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Latvian companies, Company formation in Latvia, Taxation in Latvia

Country’s geography & information in brief: Latvia is strategically located in the east Europe by Baltic sea, having several ice-free ports, good infrastructure and land border with Russia, Belarus, Estonia and Lithuania. Part of Europe Union. From 2014 national currency – Euro.

Entity type: Private limited company (SIA) “Sabiedriba ar ierobezotu atbildibu”

Directors: The minimum number of directors is one. They may be natural persons residents of any country.

Shareholders: Minimum number of shareholders is one. Shareholder can be sole Director same time.

Secretary: A company secretary is optional.

Authorized capital: The share capital must be expressed in Euro. The minimum authorized, issued and paid up share capital of a Latvian company is EUR 2,800. At least half of the capital has to be paid up before registration; the rest can be paid up during the first year of operations.

Names’ restrictions: Restrictions exist to any word that the Registrar considers undesirable, any name that is identical or similar to an existing company, any name that implies illegal activity or implies royal or government patronage.

Information about the beneficiary: The names of the shareholders and directors, their address and nationality must be submitted to the Registrar. Register in Latvia is open and for small fee it is possible to get information who is director and shareholder of the Latvian company. If shareholder of the Latvian company is an offshore company, there is requirement to disclose to the registry who is the beneficiary of that offshore company. This is not applicable to EU companies or other non-offshore jurisdictions (not-blacklisted).

Audit & financial reports: Financial statements have to be submitted to Latvian Tax authorities and the Registrar of Companies annually. VAT returns have to be submitted quarterly and social tax declarations monthly for employed salaried workers.

Taxation: All companies registered in Latvia are liable to corporate income tax at rate 15%. Dividends paid to individuals are subject to withholding tax only 10%,
even reduced rate can be provided by DTA. Latvia has extensive network of double tax agreements - with 55 countries, including almost all European countries, USA, Canada, China, Belarus, Ukraine, Kazakhstan, Uzbekistan, Azerbaijan, Russia.

Latvian companies can be effectively used as a holding company:- EU Parents-Subsidiary Directive and Interest and Royalties Directive allows Transfer of dividend, interest and royalties between related companies in EU and Switzerland without withholding tax. Sale of shares and dividends received exempted from income tax. Dividends, interests and royalties paid to foreign companies exempted from withholding tax. Sale of securities (other than shares) traded on regulated EU and EEA markets exempted from income tax. No stamp duties on share capital payment and shares transfer.

If you have further questions or want to incorporate a company in Latvia, use contact form to contact us.