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Company registration in Latvia. Limited liability company – SIA. Service offer

Major advantages of doing business in Latvia. Budget for setting up business in Latvia. Time frame for setting up business in Latvia. Company incorporation. Company structure. Company administration.

Major advantages of doing business in Latvia

High standard of living and public safety, stable and reliable legal system;

Ability to obtain a European VAT number;

20% corporate income tax rate (no tax is paid until dividends are distributed);

Attractive residence permit programmes.

Budget for setting up business in Latvia

Services
Fees (EUR)
Total cost of incorporation (including preparation and submission to the register of all necessary documents, translation and notarization, and making of the company seal)
4 800
Provision of a registered office address during the company’s first year
3 800
Opening of a temporary bank account for depositing the share capital
from 1 800
Payment of share capital
2 800
(minimum share capital)

Time frame for setting up business in Latvia

Company registration – from 1-2 weeks;

Bank account opening – from 1 month (depending on the bank).

Company incorporation

The most common type of companies registered in Latvia is a limited liability company (SIA).

The company incorporation process includes the following steps:

1) It is necessary to select:

  • company name to be checked for its availability (at least two names);
  • company structure (director, shareholder);
  • share capital (normally the min. EUR 2 800) and distribution of participations between the shareholders;

*In the case of a reduced share capital (not exceeding EUR 2 799), only individuals can be shareholders.

  • company’s type of business: detailed description for stating it in the constitutive documents;
  • company’s geography of business and main counteragents.

2) Payment of fees

3) It is necessary to provide the following documents:

  • copies of passports of the director and shareholder – with an apostille and a notarized translation into Latvian;
  • proof of address.
BUT for a document issued by the EU, EEA, Swiss Confederation, Russia, Belarus, Ukraine, Moldova, or Uzbekistan, an apostille/legalization is not required!
  • if the shareholder is a legal entity, then a full set of constitutive documents is required, including a certificate of good standing (or its equivalent) for a company older than 1 year, and a recent extract from the register in original; the documents for a corporate shareholder must disclose the ownership structure right up to the ultimate beneficial owner.

For each company, a contract for administration and audit services is signed with the beneficial owner and a client information form is completed.

4) Opening of a bank account for the payment of share capital

To pay the share capital, it is necessary to open a temporary account at a Latvian bank (company incorporation requires providing the relevant bank statement to the Register of Companies).

When opening a temporary account, banks request as much information as they normally do in the case of opening a current account for business transactions, including details of the company’s beneficial owners – the opening of an account is not included in the company incorporation cost and is payable for separately depending on the selected bank.

If a temporary account for the payment of share capital is not “converted” into a permanent current account, then a current account will need to be opened elsewhere, with all funds to be transferred there from a temporary account.

Company incorporation time frame is approximately 4 working days from the date of submission of all documents to the Register. The exact incorporation time depends on how quickly documents are signed by the directors and initial shareholders, and on the procedures at the bank where a temporary account is to be opened. If a company is registered without a visit to Latvia, the directors and initial shareholders must give the registering agent a notarized power of attorney required for company registration purposes.

Company structure

Directors

A director can only be an individual; the minimum number of directors is 1. There are no statutory requirements as to the residency of the director.

The details of directors are publicly available.

Shareholders

A shareholder can be either an individual or a legal entity. There are no statutory requirements as to the residency of the shareholder.

The details of shareholders are publicly available.

IMPORTANT: in the case of a reduced share capital (not exceeding EUR 2 799), only individuals can be shareholders – no more than 5 people.

Beneficial owners

The amendments to the Commercial Law of the Republic of Latvia, that came into force on 13 July 2011, regarding beneficial ownership information require holders of shares/participations in a Latvian company to provide information that allows to identify the company’s beneficial owner.

If a shareholder is an individual, he is by default considered the beneficial owner. If an individual is not a beneficial owner, he must notify the company accordingly (if he has acquired at least 25% of the company’s shares/participations).

If a shareholder is a legal entity, then in case the following conditions are met:

  1. the shareholder is not a company registered under the laws of an EU Member State, and
  2. the shareholder holds 25% of shares/participations in a company,

such shareholder is obliged, within 14 days, to give the company a notice of the persons considered to be its founders, members or persons of similar status who, at the time of giving the notice, benefit from the existence of this legal entity.

Within 14 days from the date of receipt of such notice, the company submits it to the Latvian Register of Companies.

This information is not public and is only accessible to law enforcement agencies and supervisory authorities within the framework of tax administration, public procurement, and public-private partnership.

Share capital and shares

The minimum share capital of a Latvian company is EUR 2 800. The capital must be fully paid before registration.

IMPORTANT: one can register a company with a reduced share capital (not exceeding EUR 2 799), however, unlike previously when the pre-incorporation payment of such a capital was optional (and, consequently, did not require opening a temporary bank account to deposit the capital), it is now impossible to register a company (even with a reduced capital) without depositing the share capital into a bank account.

Company administration

Every year, Latvian companies are required to submit to the state Register of Companies an Annual Return containing the annual financial statements. The return must be submitted by 30 April.

To have these returns prepared, it is necessary to provide underlying documentation, invoices issued and paid by the company, contracts, and bank account statements.

Аudit

A mandatory audit is required for:

  • large and medium-sized companies,
  • all entities with securities traded on a regulated market.

An audit must also be conducted for consolidated financial statements prepared by the parent company of a group.

Small companies have different options for conducting an audit of financial statements:

  1. a statutory audit must be performed;
  2. a review of financial statements must be performed (by certified auditors);
  3. no audit is required.

A statutory audit must be performed if one of the following conditions for a small company is met:

  1. it exceeds two of the following criteria for two consecutive years:
    1. total balance sheet – EUR 4 000 000;
    2. net revenue – EUR 8 000 000;
    3. an average of 50 employees in the financial year;
  2. it is a parent in a group of companies;
  3. it is a public person’s company or its subsidiary or a public-private capital company; or
  4. it elects to recognize certain financial statement items in accordance with IFRS.

A review of financial statements must be performed if the above conditions for statutory audit do not apply to a small company and if it exceeds at the balance sheet date two of the following criteria for two consecutive years:

  • total balance sheet – EUR 400 000;
  • net revenue – EUR 800 000;
  • an average of 25 employees in the financial year.

In all other cases, an audit for small companies is not required.

Сorporate income tax

The corporate income tax rate is 20%.

No corporate income tax is paid until dividends are distributed. For this purpose, deemed distribution of dividends includes non-business expenses, interest payments exceeding certain limits, transfer pricing adjustments, assets transferred abroad, etc.

Gains from the sale of assets are included in the general tax base. Profit from the sale of shares may be exempt provided they have been held for at least 36 months. Received dividends can be excluded from the tax base, except for dividends received from blacklisted countries.

The corporate income tax period is one month. In some cases, the tax period can be a quarter. In general, a tax return is submitted monthly, if there is a taxable base.

In any case, a tax return must be filed for the last month of the financial year. If a taxable base arises, the tax must be paid by the 20th day of the month following the reporting one.

VAT

The standard VAT rate is 21%. Some goods and services are subject to the reduced rates of 12% and 5%.

VAT returns are submitted quarterly.

Withholding tax

Payment of dividends, interest, and royalties is not subject to withholding tax unless such payment is to a blacklisted country. In this case, the tax is withheld at the rate of 20%.

To assess the company’s tax burden, we recommend seeking tax advice (which can be arranged upon request).

Fees[1]

Services
Fees
Total cost of incorporation, including the application for permission to set up a company with foreign participation, notary fees, preparation and provision of the company’s original constitutive documents, share issue documents, and the company seal
EUR 4 800
Provision of a registered office address during the company’s first year
EUR 3 800
Opening of a temporary bank account for depositing the share capital
from EUR 1 800
Payment of share capital
EUR 2 800
Annual maintenance (starting from the second year), including provision of a registered office address
EUR 4 100
Preparation and submission of financial statements
USD 100 – 400 / hour
(based on time spent)
Compliance fee
Payable in the cases of:
- incorporation of a company,
- renewal of a company,
- liquidation of a company,
- transfer out of a company,
- issue of a power of attorney to a new attorney,
- change of director / shareholder / beneficial owner, except the change to a nominee director / shareholder,
- signing of documents.
USD 350 (standard rate, includes the check of 1 individual)
+ USD 150 for each additional individual (director, shareholder, or beneficial owner) or legal entity (director or shareholder) if such legal entity is administered by GSL
+ USD 200 for each additional legal entity (director or shareholder) if such legal entity is not administered by GSL
USD 450 (rate for high-risk companies, includes the check of 1 individual)
USD 100 (signing of documents)

[1] The fees are valid as at July 2024.

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EUR 4 800
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