General information about the country
Latvia is one of the three Baltic republics. The country declared its independence on 18th November 1918. After regaining independence in 1991, Latvia has carried out successful economic reforms and currently demonstrates effective increases in all spheres of the economy.
The legislative power of the state is vested in the Parliament (Saeima) which is elected by the citizens of Latvia for a period of four years. Higher representation of the country is performed by the President who is elected by the Saeima for four years.
Latvia joined the European Union in 2004 and adopted the Euro as the national currency in 2014.
The legislation of Latvia is based on civil law. The basic legal document of the country is the Constitution (Satversme) which was adopted in 1922. When Latvia joined the European Union in 2004, the Constitution was amended in accordance with the general regulations of the European Union.
Amendments to the law on corporate income tax were made in 2013 providing significant benefits for companies registered in Latvia and deriving income from holding operations.
|Company type||Limited Liability Company|
|Corporate legislation||Commercial Law of Latvia 2004|
|Language of company documents||Latvian|
|Minimum amount||EUR 2,800|
|Standard amount||EUR 2,800|
|To be paid||At registration|
|Maximum number||No restrictions|
|Publicly accessible records||Yes|
|Local director||Not required|
|Status||Only physical persons|
|Publicly accessible records||Yes|
|Minimum number||No requirements|
|Local secretary||No requirements|
|Publicly accessible records||NIL|
|Filing an Annual Return||Yes|
|Fiscal year||January 01 – December 31|
|Publicly accessible Financial Statements||Yes|
|Auditor||Depends on criteria (see below)|
|Filing a Tax Return||Yes|
|On trading income||15%|
|On passive income||See below|
|Double Tax Treaty network:||Agreements with more than 50 countries|
Additional information on taxation
Any company incorporated in Latvia shall be registered as a taxpayer at the place of its registered address.
A company carrying out trading operations in Latvia becomes a VAT payer at the rate of 21% and must file a VAT statement on a monthly basis. The company also files a payroll report whereby social tax is levied on wages. The standard rate of corporate tax in Latvia is 15%.
From 2014 onwards, under Latvian law the following income is tax-exempt:
- Income received as dividends,
- Income received as capital gains, such as sale of shares in a subsidiary at a profit. No minimum percentage or period of share ownership in a subsidiary is compulsory for these exemptions to be applied.
No withholding tax is levied on the payment of dividends, interest or royalties from a Latvian enterprise to third countries.
None of the above benefits will apply for both when funds are received and paid if the operations are carried out with companies registered in countries which are included in the list of low-tax jurisdictions contained within Regulation No 276 of the Cabinet of Latvia dated 26th June 2001.
The financial statements of the company shall be filed by 30th April each year and must be certified by a sworn auditor if the company meets at least two of the following three criteria:
- The number of employees of the company exceeds 25
- The turnover of the company for the year exceeds EUR 800,000
- The net asset value of the company as at the reporting date exceeds EUR 400,000
Whilst as a default rule, all Latvian companies are tax-paying, the current legal enactments make it possible for Latvia to be a popular holding jurisdiction as a viable alternative to such countries as Denmark and the Netherlands.
A positive feature of Latvia is the sufficiently high competence of the officers of its tax authorities who have a good understanding of the procedures of handling tax documents and the application of tax rules.
A further advantage of registering a company in Latvia is the highly developed Latvian banking system whereby the venue of the company’s banking service may coincide with the country where it is incorporated.