BUSINESS IN LATVIA
Latvia's economy underwent a significant downturn as a result of the financial crisis of 2008-2009. To understand the situation, the country's GDP decreased by 18% during this period. For the last few years, stabilization of the economic situation of the Republic of Latvia has been recorded. Since 2004, the state is a member of the European Union, and in 2014 joined the euro zone. Today, business in Latvia for foreigners is quite profitable for them, which will allow them to enter European markets and give them the opportunity to compete with the leaders of world trade.
A comfortable geographical location for transit services, acceptable infrastructure, ports and an open economy help attract foreign investment to Latvia. A minor obstacle, however, is the incompletely resolved corruption problems and some administrative pressure from local authorities. Nevertheless, in 2024 many entrepreneurs from abroad are eager to open a business in Latvia.
The majority of the local population is employed in the service sector, about 73%, 23% of employees work in the industrial sector, the rest of the labor force is represented in agriculture. Unemployment in Latvia is about 6-7%. Family members of a foreign businessman can find a job in one of the Latvian companies, especially since one of the main demographic difficulties of the country is the outflow of young specialists to more developed European countries. Skilled workers are especially in demand.
Latvian universities offer quality education with reasonable tuition fees. In general, there are enough positive aspects for business immigration to Latvia. Further in the article we will consider the main aspects of doing business in Latvia, the procedure of company registration and popular forms of ownership, taxes and the process of obtaining a Latvian business visa.
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How to open a business in Latvia
The Latvian government is extremely interested in attracting foreign businessmen who will invest in the local economy. Therefore, there are no special restrictions for foreigners in the issue of business registration in Latvia. The most popular city and business center of the country is considered to be the capital of the Republic of Latvia – Riga.
However, it is not necessary to stop at this city, in some regions there are more comfortable conditions, so-called free economic zones, allowing you to do business as efficiently as possible. For example, pay attention to such cities as Ventspils or Liepaja.
If you buy a ready-made business in Latvia or open a new company, you have the opportunity to obtain a Latvian residence permit, which is extremely important for full-fledged business activities. Usually the document is issued for one year with the right to extend it up to 5 years. After that a permanent residence permit is issued, and after another 5 years you can get Latvian citizenship.
For a detailed understanding of all the legal aspects related to business immigration to Latvia, including the acceleration of the process of registration of residence permits, you will most likely have to use the services of professional lawyers, consultants, Latvian accountants and notaries. Take this issue very seriously, i.e. trust only trusted firms or individuals.
Cost and procedure of company registration in Latvia
According to the Doing Business agency, Latvia ranks 19th out of 190 countries in terms of accessibility of opening and ease of doing business. This is a rather impressive indicator. For example, the country ranks above Switzerland and France.
The main stages of company registration in Latvia
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Notarial registration of the authorized capital of the company with entry in the commercial register. At this step, the composition of the board of shareholders of the company is formed, which is also notarized. The minimum amount of the authorized capital is 2,820 euros. If you wish, you can get an electronic signature, the cost is 26 euros.
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Opening an account in a Latvian bank and receiving a receipt for payment of the authorized capital. Usually the cost of the service does not exceed 10 euros.
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Registration with the commercial register and tax authorities. To carry out this procedure within one day you will have to shell out 427 euros. For ordinary registration, which takes about 3 days, 142 euros will be needed.
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In the case of hiring workers, it is necessary to register with the social security funds.
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Provided that the registration documents are prepared, the total time for registering a company in Latvia does not exceed one week.
Forms of ownership for a company in Latvia
The choice of an effective form of ownership for doing business in Latvia depends on the scale of the planned activity, the amount of investments, the possibility of tax optimization and some other factors. Let's consider the most popular types of Latvian companies.
Limited Liability Company (LLC). An ideal option for small and medium-sized businesses. The minimum requirements for the authorized capital are 2,820 euros. Owners of the company, which can be both individuals and legal entities, are liable in proportion to their contributions. There are no restrictions on the registration of a company by foreign businessmen. This applies to both founders and members of the board of management.
Open Joint-Stock Company (OJSC). Unlike LLC, the authorized capital must be contributed only in cash, the minimum amount is equal to 35,201 euros. The company is liable for its obligations with the full amount of available assets. Management is carried out by the shareholders' meeting, the management board and the board of directors. There are no restrictions on ownership of OJSC by foreigners.
Individual Entrepreneur (IE). The company is managed by one person, who is fully personally liable for obligations with all his property. The attractive side of this form of ownership is a more simplified system of registration and accounting.
In addition to the above forms of ownership, foreign entrepreneurs can open representative offices and branches of foreign companies in Latvia.
Taxes in Latvia
Latvia has one of the most flexible tax systems in the EU, with a wide range of subsidies and incentives depending on the purpose and direction of the business. Tax rates are quite reasonable, and special economic zones allow to effectively minimize the amount of payments.
Rates of main taxes in Latvia in 2024
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Corporate income tax – 20%
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VAT. The main rate is 21%. Reduced rates – 12.5 and 0%.
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Mandatory state social insurance contributions – 34.09% Property tax – 1.5%
Income tax – progressive rate:
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20% for annual income not exceeding €20,004
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23% for annual income from €20,005 to €78,100
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31.4% for annual income exceeding €78,100
Business visa to Latvia
In order to conduct business in Latvia or simply to make business trips, a foreigner needs to apply for a business visa at the Latvian Consulate in his/her home country.
Documents for business visa to Latvia
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A valid passport with at least two blank pages.
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Filled in Latvian visa application form.
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Color passport-type photo (3.5 cm x 4.5 cm).
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Medical insurance with coverage of at least 30 thousand euros.
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Proof of residence in the country.
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Proof of business ownership in Latvia or an invitation letter from business partners.
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Payment of the state duty.
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Financial security for living in Latvia.
In each individual case, employees of the Latvian diplomatic authorities have the right to request additional information from the foreign entrepreneur.
