to the European Market

Latvia actively fosters international cooperation, establishing agreements with other countries, and attracting foreign investments to contribute to economic growth. Its membership in the European Union provides businesses access to a vast single market, opening up the export and import of goods and services without customs barriers. This cooperation stimulates business development and enables companies to leverage new technologies and innovations while integrating their products into global supply chains.

How to register a company in Latvia and what are the main requirements for such registration?

Step 1. Initial setup

• Initiating a preliminary project assessment, assessing risks, choosing the type of company, preparing the necessary documents and obtaining the necessary permits, determining the time frame, budget, and resources required to complete the process.
• Preparation and filing of the package of documents.

Step 2. Company registration

• Verification and reservation of the company name at the Register of Enterprises of the Republic of Latvia
• Facilitating the notarial process for the company’s official registration
• Incorporating the company’s data into the Register of Enterprises of the Republic of Latvia
• Obtaining the Certificate of incorporation from the Register of Enterprises of the Republic of Latvia, Memorandum and Articles of Association
• Registration for tax and social security purposes
• Opening a corporate bank account

Requirements for registering a company in Latvia on the example of a Limited liability Company / Sabiedrība ar Ierobe?otu Atbildību (SIA):

• Shareholders: at least one shareholder with any citizenship or residency.
• Director: at least one director with any citizenship or residency.
• Company Secretary: not required.
• Minimum Share Capital: at least €2,800 and 50% of which should be paid at the time of establishing.
• Legal Address: it is mandatory when incorporating a company in Latvia.
• Liability: the liability of shareholders in Latvian SIA is limited to the value of the investments made.
• Accounting: the company’s director is responsible for maintaining accounting and keeping accounting records in Latvia.

What do you have to know about taxes when registering a company in Latvia?

Corporate income tax (CIT):

The basic CIT rate is 20%.

CIT rate of 20% is applied to the gross amount, or 20/80 of the net cost, i.e., the taxable base of the CIT should be divided by a coefficient of 0.8.

Personal income tax (PIT):

Tax base: all annual taxable income (including income from paid employment, pensions, income from economic activity, royalties, etc.), unless another rate is specified by law.

Progressive PIT rates:

• for annual income up to €20,004 – 20%;
• for annual income between €20,004 and €78,100 – 23%;
• for the part of annual income exceeding €78,100 – 31%.

Value-added tax (VAT):

The standard VAT rate is 21% which applies to supply of goods for consideration and transactions comparable to supply of goods; supply of services for consideration and transactions comparable to supply of services; Intra-Community acquisition of goods for consideration; importation of goods; receipt of services in inland from taxable persons of EU Member States, taxable persons of third countries or third territories; Intra-Community acquisition of a new means of transport.

Reduced VAT rates:

• 12% applies to medicinal products included in the list of medicinal products registered in Latvia; medicinal products registered in accordance with the centralized registration procedure of medicinal products of the European Medicines Agency; inland transport services of passengers and their luggage and many others;
• 5% applies to supply of school literature and original literature issued in the form of printed publication or electronic publication; supplies of food products which are the fresh fruits, berries and vegetables, including washed, peeled, shelled, cut and packaged, but not thermally or otherwise processed (for example, frozen, salted, dried);
• 0% applies to exportation of goods and supplies of goods not released for free circulation where supplies of goods are carried out in customs warehouses and free zones; dispatch of goods to a fiscal representative within the framework of exportation of goods; the supply of goods within the EU, if the consignee is a registered taxable person of another Member State and the goods are supplied to another Member State, etc.

For readers?

Manimama provides assistance in choosing the right jurisdiction for company incorporation and in registering a business specifically in Latvia. We have a good understanding of the tax and legal peculiarities of specific jurisdictions, which helps our clients make an informed choice based on their unique needs and development strategies. In our work, we take into account factors affecting the business environment, such as the level of competition, access to financial and human resources, as well as opportunities for further growth and development in different jurisdictions.?

By choosing our company formation service in Latvia, you are working with a law firm that values integrity, competence, and client satisfaction. Let us help you set up a company in Latvia and pave the way for your business success!

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The content of this article is intended to provide a general guide to the subject matter, not to be considered as a legal consultation.