The formation of a company in Latvia is a complex process which involves various compliances. To register company in Latvia, you will have to go through several steps such as deciding company structure, filing Articles of Association, opening a corporate bank account and ensuring you remain compliant after incorporation with Latvia’s local regulations regarding the Latvia company formation. Tetra Consultants aims to make this whole process of Latvia company formation to operation a seamless and hassle free one for our clients. We provide all the services necessary for our clients to thrive in the Latvia business environment.
Step by Step Process of Latvia company formation
Below is the step by step process for Latvia company formation:
Deciding a suitable business structure
- There are several company structures available to incorporate as in Latvia, each with their own advantages and disadvantages. However, common favourites among foreign entrepreneurs are limited liability companies, joint stock companies and representatives offices. Each structure has their own minimum amount of share capital required, incorporation fee, corporate tax rates and so on. Therefore, this is a vital stage in the registration process and business owners must ensure their choice aligns with their business goals as well as the future of the company.
Preparation and filing of documents
- At the next stage, a draft of the Articles of Association should be prepared and then submitted accordingly to the Latvia company register online portal. Subsequently, upon completion and acceptance of the AOA, the company should receive a certification of incorporation, memorandum and other corporate documents to their preferred address.
Business licence applications
- Depending on the nature of business activity, you may be required to apply for certain business licences in order to operate. Some examples of business licences and their respective industries include:
- Financial service industries are required to obtain financial licences from the Financial and Capital Market Commission (FCMC).
- Telecommunications providers including internet service providers and other communication service providers are required to obtain licences from the Public Utilities Commission (SPRK).
- Transport and logistics companies might be required to obtain licences from the Road Transport Administration (CSDD) of the Ministry of Tranport
Corporate bank opening
- Once the company is incorporated it is time to proceed with the corporate bank account opening process.
- Upon researching a suitable bank in Latvia, you will be required to submit proof of documents such as the certificate of incorporation, memorandum of association, articles of association, identification documents, proof of address, business plans and tax registration documents.
Limited liability company in Latvia
- The minimum share capital amount for limited liability companies in Latvia is 2800 EUR, this can be paid through cash or in kind which is through forms of property. To register as an LLC in Latvia, there must be a minimum of one founder with no maximums, founders can be residents or non-residents. As an LLC, the company and business owners have separate legal identities, meaning that shareholders will not be held personally liable for the debts, liabilities of the company.
Advantages and Disadvantages of Latvia Company Formation
Advantages of Latvia Company Formation
- Strategic location: Latvia being strategically located in the Baltic region allows both access to European and non-european markets, spoiling business owners for expansion opportunities. Its geographical location provides opportunities with not only Northern, Eastern Europe but Russia and central Asia.
- EU membership: As a member of the European Union, Latvia benefits from the EU legislation policies, regulations that incentivize free movement of goods and services within the EU.
- Favourable tax system: Latvia has a competitive tax system that attracts business owners from all over the world. Corporate income tax is set as 20% which is relatively low in comparison to other European countries. In addition, double taxation treaties are also in place with several countries, allowing businesses to benefit further from tax reductions when conducting international business activities. There is also no withholding tax on dividends distributed to non-resident shareholders of a company.
- Ease of doing business: various reforms in Latvia have been implemented to ensure an environment attractive to foreign entrepreneurs. The country has simplified procedures for business registration, streamlined tax administration and has made efforts to reduce bureaucracy.
Disadvantages of Latvia Company Formation
- Limited market size: Latvia possesses a relatively small domestic market with a population of only 1.9 million people. As a result, companies heavily dependent on local demand may find it difficult to thrive.
- Limited skilled workforce: Latvia has experienced a significant amount of brain drain over the years whereby the younger, skilled working professionals tend to emigrate. As a result this can cause difficulties when it comes to finding and retaining qualified talent within the country.
Funding and Support in Latvia
As a company incorporated in Latvia, it may be useful to know about the different grants, subsidies and support efforts made by the government to cultivate an environment where foreign entrepreneurs can thrive.
Some examples of these initiatives include:
- EU Funding Programs: Latvia, as an EU member state, has access to various funding programs and grants offered by the European Union. These programs ranger from support business development, innovation, research and development (R&D), and regional development.
- Investment and Development Agency of Latvia (LIAA): LIAA is a government institution that provides support services and information for businesses operating in Latvia. They offer advisory regarding matters of funding opportunities here in Latvia. Additionally, they provide support for other business functions like business development, market research, export promotion, and investment attraction.
- Latvian Guarantee Agency (LGA): LGA provides guarantees to facilitate access to financing for small and medium-sized enterprises (SMEs) in Latvia. These guarantees assist small and medium businesses in the process of securing loans from banks and other financial institutions.
- Startup Support: Latvia has recently developed their start up scene in the recent years through various programs and initiatives supporting the development of startups. These include startup incubators, accelerators, and investment funds that provide mentoring, networking opportunities, and financial support for early-stage ventures.
- Latvian Development Financial Institution (ALTUM): ALTUM is a state-owned institution that offers a range of financial products and support schemes for businesses. The financial products include loans, guarantees, and venture capital investments to support business growth, innovation, and export activities.
- Research and Innovation Grants: Businesses engaged in research and innovation can access grants and funding through programs such as Horizon Europe, Eurostars, and the Latvian Science Council. These grants aim to support R&D projects, collaboration with research institutions, and technology commercialization.
- In conclusion, Latvia company formation can have its own unique pros and cons. Tetra Consultants aims to assist our clients not only in the incorporation stage of their journey here in Latvia but post-incorporation which can be done through assistance in tax and accounting related matters. With an experienced team, Tetra Consultants is confident in ensuring our client needs are met.
- Contact us to know more about company registration in Latvia and our team will revert within 24 hours. Tetra Consultants team of personnel has years of experience providing services with respect to offshore company incorporation, corporate bank account opening, nominee director services, regulatory compliance consulting as well as applying for various offshore financial licenses.