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Open a Business in Latvia

Open a Business in Latvia

Updated on Friday 04th March 2016

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Latvia is a country that has many advantages for foreign investors. Apart from a strategic position in Europe and easy access, the country also has a free trade policy making it an ideal location to base an import and export business. Foreign investors are aided by business incentives and a friendly business environment. 
 
The experts at our law firm in Latvia can help you with information about the laws governing foreign investments in the country and can help you open a company here.
 

How easy is to set up a business in Latvia?

 
The necessary time for establishing a Latvian business is no longer than one week if all the required documents are submitted in due time. The process of company incorporation includes the following steps:
 
- drawing up the deeds of incorporation,
- notarizing the deeds of incorporation,
- opening a bank account and depositing the minimum share capital,
- registration at the Commercial Register of Enterprises and at the State Revenue Service,
- registration of the employees for the state social insurance contribution at the State Revenue Service,
- registration for VAT in Latvia.
 

How easy is to hire personnel in Latvia?

 
The process of hiring employees can be eased by the numerous employment agencies situated in Latvia. The employers must keep in mind that there are certain mandatory actions that need to be taken in order to hire personnel, such as their registration at the State Revenue Service, in order to pay the state social insurance contributions.
 

What are the taxes in Latvia?

 
Any company incorporated in Latvia is taxed based on residency. Non-resident companies are only taxed on their Latvian income and foreign corporations can also benefit from reduced tax rates according to the provisions of a double tax treaty if such an agreement exists between their country of residence and Latvia.
 
The corporate income tax in Latvia is 15% but permanent establishments that have been operational for more than 12 months can benefit from a simplified tax regime: a tax imposed on 20% of the turnover. There is no capital duty imposed in Latvia. Companies must pay other taxes like the payroll tax, the real property tax, stamp duty and social security.
 
Our lawyers in Latvia can help you with tax compliance in the country and certain measures for tax minimization.
 

What are the main points of interest for foreign investors?

 
The main advantages come from Latvia’s strategic position and the status of a member in many organizations, such as EU, Schengen and World Trade Organization, this leading to all the benefits of free and open trade on the international market.
 
An advantage facilitating the trades is the good infrastructure that Latvia has. There are three major ports and from the Riga’s airport, the planes are flying to more than 80 destinations all over the world. All of the above are facilitating the trades, not only from Latvia to the foreign countries but also from these countries to Latvia.
 
The country also has important touristic potential and the services provided by the entrepreneurs involved in this business are considered affordable at a good quality. The tourism sector is bringing a considerable contribution to the Latvian GDP.
 

What are the advantages of a holding company in Latvia?

 
The holding companies enjoy mostly the provisions of the double tax treaties signed by Latvia over the years. According to it, the corporate income tax can be exempt or credited while the withholding taxes on dividends, interests and royalties paid to the subsidiaries can be minimized or even exempt from the provisions of such treaties.
 
Also, the European directive related to the parent-subsidiary coming from the state members is stipulating exemptions granted to the withholding taxes on dividends, interests, and royalties.
 
For more information about how you can start a business in this country, you may contact our Latvian lawyers.
 
After opening a business, if you are interested in HR Training Courses, we can recommend you our partners in London. 

 

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