Company formation in Latvia

Before deciding to set up a new company in Latvia, read the information below to understand the characteristics of a Limited liability Company / Sabiedrība ar Ierobežotu Atbildību (SIA):

Shareholders: at least one shareholder with any citizenship or residency.

Director: at least one director with any citizenship or residency.

Company Secretary: not required.

Minimum Share Capital: at least €2,800 and 50% of which should be paid at the time of establishing.

Legal Address: it is mandatory when incorporating a company in Latvia.

Liability: the liability of shareholders in Latvian SIA is limited to the value of the investments made.

Accounting: the company’s director is responsible for maintaining accounting and keeping accounting records in Latvia.

The basic CIT rate is 20%.

CIT rate of 20% is applied to the gross amount, or 20/80 of the net cost, i.e., the taxable base of the CIT should be divided by a coefficient of 0.8.

Tax base: all annual taxable income (including income from paid employment, pensions, income from economic activity, royalties, etc.), unless another rate is specified by law.

Progressive PIT rates:

• for annual income up to €20,004 – 20%;
• for annual income between €20,004 and €78,100 – 23%;
• for the part of annual income exceeding €78,100 – 31%.

The standard VAT rate is 21% which applies to supply of goods for consideration and transactions comparable to supply of goods; supply of services for consideration and transactions comparable to supply of services; Intra-Community acquisition of goods for consideration; importation of goods; receipt of services in inland from taxable persons of EU Member States, taxable persons of third countries or third territories; Intra-Community acquisition of a new means of transport.

Reduced VAT rates:

• 12% applies to medicinal products included in the list of medicinal products registered in Latvia; medicinal products registered in accordance with the centralized registration procedure of medicinal products of the European Medicines Agency; inland transport services of passengers and their luggage and many others;
• 5% applies to supply of school literature and original literature issued in the form of printed publication or electronic publication; supplies of food products which are the fresh fruits, berries and vegetables, including washed, peeled, shelled, cut and packaged, but not thermally or otherwise processed (for example, frozen, salted, dried);
• 0% applies to exportation of goods and supplies of goods not released for free circulation where supplies of goods are carried out in customs warehouses and free zones; dispatch of goods to a fiscal representative within the framework of exportation of goods; the supply of goods within the EU, if the consignee is a registered taxable person of another Member State and the goods are supplied to another Member State, etc.

Double taxation avoidance agreements in Latvia: Albania, Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hong Kong, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Kazakhstan, Korea, Kosovo, Kuwait, Kyrgyzstan, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Moldova, Montenegro, Morocco, Netherlands, Norway, Poland, Portugal, Qatar, Romania, Saudi Arabia, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Tajikistan, Turkey, Turkmenistan, Ukraine, United Arab Emirates, United Kingdom, United States of America, Uzbekistan, Vietnam.