How to register a company in Latvia and start a business
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Latvia (the Republic of Latvia) is a country in Northern Europe, bordering Russia, Estonia, Belarus, and Lithuania. The capital is Riga, and the official language is Latvian.
Latvia is a parliamentary republic governed by the renewed 1922 Constitution with amendments. Its legal system belongs to the Romano-Germanic legal family.
Latvia is a member of the EU, WTO, the Schengen Agreement, and the Eurozone (since 1 January 2014). There are no currency controls or controlled foreign company (CFC) rules. However, transfer pricing and thin capitalisation rules apply.
Advantages of a Latvian Company
The income tax rate is 20%. Tax is only levied when profits are distributed or when payments equivalent to profit distribution are made. Tthe company has no tax obligation.
Holding Regime Benefits:
- All received are tax-exempt, except those paid by offshore companies to entities.
- Interest and royalties are exempt from withholding tax (except for transactions involving offshore companies).
- A simple procedure for obtaining a Tax Residency Certificate and a VAT (Value Added Tax) number.
- Possibility to obtain a multiple-entry visa and travel within the Schengen Area.
- Opportunity to apply for a Latvian residence permit (under certain conditions).
- A prestigious business tool for operations in Europe and globally—Latvia is not considered an offshore jurisdiction and is not included in any "blacklists".
More details on the website.
Taxation of Latvian Companies
Legal entities in the country are regulated by the Commercial Law (Komerclikums), enacted in 2000.
The main legal forms for businesses in Latvia include:
- SIA (sabiedrība ar ierobežotu atbildību) – Limited Liability Company.
- AS (akciju sabiedrība) – Joint Stock Company.
- KS (komandītsabiedrība) – Limited Partnership.
- IK – Sole Trader (self-employed individual).
- Branches.
- PS (pilnsabiedrība) – General Partnership.
How to Register a Company in Latvia
Advantages of an SIA:
- Limited liability of shareholders to their capital contributions.
- A straightforward company registration in Latvia, with the option for remote registration (without visiting Latvia) through a notarised power of attorney signed by the founders.
- 100% foreign ownership is permitted (including by offshore companies).
- No requirement for a local director.
The company name must be in the Latin or Latvian alphabet, must not duplicate existing registered names, and must indicate its legal form. Certain words (e.g., "Latvia") have restrictions on their use.
Registered Address: Every Latvian company must have a registered legal address in Latvia, which must be declared upon registration. Any correspondence sent to this address is considered officially received by the company.
Shareholders and Capital Requirements
Both individuals and legal entities (residents and non-residents) can establish a Latvian company. The minimum number of founders is:
- 1 for an SIA or AS.
- 2 for a PS or KS.
Information about a company’s founders is publicly accessible upon request and payment of a state fee.
Minimum Share Capital:
- Min. SIA share capital is €2,800.
- At least 50% of the share capital must be paid before registration, with the remainder payable within one year after registration.
If the following conditions are met, the share capital may be between €1 and €2,799:
- The company has no more than five individual founders (residents or non-residents).
- All founders are also board members.
- The founders do not simultaneously own shares in another company with reduced capital.
Corporate Governance
The minimum number of board members (directors) for SIA and AS is one. If AS shares are publicly traded, the board must have at least three members. Only legally competent individuals (residents or non-residents) can serve as board members.
Each board member must provide notarised consent to assume their role. Individuals restricted by court order from engaging in commercial activities cannot be board members.
Exemptions for Small Businesses:
- Micro-enterprises (annual turnover under €40,000, all shareholders are individuals, total employees (including owners) do not exceed five, and individual salaries do not exceed €720) are exempt from audit requirements.
- Small enterprises (not exceeding €4M balance sheet / €8M turnover / 50 employees) require an audit only if two of these three limits are exceeded for two consecutive years.
Tax returns must be submitted within four months after the end of the financial year.
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