Latvia, officially known as the Republic of Latvia is a country located in the historically significant Baltic region on the Northern part of Europe. The country is a landlocked country, it is bordered by Estonia in the north and on the southeast Latvia shares its border with Belarus, on the east lies the Russian Federation and on the west it shares its border with Sweden along the coast of Baltic Sea. Latvia being located on the eastern sides of the European plain it has a very pleasant climate and also boasts of fertile soil which is suitable for growing a large variety of crops. Latvia also has a big forest cover that is home to some of the most exotic plants an animal species.

Population: 1.997 million (2015)
Official languages: Latvia
Other spoken languages: Russia (34%)
Currency: Euro (€)
Country code: +371
Time zone: UTC +2, Daylight saving time UTC +3
GDP (PPP): $42.471 billion (2014)
GDP (PPP)/per capita: $25.195 (2014)
Public debt: 35% GDP
Employment to population ratio: Unemployed 9.1%,  0.88 citizens between 15-65 years of age (2014)
Average salary: 820€/ month
Major trading partners: Russia, Lithuania, Estonia, Germany, Poland, Sweden

Advantages of Doing Business in Latvia

• Low company tax (15%)
• Latvian based holding company don’t have to pay taxes from dissidents or capital gains
• Cheap rents
• Cheap workforce available; Minimum salary 320€/month, average salary 544€/month
• Multilingual workforce easily available; over 70%  under 40 years of age people speaks also Russian and English

Disadvantages of Doing Business in Latvia

• Official language is Latvia and therefore all documents must translated in Latvian
• Small home market
• High corruption rate
• High consumption of Alcohol and extremely low threshold for staying home when sick causes reduction of productivity.
• Poor roads

Business Friendliness Environment Index (EUROPE) by Novasigma – 2017

Novasigma has published an annual BFEE (Business Friendliness Environment – Europe) -index for 2017. European economies are ranked from 1-51 based on their business friendliness. The rankings are determined by sorting the aggregate distance to frontier scores on 20 topics each consisting of several indicators, giving equal weight to each topic. The rankings for all countries and economies are bench-marked to January 2017

The World Banks “Ease of doing business ranking”

New businesses registered in  v. 2017: 10.720

Doing business in Latvia

Who can start business in Latvia:

• Any person or legal entity who can provide documentation required by the law for incorporation
• Person who has been banned from business operations cannot incorporate or be involved with incorporation through any middlemen.

Who can own property or shares of Latvian company

• Any legal entity
• Any person apart from individuals who has been banned from business operations

Who can act as a director or member of the board:

• Person over 18 years of age. Legal entities cannot act as director.
• At least one member of the board / director needs to be an EEA resident.
• Person who has been banned from business operations cannot act as a director and/or member of the board

Business entities in Latvia:

• SIA (Sabiedrība ar ierobežotu atbildību) = Ltd.
• AS (Akciju sabiedrība) = Public listed company PLC)
• IK (Individuālais komersants) = sole proprietorship
• PS (Pilnsabiedrība)
• KS (Komandītsabiedrība) = limited partnership
• ĀKF (Ārzemju komersanta filiāle) = Branch
• Representive office of foreign merchant (Rep. office)
• BO (Bezpeļņas organizācija) = nonprofit organization

Requirements to incorporate in Latvia

• At least 1 owner
• At least 1 member of the board and one supplementary member
• Owner and director may be the same person
• Must have official registered address in Latvia
• Minimum paid-up share capital is 2800€. At least half must have been paid on company account before registration. Second half must be paid within a year since starting a company

Opening bank account:

• Incorporation documents and articles of association
• Board of Directors meeting minutes
• Proof of identity of signatories

Public register of shareholders and directors:

• Directors: yes
• Shareholders: Yes

Allowed trades:

• All the legal trades that doesn´t require permit

Accounting and reporting regulations:

• SIA Companies must file accounts
• VAT registration is required for companies exceeding 50.000€ in annual revenue. Monthly VAT returns must be filed every month
• Any changes in the company board or shareholders registry must be notarized
• Businesses must be audited if they fall under two of the following three criteria; A) over 700.000€ in annual turnover, B) over 350.000€ in assets, C) more than 25 employees

How funds can be withdrawn from company

• Company may transfer money to another company based on sales of services and goods.
• Company can lend money to another company and / or person given that loan agreement with minimum interest and payment terms have been made. Owners cannot owe money for the company in the end of the book year.
• Company can pay dividends from it´s own capital to shareholders after end of the book year
• Company can pay salary to it´s employees given it has registered in the Tax Administration´s employer register. Employer is obliged to pay tax withheld at source from all wages paid to employees, along with making employer´s social security contributions.
• Company can pay tax free allowance, such as kilometre allowance for using they own car, per diem and meal money, to owners in order to cover their temporary business travel expenses as defined in the official Decision of the Tax Administration on Allowances for Travel Expenses
• Company can pay meeting allowances for its directors, members of the board and owners
• Profits may be transferred (if certain requirements are met) between group companies through group contribution system
• Company can invest in shares, funds or real property.

Ca you transfer Latvian company to another jurisdiction:

• No

How to terminate business:

• Company may be sold
• Company Dissolution process
• Filing bankruptcy

Freedom Index

Corporate taxation in Latvia

Personal taxation

• Due diligence process
• Foreign Market entry & Supplier search
• Business Plans & Descriptions
• Development & Capital Advisory
• International Tax Planning
• Funding & Investor Search
• Taxation in Latvia
• Business Restructuring via Offshore entities
• Exit Strategy & IPO
• Problem solving in Latvia | by Novasigma Accounting & Law partner offices

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Incorporation services in Latvia

• New company formations in Latvia
• Ready-made-companies / Vintage companies available
• Company Closures and liquidations in Latvia

Company administration in Latvia

• Legal registration address service for an Latvian company
• Company secretarial service
• Nominee director services
• Nominee shareholder services

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Some of the common domestic accounting services we provide in Latvia include

• Bookkeeping and accounting
• Invoicing and payments
• Annual accounts
• Monthly Reconciliation
• Monthly financial statements (including balance sheet and income statement)
• Payroll services
• Income and tax return
• Management accounts

Value Added Tax (VAT)

• VAT registration
• Advice on VAT scheme options
• VAT returns and declarations

Audit

• Annual accounts in view of an annual audit and attend accounting audits

Additional business services in Latvia (by Novasigma Certified Partners)

• Virtual office services in Latvia
• Hosting services
• Real estate in Estonia (offices, trade facilities, industrial)

Legal services in Latvia for all Novasigma Clients including companies and their owners and directors

Novasigma has built in Latvia a team of lawyers, associates and legal advisers to assist our clients with a business and tax planning, overseas business operations, risk management and other legal matters. Primarily focused on business transactions, Novasigma Accounting & Law corporate attorneys are a great asset to a small and large businesses. With a background on corporate law, our corporate lawyers and legal advisers have an in depth knowledge on the transactions that may put your business at risk of litigation. These include contracts and negotiations, taxation laws, business structuring, buy/sell agreements, and intellectual property, among others.

PLEASE CONTACT US TO SCHEDULE A MEETING WITH THE NOVASIGMA CONSULTANT

Banking services in Latvia

• Business bank accounts in Latvia
• Personal bank account opening for business owners
• Payment service providers
• Investment solutions
• Alternative banking solutions

Financial services in Latvia

• Debt collection services
• Invoice funding & cash flow solutions
• Factoring
• Leasing
• Wealth management

Insurance services in Latvia

• Insurances for corporations
• Insurances for business owners and their families

PLEASE CONTACT US FOR MORE INFORMATION ABOUT BANKING & FINANCIAL SERVICES IN LATVIA

• Meeting with Novasigma before applying residency in Latvia
• Assistance in applying a tax residency from Latvia
• Personal bank account in Latvia
• Address service available for Novasigma business clients