Company registration in Latvia, overview in a nutshell
Contributed by MAXCORP
07 April, 2020
Latvia is a member of the European Union with a population approx. 2 million inhabitants, most of whom live in the capital city of Riga. One of the reasons many consider to start their business in Latvia is the location - Latvia is situated right between eastern and western regions of Europe bordered by Russia, Belarus, Estonia, and Lithuania, which means the good location can be used as a bridge between those two regions.
A good location is supported by strong connections with the rest of the world, e.g. direct flight connections taround 80 destinations all over the world. Partly because of the location and partly because Latvia is a small country, most people are fluent in English and Russian, which makes communication easy. All of that, combined with one of the lowest tax rates in Europe, makes it an attractive place to choose to register your company in Latvia.
Business forms in Latvia
There are several different options for company registration in Latvia. The decision about which one to choose depends on the planned business type, the number of employees, if it is supposed to be private or public and many other factors. Most common ways to start business activities in Latvia are:
- Sole trader
- Limited liability company (SIA)
- Micro-company (limited liability company - SIA)
- Public stock company (AS)
- Non-profit association
In the majority of cases, both locals and non-residents choose to start their business in Latvia with a limited liability company (sabiedriba ar ierobezotu atbildibu or SIA in Latvian), which can can be started by one or more natural persons or legal entities. The minimum share capital for the SIA is EUR 2800, but there is also an option to establish the company with lower capital. As the limited liability company SIA is the most popular company form we are focusing on this option below.
How to register a company in Latvia?
Latvian company formation is a straightforward process, but there are some important aspects that have to be taken intaccount. Based on many years of experience we strongly recommend having a local support agent, since most required documents are in Latvian language, and the authorities may ask you tcome in for an interview or visit your registered office address unannounced (e.g. for VAT registration) unless the steps are prepared by professionals. The simplest way to get started with your Latvian business is to purchase a new shelf company with a clean balance sheet. The alternative option is to incorporate a new company. We have covered an overview for both options below.
Step-by-step company registration in Latvia
- Sign the registration application issued by the Trade Register in notary's office.
- As a statement of the share capital payment is required it is necessary to open a new business bank account to pay in the share capital.
- The following documents need to be prepared for submission to the Latvian Commercial Registry:
- The registration form
- The Articles of Association
- Proof of depositing the share capital
- Proof of registered address
- Proof of payment of the state duty
- Proof of payment of the publication fee
- Details about the shareholders and directors of the Latvian company
- The registration process usually takes 5 business days from filing the documents tthe Latvian Commercial Registry.
- The company registration process itself can be done remotely using the Power of Attorney. However, the documents need tbe signed in notary's office - in case you choose to do this outside Latvia, the original certified documents need to be sent by post.
Step-by-step purchasing a shelf company in Latvia
- Find a reliable partner to buy the Latvian company from.
- Make sure this company does not have any bad financial history - you should always make sure that the balance sheet is clean, have a look at the annual report, and check the history of the company with the tax authorities.
- You need tgthrough a purchase-sale transaction. The company can be purchased remotely by issuing a Power of Attorney or using a digital signature.
- After the documents have been signed, it takes the Latvian Commercial Registry about 5 business days to enter the changes.
- In most cases no travel is needed to purchase and set up a new shelf company. For example, we at MAXCORP offer full remote company formation packages in Latvia.
Important points to keep in mind
If you start a Latvian company yourself or decide tpurchase a Latvian shelf company, there are some requirements one needs to know about registering a company in Latvia:
- Minimum share capital for a limited company is EUR 2800.
- You need to have a local legal address, and the authorities may occasionally check if the business is active. Tregister your company address, you also need permission from the property owner. We can provide a turn-key solution by providing full set of required documentation and a virtual office address with incoming postal scanning and forwarding to you.
- The name of the company needs to be different from companies that already exist, so it is recommended to da background check about the name before filing registration documents.
- The documents filed to the Commercial Registry must be in Latvian. Original documents in other languages need tbe translated and verified.
- Some business activities need a special permit. Some of these areas are insurance, financial institutions, tourism, transport, utilities, gambling, pharmacies, and alcohol companies. Before starting with the business activities, make sure if you need a special permit and get one, if required.
- All companies must publish the registration details in the official publication 'Latvijas Vestnesis' and pay the publication fee.
- You probably need to hire a local accountant, because the accounting documents need to be in Latvian.
Steps required after company registration in Latvia
When you have your new company in Latvia registered, but before you start your activities, you still need tcheck if any further registrations are needed. It depends on the type of business, which exact registrations you need, but you might need some of the following registrations:
- Registering for VAT is mandatory as soon as the yearly turnover reaches EUR 40 000.
- If you plan to hire people, you need to register in State Revenue Service SRS (Valsts ienemumu dienests or VID in Latvian).
You most likely also need a local accountant to run your business smoothly and comply with Latvian generally accepted accounting principles. If you do not have a local accountant yet, we offer accountancy as a service, which means you will only pay for the work you actually need to be done based on hourly rate.
How to start the process of company registration in Latvia?
It is always easier tgthrough both processes - company registration in Latvia or purchasing a ready-made company - with a local support team whknows the processes and can assist with the language.
MAXCORP is a licensed service provider with a professional legal team in business since 1998. Our Riga office would be glad tfind the best possible option for your personal needs.
We assist with new incorporations and always have new pre-registered companies without any previous activity ready to purchase. Further, we can also offer aged shelf companies with opened bank accounts ready for business.
Read more about company formation in Latvia here.
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