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Subsidiary vs. Branch Office in Latvia -Updated Guide for 2024

Subsidiary vs. Branch Office in Latvia

Updated on Wednesday 24th January 2024

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Subsidiary vs branch in Latvia
 
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.
 

Requirements for opening a subsidiary in Latvia in 2024

 
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 EUR 2,800.
 
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 in 2024 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.
 

Other considerations about branches and subsidiaries in Latvia

 
Branches in Latvia present varied advantages because the country is a member of the European Union and Organization for Economic Cooperation and Development and the World Trade Organization. International entrepreneurs can confidently establish branches and subsidiaries in Latvia and develop their economic activities in a safe and stable business climate.
 
Foreign entrepreneurs from non-EU countries interested in incorporating a branch in Latvia must consider the immigration requirements. In this sense, the type D visa should be attained if the business extends for more than just 3 months in Latvia. This kind of visa is also known as a Schengen visa which grants free travel throughout the Schengen area.  
 
It is important to note that if the assets of a subsidiary in Latvia surpass EUR 800,000 while the net turnover does not exceed EUR 1,600,000, the financial statements of the subsidiary in question must be audited. You can ask for externalized accounting services, including audits, from Latvian accountants.
 
You can contact our attorneys in Latvia for personalized solutions for company registration. You can also consult with our lawyers if you are interested in acquiring Latvian citizenship by investment. Our lawyers can guide you in detail about its requirements.