Support in registering and doing business in Latvia

Company registration in Latvia

In today's dynamic business environment, where every step requires deliberation and precision, it is important to have clear guidance when carrying out key corporate processes. In this context, we invite you to dive into the essence of company registration in Latvia, a country where tradition meets innovation and where efficient registration becomes an important step on the road to successful entrepreneurship. We will cover all the main nuances that you cannot do without and that require expert advice.

Features and benefits

Among the Baltic pearls, this country deserves attention for its strong economy and attractive surroundings. Nature and developed infrastructure attract tourists from all over the world, but locals also actively use various services and goods. This creates an influx of both regular and seasonal customers.

One of the key features that make this country a magnet for entrepreneurs is its strategic location. The country serves as a bridge between East and West, providing easy access to European and CIS markets. Its transport routes and port facilities make Latvia an ideal base for exporting and importing goods.

The tax system is also quite attractive. Moderate tax rates and broad tax incentives for new companies facilitate the creation of competitive businesses. A flexible approach to taxation, including no tax on dividends and zero income tax on reinvested profits, favours growth and development.

Latvia is also renowned for its innovative environment and highly skilled labour force. A strong academic education and scientific base create favourable conditions for research and development. This is especially important if you are focused on technological innovation in your business.

Business forms when registering a company in Latvia

As in other regions, basic options are available here and non-residents can use them for registration without any problems. However, each one has its own peculiarities and rules. Many new entrepreneurs require professional advice at this stage. If you are among them, we suggest contacting us for full support. Now let's take a closer look at business forms in Latvia.

Step-by-step instruction

Latvia's Tax System: Overview

Latvia offers an attractive tax system for entrepreneurs, providing low tax rates and a variety of business incentives. Here are the main taxes that are important to consider when doing business in Latvia:

1. Value Added Tax (VAT): The normal VAT rate is 21%, but there is also a reduced rate of 12% on certain goods and services. There are exemptions for small businesses with small turnover.
2. Income Tax: The standard rate of income tax for companies is 20%. However, if profits are reinvested, full or partial exemption from this tax is possible.
3. Social contributions: Social contributions include social security and health insurance contributions. They constitute a certain percentage of employees' salaries.
4. Property tax: Property tax is levied on property owners and depends on the cadastral value of the property.
5. Excise Taxes: Taxes are levied on certain types of goods, such as tobacco, alcohol, petrol, etc.
6. Land Tax: Charged from owners of land plots and depends on the area and use of the land.
7. Dividend tax: The normal rate of dividend tax is 20%, but there is a possibility of exemption from this tax if certain conditions are met.

Here's a table for more convenience:

Please note that the tax system is subject to change, so it is recommended to be regularly updated on the latest changes in Latvian tax legislation.

Free zones in Latvia

The main purpose of creating FEZs is to create a favourable environment for business, facilitating the growth of production, innovation and job creation. Often, FEZs are located close to the border with access to important transport routes, which facilitates the import and export of goods. There are several FEZs, including:

1. Ventspils Free Port: This FEZ is located in the city of Ventspils, on the Baltic Sea coast. It specialises in handling oil, gas, containers and other cargo. The free port has favourable tax incentives and customs controls.
2. Liepājas Metalurgies: This FEZ, located in the city of Liepāja, specialises in the metallurgical industry. Tax incentives and simplified import and export procedures are available here.
3. Rezekne FEZ: Rezekne, located in the east of Latvia, specialises in light industry and logistics. It’s worth choosing company registration in FEZ for small and medium-sized enterprises.

Peculiarities of the financial aspect

Choosing the right bank and type of corporate account is an important step when opening a company. It can affect the level of service, the availability of financial instruments and the level of fees. It is important to consider the following factors:

• Reputation and reliability: Choose a bank with a good reputation and stability in the market. Research customer reviews and bank ratings.
• Level of fees and terms of service: Evaluate fees for account maintenance, transfer transactions, card maintenance, and minimum balances.
• Online banking availability and technical support: Make sure the bank provides convenient online banking and reliable technical support.

Types of Corporate Accounts:

• Current Account: A regular account for day-to-day financial transactions. Suitable for most companies.
• Deposit Account: An account for holding funds with the possibility of receiving interest on the deposit.
• International Account: If your business involves international transactions, this account can be useful for easy currency transfers.
• Trade Account: For businesses engaged in international trade, this account facilitates the processing of documents and financial transactions.
• Specialised Accounts: For example, for non-profit organisations, charitable foundations, etc.

Documents for opening a corporate account:

• Copies of the company's founding documents (articles of association, certificate of incorporation, etc.).
• Copies of passports of the founders and directors of the company.
• Documents confirming the addresses of the founders and directors (utility bills, lease agreements, etc.).
• Documents confirming the source of funds, if required by the bank.
• Documents confirming the company's business activities (business plan, contracts, etc.).
• Completed bank questionnaire.
• If necessary, additional documents following the requirements of a particular bank.

How to get a residence permit in Latvia?

In most circumstances, you do not need a residence permit (Permit to Stay) to establish a business. Having a resident permit, on the other hand, might ease some parts of doing business and give a more solid position in the nation. You may acquire a residence permit in Latvia by following these general steps:

1. Choosing a sort of residency permit: Latvia offers a variety of resident licenses, including those for job, business, study, and investment. You must select the type of residence permit for which you wish to apply. You should select the sort of residence permit that best meets your needs.
2. Document preparation: Gather the necessary documents depending on the type of residence permit. This may include an application form, passport, photographs, documentation of your finances, health insurance and others.
3. Applying: Apply for a residence permit at the relevant authority or Latvian embassy in your country. Seek counselling for specific requirements.
4. Medical examination: Depending on the type of residence permit, you may be required to undergo a medical examination to confirm the absence of certain diseases.
5. Application review: Your application will be reviewed by the relevant authorities. In some cases, a personal interview may be required.
6. Residence permit: If your application is approved, you will be granted a residence permit. This will allow you to legally reside and work in Latvia according to your status.
7. Extension of Status: A residence permit may have a limited validity period. You may need to extend your status if you plan to stay in Latvia for a longer time.

Conclusion

It can be summed up that Latvia is an ideal place for those who seek a successful business in a country with a favourable investment climate and diverse advantages. Starting a company here is not only a legal act, but also a step into the future, where the potential for growth and innovation is intertwined with cultural richness and attractive economic prospects.

The rich variety of company forms allows you to choose the best strategy to realise your business goals, while the tax system, with its reasonable rates and exemptions, facilitates more efficient financial operations. At the same time, it is important to realise that running a successful business requires not only legal support but also a deep understanding of local realities.