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Main characteristics for registration in Latvia
Best choice for:Holding
Time to complete the registration5 days
Company Registration in Latvia
Latvia is an attractive country for doing business. Being the EU member, Latvia is an excellent place to enter the EU market for non-residents. Registration and operation costs in Latvia are cheaper than in the rest of Europe. In the meantime, this country offers excellent business environment and competitive taxes at the same level as in other countries.
This article gives you an overview on how to set up a company in Latvia and key points on how your business can benefit from it.
What types of legal entities is it possible to incorporate in Latvia?
The process of company formation is rather simple in Latvia and you can choose from several types of legal entities:
- Limited liability company: this is the most popular type of legal entity thanks to its simplicity of registration and operation. The share capital of LLC is EUR 2,800. The share capital can be less if it has less than five individual shareholders and if it meets certain conditions provided by the Commercial Law.
- Joint Stock Companies: JSC can be closed or open. The minimum share capital is EUR 35,000.
- Partnerships: consist of two or more persons. It can be general partnership with partners having unlimited liability for partnership debts or limited partnership which are established by limited and unlimited partners where the liability of limited partners is limited to the amount of capital contributed.
- Sole proprietorship
- Branch or representative office
Tips: The cost for company formation in Latvia is rather cheap and simple. Company registration documents to be submitted depend on the type of legal entity you choose from.
How long does it take to register a company in Latvia?
The term for registering a company in Latvia is 1-2 weeks.
Tips: it is possible to register a small-capital limited liability company with the smallest authorized capital in the amount of 1 Ls (1,4 EUR). Such companies must invest 25% of annual profit into an obligatory reserve.
What are the requirements for company names in Latvia?
There is no requirement to reserve the company name prior to its incorporation. As a general advice, it is essential to think on the first impression your company makes. Before you register your company, you should think how it works on your logo, website, and advertisements and check whether there is no registered trademark that has identical name. You should try to avoid such similarities; otherwise you will fail to protect your IP rights.
What are the requirements for shareholders and directors in a Latvian company?
Companies incorporated in Latvia may have one director with any citizenship or residency. No nationality or residency requirement applies to shareholders.
Is it necessary to appoint a company secretary in Latvia?
The company secretary is not required.
What are the accounting requirements for Latvian companies?
The company’s director is responsible for maintaining accounting and keeping accounting records in Latvia. The reporting period is 12 months.
Consolidated reporting is only required for group of companies that exceeds certain amount of assets, net turnover and a number of employees.
Is annual audit required for Latvian companies?
Statutory audit is not mandatory for LLCs.
Tips: Latvian law allows computerized accounting which is a convenient way of doing business. Accounting is conducted in Latvian language and the measure of value must be Euro. Please contact us for more information about online accounting services.
What is the cost of company formation in Latvia?
The cost of company incorporation in Latvia is Euro.
Taxes in Latvia
What companies are qualified as tax residents in Latvia?
A company is a tax resident in Latvia if it is incorporated in Latvia.
What is a taxable period in Latvia?
Taxable period in Latvia is one calendar year. A company may choose other taxable period corresponding to its financial year.
When tax returns are filed in Latvia?
Small and medium-sized companies file annual tax returns within four months after the end of the financial year. Large companies file annual tax returns within seven months.
What is corporation tax rate in Latvia?
Corporate income tax rate in Latvia is 15% and is levied on a company worldwide income. Non-resident companies without permanent establishment in Latvia are subject to tax on their sourced income in Latvia.
3% corporate income tax rate applies to companies in Special Economic Zones being Liepāja Special Economic Zone, Rēzeknes Special Economic Zone, Ventspils Free Port, and Riga Free Port.
Are dividends exempt from taxation in Latvia?
All dividends are exempt from taxation in Latvia.
What is interest tax rate in Latvia?
Interest income is exempt from tax liability in Latvia (except for a few limitations provided in the Latvian legislation).
What is royalties tax rate in Latvia?
Royalties paid to abroad companies (excluding companies located in tax haven territory) are exempt from tax liability in Latvia.
What is capital gains tax rate in Latvia?
Capital gains on the disposal of shares are exempt from corporate income tax. Gains from sale of shares in companies located in tax haven countries are subject to 15%.
What is VAT rate in Latvia?
The general VAT rate in Latvia is 21%. Reduced rate in the amount of 12% applies to certain types of transactions. 0% applies to certain supplies, including medical services, rentals of apartments, and banking and insurance services.
As in other jurisdictions, a company in Latvia can be liquidated voluntary and involuntary.
What are the grounds for involuntary liquidation in Latvia?
A company registered in Latvia can be liquidated compulsory as requested by creditors or governmental institutions (court, State revenue service, Register of enterprises), if such company does not comply with legislation. Based on the request, forced liquidation of the company will be initiated.
What is the procedure of involuntary liquidation in Latvia?
In case of compulsory liquidation, a liquidator is appointed based on the court order. The liquidator is responsible for informing the official gazette regarding the new status of the company. During three months, the liquidator invites the creditors to state their claims. Further, the liquidator prepares balance sheet with company’s assets. All corporate, employment and other documents shall be sent to the State Archives. Based on the company’s assets, the liquidator shall satisfy creditor’s claims. The remaining assets are delivered to the shareholders. Finally, the company is excluded from the commercial register.
What are the grounds for voluntary liquidation in Latvia?
A company is liquidated voluntary based on the decision of shareholders or expiration of term specified in the articles of association of the company. In rare situations, shareholders may agree to establish a company for a certain period. A company may be terminated if it reached its aims specified in the articles of association.
What is the procedure of voluntary liquidation in Latvia?
The decision of the company liquidation is made during the general meeting. For the termination of activities at least 2/3 of the shareholders’ votes must be present at the meeting, if the charter does not provide for a greater number of votes. After that, shareholders appoint a liquidator who is responsible for notification of creditors through the official gazette and the Register of Enterprises about the new status of the company. Liquidator prepares balance sheet with company’s assets, submits all necessary reports to governmental authorities and recovers debts. The remaining assets are delivered to the shareholder.
All company documents, including corporate, employment, accounting and other documents shall be sent to the State Archives where the documents are kept for a certain amount of time. During the liquidation process, the company cannot engage in any commercial activity. After all debts are settled, the company is excluded from the commercial register.
Note: if a company ceased its business activities, the Register of Enterprises can exclude the company from the commercial register without special liquidation process. In this case, the government may hold all property of the company.
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