Company Formation in Latvia

Latvia is a popular country for foreign investors to establish companies due to its status as a European Union (EU) member, low business costs, and business-friendly tax structure. Foreigners, in particular, The SIA While choosing structures such as an SIA (Limited Company), options for establishing a joint-stock company, individual entrepreneurship, and branch offices are also available. During the company formation process, the first step is to apply to the Latvian Commercial Register. At the time of application, details such as the company's area of activity, name, address, and manager information must be provided. Following this, registration with the Latvian tax authorities (SRS) is required, along with obtaining a VAT number. Opening a bank account and depositing the minimum capital amount are also essential steps in the process. The minimum capital for an SIA company is 2800 Euros; however, under certain conditions, only 50% of this amount needs to be deposited at the time of application. The company formation process is typically completed within 5-7 business days, and most documents can be submitted digitally. Additionally, the process can be conducted with English language support, allowing foreign entrepreneurs to complete their transactions smoothly. At CoWorldHub, we offer consulting services for all stages required for setting up your company. We assist with commercial registry registration, tax applications, banking transactions, and other legal requirements. By providing fast and reliable support, we ensure a seamless process to help you establish your business in Latvia without any complications.

Advantages of Setting Up a Company in Latvia

Latvia offers numerous opportunities for foreign investors due to its business-friendly policies, low operating costs, and European Union membership. The direct access to the EU single market allows companies established in Latvia to trade freely across Europe. Its strategic geographical location also makes Latvia a crucial hub for trade between the Baltic region and Eastern Europe. The tax system is designed to support entrepreneurs. Particularly, the 0% corporate tax on reinvested profits encourages business growth. For entrepreneurs seeking profitable investments, the digitalized and efficient tax systems simplify the process. Additionally, Latvia has a professional and educated workforce with lower costs compared to other European countries, enabling businesses to keep expenses minimal. The company formation process is extremely fast and easy; most application procedures can be completed online. Furthermore, legal provisions in Latvia facilitate residence permits for foreign investors establishing companies. All these advantages make Latvia an attractive choice for startups, small and medium-sized enterprises (SMEs), and international investors.

Requirements for Establishing a Company in Latvia

The process for those looking to establish a company in Latvia is straightforward and efficient. The first step is to determine the type of business (the most common option SIA – Limited Liability Company model). Minimum capital requirement for establishing a company 2800 Euro At least 50% of this amount must be paid at the time of establishment. A registered address in Latvia is required, and the company must have at least one director. During the establishment process, obtaining a tax identification number and registering the business Latvia Trade RegisterIt is done through the Latvian Commercial Register. Incentives for foreign investors and Latvia’s low corporate tax rate (20%) offer attractive advantages for entrepreneurs. As a special permit or license may be required depending on the field of activity of the business to be established, it is important to investigate these conditions before applying. The legal procedures for the company, on average 5-10 business days. are completed within this period, and all procedures online can be conducted.

Required Documents for Company Formation in Latvia

Starting a business and establishing your own company in Latvia offers numerous advantages for entrepreneurs. Especially as a member of the European Union with tax incentives, Latvia is an attractive option. However, to successfully complete this process, you need to prepare certain documents thoroughly. Below, Required Documents for Company Formation in Latvia and the key points to consider in this process can be found below. Memorandum of Association

• It is an official document containing information such as the name, purpose, business field, and shareholders of the company to be established.
• It must be signed by all partners.

Articles of Association

• It is the document that defines the management structure and operational rules of the company.
• It must be prepared in accordance with Latvian commercial laws.

List of Shareholders

• The shareholders of the company and the share percentage held by each shareholder are specified in this document.
• It must be notarized.

Statement of Paid Capital

• It is a document proving that the company's initial capital has been paid.
• A bank statement or bank letter is attached.

Proof of Registered Address

• indicates that the company has a registered address in Latvia.
• It can be submitted with a lease agreement or title deed.

Managerial Authorization Document

• If a transaction is to be conducted through a representative or proxy, this document must be submitted.
• Notarization is mandatory.

Identification Documents

• Notarized copies of the founders' and directors' passports or identification documents are required

Tax Registration Certificate

• It is the document that shows the company’s registration with the Latvian tax authority.
• Obtaining a tax identification number is mandatory.

Documents for Opening a Corporate Bank Account

• It contains the details of the bank account opened in the name of the company.
• An official letter obtained from the bank is included.

Latvia Work Permit or Residence Permit (If Required)

• Foreign partners may need to apply for a residence permit to work permanently in Latvia.

Things to Consider When Establishing a Business in Latvia

The process of establishing a business in Latvia is advantageous for many entrepreneurs due to its fast-paced nature and compliance with European Union standards. However, there are several essential steps to pay attention to during the process. First and foremost, selecting the type of company is crucial. A limited liability company (SIA) is the most commonly chosen model, offering low capital requirements. After deciding on the business type, it is mandatory to register with the Commercial Register and submit the necessary documents (such as the articles of association and manager details). Opening a bank account and depositing at least the minimum capital is a prerequisite for activating your company. Therefore, it’s beneficial to research banks operating in Latvia and choose the one that best suits your business needs. Additionally, conducting a name search in advance to ensure your chosen name is not already in use by another company in Latvia is essential. Having a well-defined business plan and setting long-term strategies can make it easier to prepare the documents required during the registration process. Tax compliance plays a critical role in business management. While tax rates in Latvia are reasonable, registering for VAT and submitting regular declarations are mandatory. If you plan to employ staff, it is important to adhere to legislation on insurance and workers’ rights. Moreover, closely following local regulations and working with a professional accounting or legal advisor to ensure compliance is recommended. This way, you can avoid potential mistakes and delays in the company setup process and focus on growing your business smoothly.

Why You Should Choose Latvia to Start a Business?

Latvia has become an attractive destination for entrepreneurs looking to establish a business in Europe due to its strategic location, business-friendly policies, and low operating costs. The country’s membership in the European Union provides entrepreneurs with access to all EU markets and opportunities for free trade. Additionally, Latvia, with its strong economy and modern infrastructure among the Baltic states, serves as an important hub in the trade and logistics sectors. Latvia offers investors appealing tax rates; corporate tax is only applied to distributed profits, and tax exemption is granted for undistributed profits. This allows companies with growth objectives to operate advantageously. The low cost of living in Latvia and the qualified workforce provide entrepreneurs with the chance to find skilled employees within budget. Moreover, Latvia stands out with its digital infrastructure that facilitates the process of starting and operating a business. Most official transactions can be completed quickly through e-government platforms, and the company formation process typically takes 3-5 business days. Chambers of commerce, investment agencies, and business associations also provide guidance to new ventures, enabling the establishment of strong partnerships in the local market. All these advantages make Latvia an ideal choice for investors looking to start and grow a business in Europe.

How Long Does It Take to Establish a Company in Latvia?

Establishing a company in Latvia is a fast and practical process. The standard setup time for a limited liability company (SIA) usually takes between 3 to 5 business days. The process begins with the complete preparation of application documents and their submission to the Latvian Commercial Register. To expedite the establishment process, bank accounts can be opened in advance, and the capital commitment can be deposited. Ensuring that documents are thoroughly prepared, notarized, and correctly submitted for trade register registration prevents delays in the process. The option to apply online further accelerates the process. At CoWorldHub, we provide step-by-step support for your company establishment in Latvia, helping you save time by minimizing bureaucratic procedures.

Types of Companies You Can Establish in Latvia

Latvia is an ideal option for entrepreneurs looking to establish a business due to its membership in the European Union (EU), strategic geographical location, and attractive tax advantages. When starting your company, it is crucial for the success of your business plan to choose the type of company that best suits your needs from the various options available in Latvia. Below, we explain the most common types of companies you can establish in Latvia and the advantages of each. Limited Company (SIA – Society with Limited Liability) This type is the most commonly preferred company structure. It is suitable for small and medium-sized enterprises.

• Minimum Capital: 2,800 Euros (In some cases, it can be reduced to as low as 1 Euro.)
• Liability: Partners are only liable up to the amount of their capital contributions.
• Taxation: Tax is applied when profits are distributed (usually at a rate of 20%).
• Advantages: Limited liability, low capital requirements.

Joint Stock Company (AS – Joint Stock Company) It is suitable for larger-scale enterprises and companies planning to go public.

• Minimum Capital: 35.000 Euro
• Liability: Shareholders are only liable for the amount they have invested.
• Taxation: Taxes are levied on profit distribution and capital gains.
• Advantages: Possibility of public offering and growth potential.

Sole Proprietorship (IS – Individual Merchant) It is the most suitable option for individual entrepreneurs.

• Ownership: It is established by a single individual.
• Liability: The founder is liable with all of their assets.
• Taxation: Personal income tax is applied on the company’s income.
• Advantages: It is quick and inexpensive to set up.

Branch (Filiale) It is a branch established by a foreign company to operate in Latvia.

• Capital: It does not require separate capital.
• Liability: The parent company is liable.
• Taxation: It is subject to tax treaties between the country of the parent company and Latvia.
• Advantages: Opportunity to operate without the need to establish a new company.

Partnership (Partnership – Pilnsabiedrība and Limited Partnership – Komandītsabiedrība) It is a structure in which multiple entrepreneurs establish a business together.

• General Partnership (Pilnsabiedrība): All partners are fully responsible for the company's debts.
• Komandītsabiedrība (Komandit Ortaklık): At least one partner has limited liability, while one partner has full liability.
• Taxation: Income tax is applied on the profits of the partners.
• Advantages: The opportunity to share labor with partners and increase capital.

Special Support for Startups and Technology Companies Latvia offers various incentives to attract technology and innovation entrepreneurs. With the startup visa and investor support programs, you can easily establish a company.

• Vergi Avantajları: Certain startups are eligible for tax reductions in the initial years.
• Fon Desteği: Grants are provided by the Latvian government and EU funds.

When starting a business in Latvia, selecting the appropriate company structure that suits the type of your enterprise is crucial for your growth strategy. For small businesses, the SIA (Limited Liability Company) is the ideal option, while the AS (Public Limited Company) structure may be preferred for larger-scale investments. Branch and partnership structures are attractive options for those looking to collaborate with foreign companies. Once you determine the structure that aligns with your business plan, CoWorldHub is ready to support you throughout the entire process. Start Your Company Formation in Latvia with CoWorldHub! We are with you at every step of establishing your company in Latvia, from the required documents to registration processes. To determine the most suitable type of company for you and to expedite your application process, please reach out to us!

What is a Limited Liability Company in Latvia?

In Latvia Limited Liability Company, In Latvian, it is known as “Sabiedrība ar Ierobežotu Atbildību” (SIA) and is the most common type of company for small and medium-sized enterprises. The SIA structure limits shareholders’ liability to the amount of their capital contributions to the company, meaning their personal assets are protected. The minimum capital requirement for establishing an SIA is set at 1.00 EUR, offering entrepreneurs a low-cost entry point. Company shares can be transferred, but they cannot be publicly traded. The commercial activities of SIAs in Latvia are regulated by the Latvian Commercial Law, and establishing an SIA requires a shareholder agreement, founding documents, and the appointment of a board of directors. Establishing an SIA is advantageous for both local and international investors in Latvia, as this structure provides opportunities such as tax incentives, access to European markets, and flexible business management. Additionally, SIAs operating in Latvia are subject to a 20% corporate tax on profits, and internal procedures are supported by simplified regulatory measures.

Cost of Starting a Business in Latvia

Latvia offers an opportunity to start a business at lower costs compared to other European countries. While costs vary by company type, establishing a limited liability company (SIA) is generally quite affordable. The minimum capital requirement for company formation is around 1,000 Euros, although small-scale entrepreneurs have the option to set up a company with as little as 1 Euro in capital. State fees and notary expenses are also relatively low. Company registration fees range from approximately 150-200 Euros, and since the process is largely digital, additional time or intermediary costs are minimized. Labor costs are more economical compared to Western European countries; average salaries and social security expenses in Latvia are lower, which helps reduce operating costs. Additionally, rental and energy costs are below the European average. In major cities like Riga, office and commercial space rentals are available at affordable prices, and industrial areas offer economical solutions for larger businesses. Thanks to Latvia’s digital infrastructure and government support, entrepreneurs can optimize startup costs and begin operations quickly.

Starting an E-Commerce Company in Latvia

Latvia, as a member of the European Union with low tax rates, provides an ideal environment for e-commerce businesses. Company formation is quick and can be completed digitally; for foreign entrepreneurs, the process is usually finalized within a few weeks. To establish your e-commerce business, you first need to register a company in Latvia. The most commonly preferred company type The SIA (Limited Liability Company) is the most common choice, with a minimum capital requirement of 1 Euro. To register the company, you apply to the Latvian Commercial Register, and thanks to online processing options, there is no need to be physically present in Latvia. After establishing your company, you will need to open a business bank account, obtain a VAT number, and operate in compliance with Latvia’s digital commerce laws. Latvia provides a strong digital infrastructure for e-commerce businesses, with fast internet connections and low operational costs ensuring smooth business operations. Offering direct access to the European market, international payment options, and logistical ease, Latvia presents an advantageous environment for growing your e-commerce business.

Opening a Bank Account and Financial Transactions in Latvia

Opening a bank account is a legal requirement during the company formation process in Latvia and is essential for the smooth execution of your financial transactions. To open a bank account, you must first provide the commercial register and the company's official documents. Banks may request documents such as the company representative's identification, a notarized signature specimen, and the company's business plan during the application process. Banks in Latvia offer internet banking services, facilitating money transfers and daily financial operations. During the application, you may need to deposit a certain initial capital, and different fees may apply depending on the bank's account types. Additionally, foreign currency accounts are available for companies planning to make international payments. It is advisable to seek professional consultancy services to manage your company's financial transactions effectively.

Local Partnerships and Collaborations in Company Formation in Latvia

Starting a business in Latvia becomes significantly more efficient, especially when collaborating with local partners who understand the region's business dynamics. Being a member of the European Union, Latvia offers access to diverse markets while also streamlining the compliance process with regional regulations. However, establishing reliable local partnerships is crucial for effectively navigating Latvia's local market and achieving rapid growth. Local partnerships allow entrepreneurs to better understand customer expectations unique to the region and to develop strategies that align with the target audience. Additionally, working with local business partners and consultants simplifies the management of official procedures. Gaining support from local experts, particularly in areas such as accounting, taxation, and legal processes, saves time in operational workflows. Joining platforms such as the Latvian Chamber of Commerce, investment agencies, and business associations can help you build strong business connections that will drive your business growth. These organizations offer guidance for developing industry-specific partnerships and leveraging regional incentives. By forming local collaborations in Latvia, you can both enter the market quickly and achieve long-term success.

Corporate Taxation System in Latvia

Latvia is a country that encourages company formation by offering a simple and competitive tax structure for entrepreneurs. Among the main taxes for companies in Latvia are corporate income tax (20%) and value-added tax (VAT at 21%). and income tax for employees. One notable feature in Latvia is that companies do not pay corporate income tax on reinvested profits.; only distributed profits are taxed. Additionally, for small businesses micro-enterprise tax system is available; this system offers the advantage of paying low taxes at fixed rates determined by turnover. Thanks to Latvia’s transparent and digitally focused tax practices, all transactions can be easily conducted online. Entrepreneurs can collaborate with local financial consulting firms to obtain information about tax regulations and to structure their businesses in the most advantageous way.

Company Formation Consultancy in Latvia with CoWorldHub

At CoWorldHub, we provide comprehensive and professional consulting services for entrepreneurs looking to establish a company in Latvia. We guide you through every step, including selecting the company type, understanding tax regulations, preparing a business plan, and completing registration processes. We help you maximize the benefits of Latvia’s low tax advantages and access opportunities within the European Union market. Our team assists you in preparing all necessary documents accurately to ensure your processes are completed swiftly and smoothly, and we liaise with local government authorities on your behalf. With CoWorldHub’s experienced team, we simplify your company establishment journey, supporting you in reaching your goals. For detailed information please contact us.