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LatviaMain » Jurisdictions » Latvia
Latvia (officially known as the Republic of Latvia) is a country of Northern Europe that has an access to Baltic sea, is a member of EU, WTO, NATO and Schengen Agreement. Most Latvians speak Russian, which makes business and living in this country convenient for our citizens, and liberal legislation allows, run the business in favorable tax conditions.
Is Latvia a classic “offshore”? No. Although this combination is very often found in publications. Therefore, in our material we use the word “offshore” in quotation marks, showing its figurative meaning in relation to Latvia.
ADVANTAGES OF COMPANY REGISTRATION IN LATVIA:
- liberal tax legislation;
- trade relations with European countries and the CIS, convenient geographical location;
- Latvia is included in the white list of jurisdictions of the Organization for Economic Co-operation and Development (OECD);
- the opportunity to obtain a residence permit in Latvia in exchange for investment in the company;
- no language barrier;
- the possibility of buying a ready-made company with a history;
- use as a trading company, commission agent, investment, license or management company, as well as a holding.
Opening of “offshore” in Latvia
The Latvian Commercial Law Act establishes the procedure for the functioning of companies in Latvia.
TYPES OF COMPANIES
The Latvian Commercial Law regulates the activities of enterprises of various forms of ownership: joint-stock companies, limited partnerships, limited liability companies and individual merchants.
For foreign founders, the most convenient corporate form is the Limited Liability Company (SIA). The name of such a company must contain the abbreviation SIA and it is forbidden to use the words “Latvia”, “state” and “self-government”, as well as parts of the names of state organizations in Latvia.
SOCIETY WITH LIMITED LIABILITY (SIA):
- The minimum authorized capital is 2800 EUR. 50% of the capital should be paid at the time of registration of the company, the rest - during the first year. After registration, this amount can be disposed of for business purposes. A special temporary account is opened for the formation of the authorized capital.
- Shares are not issued, the authorized capital is divided into shares of participants.
- Members of the board - the company is managed by a board which can consist of one person or entity, any residence. Nominee board members are not allowed. The director’s personal visit to Latvia is required to sign the company registration documents.
- Shareholders - at least one individual or legal entity, no residency requirements. When registering a company, it is possible to use nominee shareholders.
- Secretary – not required.
- Public information - on directors and shareholders (information is stored in the Register of Enterprises of Latvia). The company is required to maintain accounting records and submit an annual financial report. The annual reporting is subject to completion by the auditors if the company meets two of the three conditions: the company's balance sheet exceeds 400,000 euros, its turnover exceeds 800,000 euros, and the number of employees exceeds 25.
- Registered office in Latvia is required.
Corporate income tax - 20/80. It means:
- if the tax is calculated from the net amount, the effective tax rate will be 25%;
- if the tax is calculated from the gross amount - the tax will be 20%.
Corporate income tax is paid at the time of distribution of profits.
VAT - 21%.
A VAT number is required of the company conducts business in the EU. To register as a VAT payer, you need to rent a real office in the country, and in order to maintain the status one has to submit tax returns and pay taxes in a timely manner.
Dividend tax - 0% (the rate applies if the corporate income tax has already been paid).
AGREEMENTS ON AVOIDANCE OF DOUBLE TAXATION
Latvia concluded more than 60 agreements on avoidance of double taxation, including Ukraine.
If you wish to register a company in Latvia, please contact our lawyers for advice:
+38 (044) 383-48-88
+38 (044) 383-28-88
We will help you to open a company in Latvia or in any other jurisdiction of your choice.