Latvia

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Latvia

General information about the jurisdiction

The Republic of Latvia is a state in Northern Europe with an access to the Baltic Sea. It is a part of the EU, WTO and NATO. The country is famous for its cuisine, lots of beer sorts, Riga balsam and "The New Wave" festival.   

The crises of 2009 undermined the Latvian economy and the government had to attract investments by simplifying the procedure of obtaining a resident permit when buying a real estate.

1. Legislation

Company activities in Latvia are regulated by the Commercial Act.

2. Company formation

2.1 Types of companies

The legislator provides some corporate forms (Limited Liability Company, limited and unlimited joint stock company etc), but the most preferable is the Limited Liability Company (SIA).

2.2. Private Limited Liability Company (SIA):

  • The minimum authorized capital – 2000 LVL (approximately $3800), 50% of which must be paid by the moment of incorporation. The authorized capital may be less than 2000 LVL if the company has 1 - 4 members, who are individuals (no residency required) and members of the Board of Directors, and are not members of any other SIA with small capital. In this case the authorized capital must be paid by the moment of incorporation.
  • The authorized capital is divided into shares.
  • Director - at least 1, individual or legal person, no residency required.
  • Members – at least 1, individual or legal person, no residency required. 
  • Secretary – not required.
  • Publicly available information: information about members and directors. Information about beneficiary owner may be hidden by using nominee service. 
  • Company is obliged to keep and submit an annual financial report. An audit is required for companies with balance – more than 250 000 LVL, annual turnover – more than  500 000 LVL, the number of employees exceed 25 per year
  • Registered office in Latvia is required. 

3. Taxes

Income tax – 15%

VAT - 22% (for some goods – 0-18%)

Tax on dividends and royalties, paid for non-residents - 10%.

Tax on royalties – 5% and 15% (depends on the type of intellectual property).

4. Currency control

None

5. Agreements on avoidance of double taxation

Latvia concluded more than 50 agreements on avoidance of double taxation, including Ukraine.