Latvia

ABOUT LATVIA

Latvia at a Glance

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

Doing Business in Latvia

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

LATVIA – OVERALL RANK 2017: 9th (Europe)	53/100 points
1. Ease of incorporation process (bureaucracy, costs, time frame)	2/5 points
2. Privacy level of shareholders and investors	2/5 points
3. Privacy level of company directors and signatories	1/5 points
4. Availability of the private equity funding	2/5 points
5. Availability of the public and / or bank sector financing instruments	2/5 points
6. Reputation of the country (trading across borders with a company registered in this country)	2/5 points
7. Easiness of recruiting professional staff (professionalism, average pay, protection against dismissal)	3/5 points
8. Easiness of getting business premises (price, availability)	4/5 points
9. Suitability for production of physical products	3/5 points
10. Suitability for producing services	3/5 points
11. Size of the home market B2C (population and purchasing power)	1/5 points
12. Size of the home market B2B and public sector purchasing services from local businesses	2/5 points
13. Exporting physical products (markets nearby, logistics and toll)	3/5 points
14. Exporting services	4/5 points
15. Immaterial rights (compared to other countries)	4/5 points
16. The level bureaucracy or corruption during business operations	5/5 points
17. Company taxation	4/5 points
18. Dividend taxation, withholding taxes and tax treaties	2/5 points
19. Easiness of selling a business	2/5 points
20. Easiness of closing down a company	2/5 points

The World Banks “Ease of doing business ranking”

Overall rank:	rank 23 (-2 since 2014)
- Starting a business:	rank 36 (Average processing time 12.5 days)
- Dealing with construction permits:	rank 47 (Average processing time 149 days)
- Getting electricity:	rank 89 (Average installation time 108 days)
- Registering property:	rank 32 (Average registration time 18 days)
- Getting credit:	rank 23
- Protecting minority investors:	rank 49
- Paying taxes:	rank 24 (Average company tax from profits 35%, Average time used for taxation 193 hours / year)
- Trading across borders:	rank 28 (Average export cost / container: $600, Average processing time 10 days. Average import cost / container: $801, average processing time 11 days)
- Enforcing contracts:	rank16 (Average 469 days, average cost from standing amount 23.1%)
- Resolving insolvency:	rank40 (Average time processing bankcruptcy: 1.5 years)

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:

How to terminate business:

Company may be sold
Company Dissolution process
Filing bankruptcy

Residency and Moving to Latvia

Freedom Index

Overall rank:	32 (64/100 points)
- Property:	50/100 points
- taxes:	85/100 points
- Speech:	94/100 points
- Government:	55/100 points
- Guns:	45/100 points
- Drugs:	30/100 points
- Corruption:	53/100 points
- Inflation:	80/100 points
- Business:	83/100 points

Taxation in Latvia

Corporate taxation in Latvia

Taxable income	15%
Taxation of dividents	4.89%
VAT registration	When yearly overturn exceeds EUR 50.000
VAT rates	21% / 12% / 0%
Tax at source	0% (EU- ad tax treaties / 10% Outside EU)
- Dissidents	0%
- Royalties	0-10%
- Interest	0-10%
- Technical services	0-10%
Transfer tax	0%
Capital gains tax	Treated as normal income
Real property tax	0.1% - 2%
Social security	33%
Capital duty	0%
Stamp duty	0%
Tax treaties	Over 57 countries

Personal taxation

National income tax	23%
Social security;;30.58% (Employers pays 10.5%)
VAT	21%/125%/0%
Capital income tax	10%
Capital gains	15%
Net wealth / Net worth tax:	0%
Real property tax	0.2% - 3%
Inheritance tax	0%
Transfer tax	0%
Vehicle tax	0%

OUR OFFERS IN LATVIA

COMPANY DISCLOSURE SOLUTIONS
INTERNATIONAL BUSINESS CONSULTING
Latvia - Trading Company Formation
TAX & WEALTH PROTECTION PLAN

NOVASIGMA IN LATVIA

Consulting & advisory services

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, administration & business services in Latvia

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 for Latvian companies and business owners

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