Setting up a company in Latvia

Setting up a company in Latvia costs €1000 + VAT.

Why start a business in Latvia?

Latvia is considered the financial centre of Eastern Europe, offering convenient taxation for commercial and holding companies. Attracting foreign investors is a clear public objective, which the Latvian authorities are pursuing through concrete measures to simplify procedures for setting up businesses and reduce red tape.

As of 2018, the corporate income tax payable in Latvia has been changed to 20% and is only paid on the part of the profits that are distributed or paid as dividends or used for other purposes not directly related to the development of the company. However, a company may decide not to pay dividends and instead reinvest the profits in its business, in which case 0% tax applies (in other words, it is not taxed). This is particularly attractive for companies that are focused on expansion rather than making a quick profit. For this reason, Latvia is currently considered one of the better tax optimisation options in Europe.

In Latvia, there are different legal forms of business, such as a joint-stock company called SIA (Sabiedrība ar Ierobežotu Atbildību), joint-stock company (AS), etc. However, Latvians (and foreign entrepreneurs) usually opt for the SIA, which we will discuss in more detail below.

The intricacies and limitations of setting up an SIA depend on the size of its registered capital. Therefore, every entrepreneur should choose wisely:

– if the share capital is between €1 and €2799, and

– if the share capital is between €2,800 or more.

As of May 2010, the first option is very attractive for new and small companies. As an added bonus, the founders of this company do not have to open a bank account at the time of incorporation and can leave it after the registration is completed. This, in turn, will ensure that the company is “up and running” as quickly as possible.

In addition, its founders and shareholders can only be natural persons, irrespective of nationality and residence. However, the number of founders is limited to 5 persons. Also, a shareholder of such a company may only be a shareholder of a company with reduced capital (€1-299 option). The board of directors of a company may consist only of its shareholders.

A company’s share capital can be deposited in assets or in cash. Companies with reduced capital are not obliged to open a temporary account and do not have to provide proof of paid-up capital to the register.

If an SIA is set up with a share capital of €2,800 or more, a wider range of options opens up. In addition, its founders and shareholders can be both natural and legal persons.

How to set up a company in Latvia?

Registering a business in Latvia is more convenient than ever – once selected, we offer our services to clients remotely, with professionals sending all the documents. The registration itself usually takes 2-4 working days.

The prospective entrepreneur will receive a questionnaire and a list of documents to fill in. We will liaise with the notary and, if necessary, ask you for further details.

The share capital of an SIA ranges from 1-2799€.

However, unlike a company with lower capital, a company bank account must be opened in Latvia at the time of incorporation. For this purpose, a cash contribution or a recognised capital contribution as an asset is required. After these steps, a copy of the approved capital contribution to the company's account must be submitted to the register. A document, usually issued by a bank, certifying that the required amount is in the bank and will be credited to the company's account immediately after its registration. Swiss banks may open an account for a company whether or not it has a local office. The specific conditions depend on where the company is registered.

Setting up a company in Latvia involves several types of taxes:


VAT rate is 21%


From 2018, the 20% corporate tax rate will apply only to profits distributed as dividends or used for purposes not directly related to business development.


Latvia has a low corporate tax rate and a transport and logistics advantage.

Latvia is considered as a Nordic country in the Baltic region, with experienced professionals who speak Latvian, English and Russian and are well versed in Western and Eastern business cultures. These valued qualities, together with a convenient geographical location and a good business environment, make the country very attractive to foreign investors. Estonian entrepreneurs are no exception.

LCPC aims to provide you and your business with high quality assistance. Setting up a company is one of the first steps in building your business, and we will help you along the way!

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