Located in Northern Europe, Latvia is known for its favorable business environment and access to the European market.
Company registration in Latvia can be an interesting opportunity for entrepreneurs who want to start a business in this country.
Before proceeding to the details of the company registration procedure in Latvia, let’s consider some of the advantages that this country provides for entrepreneurs:
- Favorable business environment: Latvia has a transparent and efficient system of business registration, which facilitates the quick start-up of a company.
- Access to the European market: Latvia is part of the European Union, which gives entrepreneurs the opportunity to work in the single European market and to carry out international trade.
- Stability and low crime: The country is known for its stability and low crime rate, which creates a safe environment for business and life.
- E-governance: Latvia has developed a system of e-governance and e-governance, which facilitates many administrative procedures.
- Simplified taxation: Latvia offers a simplified taxation system for small entrepreneurs, which makes it easier to do business.
The most widespread organizational and legal form of company registration in Latvia is SIA – Sabiedr ī ba ar ierobe ž otu answer ī bu (Limited Liability Company). So, let’s consider the advantages and the procedure for registering an LLC.
Registration of an LLC in Latvia involves several steps that must be completed:
- Choosing a company name
The first step is choosing a name for your company. The name of the LLC must be unique and not similar to other registered names in Latvia. Please note that it is forbidden to use ambiguous concepts, as well as the name of state structures and self-governments, the words “state” and “self-government”
- Collection of necessary documents
To register an LLC, you need to prepare the following documents:
- A copy of the passport of the founder (or founders) of the company.
- A document confirming the address of the company’s registration in Latvia (for example, a lease agreement or a certificate of ownership).
- Authority to represent the interests of the company (if the founder does not personally submit documents – a power of attorney).
- Registration at the State Agency for Company Registration
LLC registration should be carried out in the State Agency for Company Registration (The Register of Enterprises of the Republic of Latvia). This can be done in person or electronically.
- Contribution of authorized capital
According to the legislation of Latvia, the LLC must contribute authorized capital. The minimum amount of authorized capital is EUR 2,800.
- Obtaining a registration certificate
After successful registration, you will receive a registration certificate that confirms the legality of your LLC in Latvia.
- Taxation and reporting
After registering an LLC, you are required to keep records and submit financial reports in accordance with the requirements of Latvian tax legislation. This includes income tax, VAT, and other mandatory payments.
Tax Aspects LLC in Latvia
Latvia has certain tax aspects that must be taken into account by entrepreneurs registering an LLC:
- Income tax: Income tax for LLCs in Latvia is 20%. However, there are tax breaks and exemptions for some activities. For example, small (micro) enterprises can claim a reduced corporate tax of 15% if their turnover is up to EUR 100,000/year and the staff does not exceed 5 people.
- VAT (Value Added Tax): Regulated VAT is 21% and companies must register for VAT if their turnover exceeds a certain limit.
- Social contributions: Payment of social contributions is mandatory for LLC employees and founders.
- Property Tax: Property owners must pay property tax.
Considering the above, registering an LLC in Latvia can be a chosen strategy for entrepreneurs who want to start a business in Central Europe and have access to the European market. Latvia offers a favorable business environment and tax advantages for entrepreneurs.
It is important to comply with all the requirements and rules of registration, as well as the correct management of financial activities, in order to ensure the successful start and development of your LLC in Latvia.