Incorporation in Latvia

Latvia

Latvia has one of the lowest corporate taxes in the European Union.

A Latvian company is taxed on worldwide income at standard rate of 15%. Withholding tax 10% is applied to a profit distributed to individual Shareholders, unless the rate is decreased by a treaty. Structuring is possible to omit withholding tax completely. There is also a 0% VAT for companies involved in import and export businesses.

Popular applications

Corporate requirements

Bank account introduction

Bank account introduction is offered with personal visit at Blue Orange Bank (Baltikums), Latvijas Pasta Bank, Norvik Bank, Meridian Trade bank and others.

Timescales

New company set-up or shelf company transfer within 4-5 business days. Expedite service at extra charge– within 1-2 business days. Wherever Latvian Company has a foreign shareholder company set-up or transfer will take 7-10 business days.
VAT registration -10-14 business days. (Tax authorities may request additional information, such as contracts and invoices with Latvian vendors/clients).
Minimum 7-10 business days for bank account activation upon receipt of required information and originally signed bank forms.

Accounting requirements

VAT declarations are usually filed monthly.
Annual Financial Report must be submitted for each 12 month fiscal period, which can be up to 18 months for newly established companies in the first fiscal year (standard fiscal year for Latvian companies is the calendar year, January-December). Deadline to submit the Annual Report to the State Revenue Service is April 30th.
An audit of the Company's Annual Report is required if at least 2 out of 3 below criteria are met:
balance sheet total - EUR 400 000
annual turnover - EUR 800 000
number of employees - 25

How do I proceed?

In order to commence incorporation and account introduction, we will require the following:

Detailed description of company work with Completed bank questionnaire form.
CV and/or Recommendation letter of the Beneficial Owner/ Authorised Signatory
Passport copy + utility bill not older than three months of Beneficial Owner, Directors and Shareholders.
For corporate shareholders – certified corporate documents with Latvian translation. Ask us for details.
Company Register forms (prepared by Confidus) must be certified and/or legalized and translated into Latvian language. Ask us for details.
Company Register forms (prepared by Confidus) must be certified and/or legalized and translated into Latvian language. Ask us for details.

Trading with vat

The most popular business entity is the limited liability company (SIA) broadly used as European trading vehicle as VAT registration is normally easy to obtain, and the corporate tax is only 15%.

Typical structure

A Client in one country orders goods from a Latvian intermediary company, which sources the goods from the supplier directly to the client. Such movement of goods is called triangulation.
If the Supplier Company in EU is registered with VAT number it can zero rate its invoice to the Intermediary company only if the Intermediary company is as well registered with EU VAT number.
In case the Intermediary company does not have EU VAT number, the Supplier must charge full VAT at its local rate to the Intermediary Company.
If the Latvian company sources out the goods to the EU client with VAT, then it also applies 0% VAT to its invoices.
In case of export of goods, no VAT is applied.

Taxation

One must note that any payment to any non-EU offshore company (see complete “black list” at the end) – whether dividend, loan or invoice payment – is taxed 15% at time of transaction.

Latvian company can obtain Tax residence certificate in order to use double tax treaties.

Paying monthly salary to a Director or employee(s) is highly recommended and in many cases is required by the Latvian Tax office.

In case of a non-resident Nominee director, we can offer a local employee (accountant, admistrator, etc.). Additional fees are charged for nominee director signatures on contracts and resolutions if required € 65 per signature plus courier costs.

Latvian local employee services fees (accountant, admistrator, etc.) consist of Annual payroll administration fee €250 & monthly salary + minimum salary taxes €180 per month paid to government account (i.e. minimum salary is €400 – from this amount salary taxes are €180).

If the Client is Director / Board Member himself, he may receive salary instead of waging an employee. Same calculation is applied: Annual administration fee €250 & minimum salary taxes €180 per month paid to government account (i.e. minimum salary is €400 – from this amount salary taxes are €180).

Latvian Professional nominee Director’s services fees consist of Annual administration fee €500 & monthly salary. Monthly salary starts from €400 per month (including salary taxes) and depends on company’s activity and turnover.

POPULAR PACKAGE

Shelf company with VAT number
Paid up share capital
Bank account set-up – with personal visit
Or, Bank account remotely for additional fee -
Annual fees:
Domicile/Legal address
Accounting services & VAT reports (up to 10 docs per month)
Annual Report & Tax return

STANDARD LEGAL ADDRESS & VIRTUAL OFFICE SERVICE PACKAGE

UPGRADED VIRTUAL OFFICE SERVICE PACKAGE

ACCOUNTING SERVICE PACKAGE

Accounting service fees are based on document (not sales) turnover, no. of employees and fixed assets. Standard monthly rates include the following services:

Preparation and submission of monthly tax / VAT declarations to the Latvian Tax Authorities
Latvian accounting software program license fee
Maintenance of accounting books as required by Latvian laws and normative acts
Basic bookkeeping administration, response to standard tax authority queries
Low Activity Account (0-20 documents monthly)
Medium Activity Account (21-50 documents monthly)
High Activity Account (51-100 documents monthly)
Holding Company Accounts

Confidus Solutions

Worldwide incorporation partner

Company Formation

Accounting services

Bank account opening