Latvia
STRUCTURE
Latvian company – is a private or public body corporate. The most frequently used legal forms – a limited liability company (SIA) or a joint stock company (AS).
The share capital of the company is formed by the contributions of its shareholders (cash or material contribution). The minimum paid-up share capital is 2000 LVL (~ 2850EUR).
The company is liable for its own liabilities ensured by its all assets as well as assets received from the shareholders (contributed to the share capital). Shareholders are not liable for the company’s liabilities and the company is not liable for the shareholders’ liabilities.
LATVIA – TAX EFFICIENT JURISDICTION FOR INTERNATIONAL BUSINESS AND CAPITAL
Starting from January 1st 2013, Latvia became an ideal jurisdiction for holding companies offering a 0% tax on received dividends. Trading companies are subject to 15% corporate tax only – it is one of the lowest corporate taxes in Europe. The advanced and easy banking industry allows clients to open bank accounts and to manage them remotely.
Finally, any foreign investor may obtain an investor visa allowing him to travel and live in Europe without any limitations. This visa can be extend to all his family members.
HOLDING ACTIVITY
- Favorable tax regime for international holding, financial companies and companies holding intellectual property.
- No corporate tax on sale of shares and dividends received from subsidiaries
- No witholding tax on dividends paid to foreign companies
- Starting from 2014 interests and royalties paid to foreign companies are exempted from withholding tax. Even now in certain cases these payments are exempted.
- No stamp duties on share capital payment and shares transfer.
- No controlled foreign corporations rules for legal entities.
TRADING ACTIVITY
Corporate income tax rate – 15% – one of the lowest in Europe.
Only margin, i.e. net profit after deduction of all business related expenses is subject to taxation. Thus effective tax rate may be reduced through expenses or using agency structure provided that transfer pricing rules are reasonably complied with. In case of operations within EU requiring European VAT registration, the company may easily register for VAT in Latvia.
Transactions on the territory of Latvia are subject to VAT at a rate of 21%. Transactions between different EU countries generally are VAT exempt.
The only restriction in trading activity is that payments to companies from tax-free countries included in socalled “black list” of the Cabinet of Ministers are subject to withholding tax 15%.
European funds are accessible for setting up and development of production and services business.
LATVIAN COMPANY REGISTRATION AND ANNUAL ADMINISTRATION FEES
Director
Director may be the client himself or his authorized representative, natural person of any residence. Latvian company’s director is personally liable for all the company’s activities.
Shareholder
Shareholder may be the client himself, his authorized representative or his company.
Share capital
Minimum paid-up share capital 2 000 LVL (together with bank commissions -2930 EUR, or equivalent in other currency at the exchange rate of the Bank of Latvia) should be paid by shareholder to the company’s temporary account before registration with the Register of Enterprises. In our company incorporation methodology, the incorporation can be made without the ned to pay the share capital.
