Open Company in Latvia: Legal Steps, Taxes, and Best Practices   

• Open Company in Latvia is a desirable choice for business people who want to set up a company in a strategic and business-friendly location. Being a member of the European Union, Latvia offers access to a market of more than 447 million consumers, backed by an efficient registration process that only takes four business days. The tax-friendly nature of the nation, with a 0% corporation tax on earnings that are reinvested, and a multilingual workforce make it a favorite among foreign investors. 

• To register company in Latvia, firms must complete formalities such as selecting an appropriate structure (e.g., SIA or AS), preparing incorporation documents, and meeting share capital requirements. With more than 20,000 new businesses registered every year in Latvia, the country remains a magnet for international entrepreneurs. This article explains the legal procedure, tax requirements, and best practices to observe when registering a company in Latvia. 

Legal steps to open company in Latvia 

Step 1: Understanding business requirements 

• Our Tetra Consultants’ specialists first learn about your business objectives, sector, and operational requirements. We provide advice regarding the most appropriate corporate structure that suits your case, either the Limited Liability Company (SIA) or the Joint Stock Company (AS). This is absolutely certain to satisfy your business purpose. This offers you a proper understanding of Latvia’s legislations and framework in action. 

Step 2: Strategic planning and documentation 

• In addition, we assist in preparing all documents that are needed for incorporation, including the Memorandum and Articles of Association, resolutions of shareholders, and proof of deposit of share capital. Our specialists ensure that these documents are compliant with Latvian Commercial Law and are ready to be filed with the Commercial Registry. 

Step 3: Company name reservation 

• Tetra Consultants performs a comprehensive name search to verify that your preferred company name is distinctive and meets Latvian naming laws. This involves searching for conflicts with registered trademarks or entities through our international trademark registration services. 

Step 4: Filing for incorporation 

• After all the documents are ready, we process the submission with the Latvian Commercial Registry using its online platform. Our experts maintain precise filing to prevent delays and obtain your Certificate of Incorporation within the set timeframe. 

Step 5: VAT registration 

• Where relevant, we sign up your company for Value-Added Tax (VAT) on the State Revenue Service’s Electronic Declaration System. This is an important process for companies engaged in taxable products or services. 

Step 6: Corporate bank account opening 

• Once incorporated, Tetra Consultants assists in the corporate bank account opening. With our affiliations with quality banks, we introduce your company to compliance departments and negotiate the terms to make the experience as smooth as possible. In many situations, directors and shareholders do not need to travel. 

Step 7: Getting licenses and permits 

• For companies that need specific licenses, including cryptocurrency or electronic money institution (EMI) licenses, our experts offer full support in preparing applications and communicating with regulatory bodies. 

Step 8: Registered office establishment 

• We assist in establishing a registered office address in Latvia, the correspondence requirement with government authorities.  

Step 9: Compliance support on an ongoing basis 

• After incorporation, Tetra Consultants ensures that your company is Latvian law-compliant by handling annual filings, preparing financial statements, and filing tax returns on your behalf. 

Tax obligations to open company in Latvia 

Corporate Income Tax: 

• The overall corporate tax rate in Latvia is 15%, which is charged for the profits of resident companies per annum. It is only charged if profits are distributed as dividends. Companies are qualified to receive a flat-rate regime in which companies that are in operation for not exceeding 12 months can choose to pay corporate tax on turnover of 20% instead of profits. 

Value Added Tax (VAT): 

• The standard rate of VAT in Latvia is 21%, while a reduced rate of 12% is levied on specific goods, like medical equipment. Firms have to be registered for VAT if their taxable turnover exceeds a set threshold. 

Social security contributions: 

• The employers must contribute to social security, equal to 34.09% of the gross earnings of an employee, comprising employer and employee contributions. This funds several social benefits such as pensions and unemployment insurance. 

Personal income tax:  

• Employers are required to deduct personal income tax from wages of employees, which may be 20% to 31.4% depending on the level of income. 

Capital gains tax:  

• Capital gains arising from property sales are taxed at the corporate income tax rate of 15%. Capital gains from selling shares are exempt from taxation in general. 

Stamp duty: 

• When getting the property into a company name, there is a 2% stamp duty on either the sales price or cadastral value, whichever is highest.  

Tax compliance: 

• Companies have to submit annual returns of tax within four months from the end of their accounting year, and all companies are to submit standalone returns without consolidation. 

Best practices to follow to open company in Latvia  

Select the appropriate legal structure 

• Selecting the appropriate legal form is crucial for success in your business. Latvia offers quite a number of options, such as Limited Liability Companies (SIA), Joint Stock Companies (AS), branches, and partnerships. They are all different in respects to liability, taxation, and operating flexibility. Consider your business objectives thoroughly and consult experts so that your choice will be part of your long-term plan. 

Prepare comprehensive documentation 

• Make sure all the necessary documents, including the Articles of Association, Memorandum of Association, share capital deposit proof, and registered office address, are prepared correctly. Documents have to meet Latvian legal requirements and be provided in Latvian. It might be advisable to involve professionals to preclude mistakes and guarantee compliance with local legislation. 

Obtain a registered office address 

• It is obligatory for all enterprises to have a registered office in Latvia. This office is used as the official address for contacting the government institutions. Select a sound service provider or physical office that complies with regulatory expectations. 

Understand tax obligations 

• Get to know Latvia’s tax laws, corporate income tax, VAT registration, and social security contributions. Registering with the State Revenue Service and acquiring a Tax Identification Number (TIN) is necessary for compliance. Hiring tax experts may assist in maximizing your tax strategy. 

Comply with share capital requirements 

• Depending on the structure you choose, make sure to satisfy the minimum share capital threshold. For instance, an SIA has a minimum of €2,800 in share capital, while an AS has a minimum of €35,000. Pay the necessary amount into an interim bank account prior to registration. 

Get required permits and licenses 

• Depending on your industry, you might require specific permits or licenses to operate in Latvia legally. Investigate what’s required in your industry and obtain these permits either during or after incorporation to prevent operating delays. 

Conclusion 

• Open a company in Latvia with Tetra Consultants as it makes the whole process easy, offering a smooth experience to businessmen. Our professional staff offers a full array of services from choosing the most appropriate business structure to preparing and submitting all required incorporation documents. We also help in securing vital licenses, opening corporate bank accounts, and maintaining compliance with local laws.  

• With our knowledge, you can confidently navigate the intricacies of Latvian business regulations. Tetra Consultants will be your guide to helping your business thrive in Latvia, with continued support for tax requirements and compliance needs. With us as your business partner, you can concentrate on developing your business while we deal with the complexities of business registration and management.  

• Contact us to know more about how you can proceed with company formation in Latvia and our team will revert back in 24 hours.