Company registration in Latvia

Registration of an IT project in Latvia entails some benefits for the company owners. It allows them to enter the European market and attract investors. However, the basic points of establishing such a company must be understood first.

Key legal aspects of registering a company in Latvia: director, beneficiary, legal address, and authorized capital. Is the nominee service possible?

The company is registered in the Registries. A set of documents must be submitted, which depends on the chosen organizational legal form.

The Board manages the company. The Board may consist exclusively of founders if the authorized capital of the company is less than 2,800 Euros. The Board elects the Chairman, who then decides on the appointment of the Director. The company must have at least one director, whose personal details are published in a public registry.

Latvian legislation requires the disclosure of information about the beneficiaries. However, they are only needed for the country's supervisory authorities, and their details are not disclosed to anyone else.

He issue of nominee service is controversial. Many companies provide this service in Latvia. However, it is important to note that the nominee service in Latvia is risky as it can make doing business in the country impossible. Therefore, this issue must be taken into account.

A legal address in the country is required. However, it can be rented: such services are currently provided.

The amount of the authorized capital may vary, according to Latvian legislation. It depends on the type of company (organizational legal form) you decide to establish. LLC is one of the most popular options, and its minimum authorized capital must be 2,800 Euros. If you decide to pay the minimum, you must do it as a lump sum payment.

Taxation of legal entities in Latvia. What a non-resident needs to know.

According to local law, branches of foreign companies are obliged to pay taxes in the country on an equal basis with local companies. The requirements for 2021 are the following:

• VAT is 21%;
• excise taxes depend on the type of goods;
• taxes on real estate are 0.2–3%;
• income tax is 20%;
• compulsory social contribution is 34.09%, where 10.5% is paid by the employee, and the rest must be paid by the employer.

Microbusiness can also enjoy concessions. In particular, the qualifying companies are exempt from the income tax and employee payroll tax. They pay a flat tax at a rate of 15% to the treasury instead.

Types of legal forms in Latvia

The following types of legal entities can be established in this country:

• Limited partnership is a form that assumes responsibility solely for contributions; there must be at least 2 members.
• Full partnership is similar to the previous form, but there are no restrictions on liability to creditors.
• Joint-stock company is a legal entity with the activity closely related to the issue and sale of stocks. Moreover, the stocks are freely traded on the market.
• A limited liability company is a type of firm that can issue stocks, but they will not be freely available. Latvian legislation divides all LLCs into micro-companies and regular companies.

Opening a bank account in Latvia

According to the rules of the Latvian banking system, Russian business owners are able to open a corporate account. However, it is provided rather as an exception because not all European banks are ready to open such accounts for Russian businessmen.

The following is required to open an account:

1. 1. Provide information about the affiliation with the US or about the status of a politically exposed person.
2. 2. Define the connection of the company with Latvia.
3. 3. Decide on the public good.
4. 4. Determine whether bearer shares will be issued.
5. 5. Find out if there are any special offers. They are often available for IT projects in Latvia.

Opening an account in a Latvian bank is convenient because it is available not only to domestic businesses, but also to foreign companies. The following products are available:

• payment card account;
• investment account;
• settlement account;
• deposit account;
• merchant account.

An IT business usually needs a current account. It can be opened after filling up a questionnaire and providing basic personal details (according to the sample). Please note that Euro is the default base currency. If you want to select a different currency, this must be indicated separately. The current account is multicurrency, separate sub-accounts are opened for each currency.

You can open an account in Latvia remotely in 2021. A set of documents that a specific bank requests must be submitted, and a video call with a manager arranged. The standard time for opening an account is about a month.

Pros and cons of opening a company in Latvia for residents of the Russian Federation

There is no foreign exchange control in Latvia as is. Control over the activities of foreign IT firms is objectively poorly developed. As a result, opening a company in Latvia becomes attractive for residents of the Russian Federation.

Main advantages of opening an IT company in Latvia can be summarized as follows:

1. 1. There are preferential dividend regimes.
2. 2. Income tax is 15%, which is one of the lowest rates in the EU member states.
3. 3. A non-resident who has opened a company in Latvia is granted the right to a residence permit upon fulfilling some requirements.
4. 4. It is easier to open a multiple-entry visa, which gives the right to freely move around the EU member states.
5. 5. Establishing a company also allows to obtain a tax resident certificate of the country, which allows to pay taxes at favorable Latvian rates.

However, there are also downsides to consider:

1. 1. There is no offshore zone in Latvia.
2. 2. The country is fighting shell companies. Therefore, the firm must conduct real economic activity and be transparent.
3. 3. The history of deposits in the ABLV Bank has shown that Russian customers must be careful when making investments in Latvia.

Establishing an IT company in Latvia is objectively profitable and comes with a number of advantages. However, in order not to end up disappointed, you first need to study all the details and get legal advice.

Registering an IT company in Latvia may first seem like a complicated procedure. However, it becomes much easier if the entire process is delegated. In this case, you get advantages associated with operating in this jurisdiction. Please request details at veritaslaw2009@gmail.com.

Please inform us about the goals of the company first. We will offer an algorithm for registering the company for your purposes and make a price offer for setting up business in Latvia in the second stage.

We will handle all legal documentation and statements in the third stage.

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