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Latvia

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Among the European countries that are frequent targets of companies seeking tax optimization are Cyprus, Malta, the Netherlands and Liechtenstein. Some of these countries are perceived as typical offshore destinations, or represent locations with high administrative and operational costs, which makes them unsuitable for some types of companies. Latvia – a new, developing European onshore center is an interesting alternative to them.

Why should you consider starting a company in Latvia?

Prestige

Latvia is a well-known European destination with a quality legal system and the financial center of North-Eastern Europe. This is a suitable location for business in Europe, strengthening the company's prestige and growing business opportunities.

Saving money

Every normal person wants to save their money and entrepreneurs are no exception. Latvia will allow you to do that. Latvia offers lower costs of running a company and its management, a quick process of setting up a company, and all this at a reasonable level of taxation for trading and holding companies. The basic corporate tax rate is 15 %, which ranks Latvia among the countries with the lowest income tax rates in Europe.

Most often, companies of the SIA type (Sabiedriba ar ierobezotu avdebibu) are established, which correspond to our limited liability companies, and companies of the AS type (Akciju sabiedriba), which are the equivalents of our joint stock companies.

Simplicity

Only one shareholder and one director are required, they do not have to be residents. The minimum initial capital is 2,000 LVL, at least one half of the share capital must be paid up. However, the paperwork awaits you in Latvia as well, after all, we are still in Europe. The company must keep accounts and file tax returns. Under certain conditions, it will also be the subject of an audit. If you want to avoid paperwork altogether, you'll have to think about another destination.

The register of companies is public in Latvia. Withholding tax on dividend payments is zero for EU citizens! If dividends are paid to countries identified as having a zero or low rate of taxation, the tax is 15 % and in the case of exceptional dividends it is increased to 30 %.

The basic value added tax rate is 21 %, but there are also reduced rates of 12 % and 0 %. Latvia is a signatory to many double taxation treaties.

Member of the EU and NATO since 2004. The country offers an interesting environment mainly thanks to trade relations and borders with Russia. Latvia has government-backed investment immigration programs to obtain residency in Latvia by investing as little as €75,000 in real estate. If you are interested in obtaining a residence permit incl. the possibility to travel freely in Schengen, it can be a verified and correct way. One of the fastest and easiest ways to your new residency and citizenship is the investment-immigration program in Latvia.

Close to the Nordic countries and the border with Russia. You can easily communicate in Russian and English. We have our own consulting, legal, tax and accounting office in Riga.

Basic information

  • Type of legal entity: limited liability company (SIA = Saibedri ar Ierobežotu AtbildÄ«bu)
  • Establishment time: 5 working days
  • Number of shareholders: minimum 1, can be any nationality
  • Shareholders: they can be FO or business entities
  • Share capital: at least EUR 2,800
  • Shares on bearer: not allowed
  • A seat is required
  • The company secretary is not mandatory
  • Directors: minimum 1, maximum not defined
  • Resident function of the director: the director does not have to be resident in Latvia

Taxation

  • Corporate income tax 15 %
  • Branch tax rate 15 %
  • Capital gains 0 % (except in low tax jurisdictions)
  • Dividend tax rate 0/15/30 %
  • Interest 0/5/15 %
  • License fees 0/15 %
  • Net operating losses can be carried forward without income.
  • The standard VAT rate is 21 %. Medical services, book supplies and subscriptions are rated 12 %. VAT registration is mandatory if the company's turnover in the last 12 months exceeded LVL 10,000 (approx. EUR 14,400)
  • Double taxation agreements with approximately 40 countries have been applied, determining tax rates on dividends, interest and royalties
  • Accounting. Billing and preparation of accounts is required
  • Audit is not required

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