Latvian legislation encourages business development in their country without paying much attention to whether the company’s owner is a resident.
In 2019, the international Doing Business ranking rated Latvia 19 out of 190 countries regarding ease of doing business. The importance of this indicator is quite severe, as Latvia is ahead of countries such as France and Switzerland in this list.
Pros and cons of doing business in Latvia
Some advantages:
- Opportunity to enter the EU market on the same terms as in Europe
- Ease of business registration and minimum requirements for the availability of authorized capital
- Lack of pressure on business from the state
- Moderate tax burden
And now a few disadvantages:
- Need to keep all official documents in Latvian. But in general, this is the norm for modern society. If you want to play with us, play in our language.
Residence and citizenship permit in Latvia
Like Lithuania and Estonia, Latvia attracts CIS residents with the opportunity to obtain a quick and easy residence permit and citizenship. Anyone wishing to immigrate to Latvia can obtain a residence permit by investing or buying/opening a business in the country (we will leave the option of buying real estate without disclosure).
Starting from 2010, for foreigners on a long-term basis, there is an opportunity to obtain a residence permit for five years. Subject to financial investment in the development of the country’s economy. It is important for relatives of the investor, who can also obtain a residence permit.
Five ways to get a residence permit in Latvia:
- Register a new company with a capital of 50 thousand euros
- Invest from 50 thousand euros in the capital of the Latvian company. But provided that such a company has less than 50 employees and an annual turnover of no more than 10 million euros. Also, you need to be prepared for the state tax, not much, not a little – 10,000 euros !!
- Invest 100,000 euros in the capital of a Latvian company if it has more than 50 employees at the time of investment and an annual turnover of more than 10 million euros. Here you also must be ready for the state tax, in the amount of not much, not a little – 10,000 euros !!
- A more complicated option is to invest at least 280,000 euros in the country’s credit institutions.
- Buy for 250,000 euros interest-free government bonds with subsequent payment of state duty for 38,000 euros.
All. These were the TOP-5 most common loopholes in how to get a temporary residence permit in Latvia.
Company registration in Latvia
Latvia is open to foreigners and their business. The country’s legislation does not restrict the business (business participation) of non-residents (foreigners) in the capital of Latvian companies. Non-residents of Latvia can create their own business with 100% ownership, with the sole right, and participate in a ready-made business in the format of share distribution.
Organizational and legal forms of doing business in Latvia
If you have already decided that doing business in Latvia is yours, be sure to read the legal forms approved at the state level:
The first form. Individual businessman (individual)
All legal and financial responsibility lies solely with the merchant. He is 100% responsible for all his property.
Another form. Limited Liability Company (LLC) – a legal entity
The founder of a limited liability company may be one person or several.
Importantly! The law does not specify that the founder must be a resident of Latvia.
- The authorized capital must be at least 2,800 euros. Capital contributions can be divided into two parts. The first 50% is paid before applying for registration, and the second half is within a few months after the company’s start.
- The capital of the LLC can be contributed in the form of funds or other property, which covers the entire amount.
- The LLC is fully responsible for the debt, and the founders of the LLC are not liable for the company’s obligations.
The third form. Open Joint Stock Company (OJSC)
It can have one or more founders, residents, and non-residents of Latvia. OJSC is fully liable for all property. The minimum capital is at least 35,210 euros, 25% of the total amount must be credited to the account before registration. Compared with LLC, the amount of authorized capital is paid exclusively in cash.
Fourth Form. Branch or representative office of a foreign company.
May you be interested in the difference between a branch and a representative office?
The branch is entitled to conduct commercial activities, but there is no representative office. That’s the difference. Both options do not bear any responsibility because they are not legal entities. The guarantor of the obligations is a foreign parent company.
Business registration procedure in Latvia
Registering a business in Lithuania is fast.
Before initiating the registration procedure, it is necessary:
- choose the type of company
- decide on the organizational and legal form of the company
- choose a name, pass a uniqueness check through the State Register Center of the country
- prepare the charter of the enterprise
Stages of registration:
- collect all necessary documents. Importantly! All documentation must be in Latvian,
- notarized by a Latvian notary
- register the authorized capital and certify samples of signatures of members of the board
- open a bank account in a bank of Latvia
- deposit the authorized capital on it ( if such is provided, to receive a statement of payment)
- register the enterprise in the Commercial Register of the State Revenue Service
- obtain a VAT payer’s certificate from the State Revenue Service
- to determine whether the company will employ employees and if yes, it is necessary to register them all in the system of compulsory state social insurance.
- if the company employs foreign nationals, it is needed to register them through the immigration service
As if walking on all points. Congratulations, you can now move on to taxes
Taxes on business in Latvia
Taxation in Latvia is one of the most flexible and lenient in the EU.
In some ways, tax rates can be compared to everyone’s favorite offshore, such as Hong Kong and Macau. Because the government promotes the business development of small businesses, for which there are many benefits and bonuses.
The simplified taxation system for small businesses has:
- VAT – 21% for domestic business
- 0% VAT – for export business and supply of goods across the EU
- insurance payments 31.04% when hiring employees
Well, that’s all. Now it’s up to you to choose Lithuania, Estonia, or Latvia as the jurisdiction of your future business. We will be happy to provide you with qualified advice on business registration and obtaining a residence permit.
Our team is ready to provide consultation on these issues. Our business hours: Monday to Friday, 9:00 AM — 7:00 PM. Contact us via WhatsApp, Telegram, or Viber, or submit an inquiry through our online form.
