Subsidiary vs. Branch Office in Latvia
Subsidiary vs. Branch Office in LatviaUpdated on Tuesday 08th March 2022
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Latvia has a pro-business legislation and offers great investment opportunities and incentives to foreign enterprisers. Foreign investors choosing to establish their business operations in Latvia may open new companies or branch offices. Our lawyers in Latvia will provide relevant information about the possibilities each of the two types of companies offer.
The subsidiary in Latvia
Foreign investors may choose to register a subsidiary in Latvia under the form of a limited liability company. One of the greatest advantages of opening subsidiaries in Latvia is the limited liability of the shareholders, but also the taxation system that does not impose the taxation of dividends, interests and royalties when they are repatriated to the parent company.
A Latvian subsidiary will also have its own management compared to a branch. As mentioned before, subsidiaries will be incorporated as limited liability companies that in Latvia can be private or public. No matter the type of limited liability company foreign businessmen decide to register, there are minimum share capital requirements for both types. The most employed type of structure will usually be the private one, as it requires a start-up capital of 2,000 LVL.
Compared to the Latvian branch office, the subsidiary is required to have a certain form of management that will include a director or board of directors and a supervisory board in case of public limited companies. Subsidiaries are also required to register for taxation purposes and with the State Revenue Agency if hiring personnel.
The branch office in Latvia
Compared to the subsidiary, it is less demanding to set up a branch office in Latvia because branches are not deemed legal entities. Branch offices in Latvia will depend on the parent company which means the mother-company will be held liable for the branch office’s liabilities.
Branches are not allowed to carry any business operations in Latvia unless they register with the Companies Registrar. Once the branch office registers with the Trade Register in Latvia, it will have to register with the tax authorities as well. Branch offices may hire personnel and conduct business operations just like the subsidiary with the only difference the branch office is an extension of the foreign company.
You can contact our attorneys in Latvia for personalized solutions for company registration.