Doing Business in Latvia

Legal office LM LAW OFFICE offers international customers the following services:

1. Establishment of a branch in Latvia

A branch is a foreign company’s organizational standing (independent) part, which is territorially or otherwise separated from the company. On behalf of the foreign company in the location place of a branch there are carried out systematic commercial activities. Branch does not need to create share capital. The main company is responsible for the commercial activities made by branch. The main task of the branch is to conduct business in a particular place, thus expanding the company’s market availability, and gaining more income. As a general rule, the branches established in Latvia cannot operate business before being registered in the Register of Enterprise in Riga. If the branch will hire employees there is also required to apply for the social insurance contribution, process regulated also by the State Revenue Service. As a difference between the branches opened in another country and a branch registered in Latvia is that is not mandatory for the representative to be a Latvian resident. The branches opened in Latvia are subject to income taxation and VAT and if the foreign company must reveal annual reports, a copy of it along with the report of audit of these accounts must be deposited at the Register of Enterprise in Riga.

Necessary documents for establishment of a branch

Necessary documents are: the certificate of registration of the foreign company or a proof of existence in that country, the permission of opening a branch (in certain cases regulated by law), the articles of association and the memorandum of association or any constitutive acts, a proof of the director’s authority, the consent of the owner of the property where the branch will have its registered office (including the cadastre number, personal ID of the owner or the registration number). Along with the above, an application containing the following information must be delivered: the name and the registered address of the foreign company, the name and address of the foreign register where the company is recorded, the registration number of the foreign company, the legal form of business of the foreign company, the amount of capital owned by the foreign company, the name and address of the branch, the name and address of the branch’s representatives and the powers of each representative. Legal office LM LAW OFFICE will prepare all the necessary documents for registration of a branch in Latvia.

The above must be legalized and notarized in the country of origin and accompanied by a Latvian translation. After registration in the Commercial Registry, is necessary to apply for the VAT and the specific taxes at the State Revenue Service.

Branch registration procedure Latvia

After receiving the information from the client and after all legal documentation is made, legal office LM LAW OFFICE will organizes signing of made document and will submit the documents in the Register of Enterprise in Riga.

Branch registration costs

State fee for registration of the branch – 30 EUR

The cost of the publication in the official publisher “The Latvian Herald” – 18,50 EUR

Signature certification – 7,11 EUR (one signature)

Legal costs – 300 EUR

2. Establishment of a Latvia Representative Office

The foreign company representative offices are established for the purpose of a foreign company to enter a particular market. Representative office is not a legal entity and is not allowed to enter into employment contracts and pay salaries. Accordingly, to open a bank account in Latvia and pay daily expenses can only foreign company. As to salary taxes – salary will be liable to tax because this income is made from the work which is done in Latvia. Tax payments can be done by natural person or foreign company before registering in the State Revenue Service. The foreign companies chose this type of representation because of the small administrative costs and with the desire to check the opportunities offered by the Latvian market. If a representative office starts any commercial activities, it must be registered as a branch of the foreign company and must be registered for the specific taxes. Representative office must be registered in the Register of Enterprise in Riga. A company willing to open a representative office in Latvia doesn’t need to submit any share capital mostly because the representative office is not capable of producing any profit.

Necessary documents for the setup of a Representative Office in Latvia

The necessary documents to register a representative office in Latvia are the following: the standard application for register, the Memorandum of Association and the Articles of Incorporation of the parent company, the registration certificate of the parent company, an authorized decision of the foreign company to open the registered office in Latvia, the decision appointing the representative of the registered office, a document confirming the legal address of the registered office, the notarized signature sample of the head of the registered office, the notarized copy of the registered office representative person’s passport, a proof of payment of the state fee for recording the registered office in the Commercial Register, a proof of payment of the announcement in the official publisher “Latvian Herald”. All the specific documents must be followed by the notarized and legalized translation into Latvian. Legal office LM LAW OFFICE will prepare all the necessary documents for registration of the representative office in Latvia.

Representative office registration procedure Latvia

Representation office registration costs

State fee for registration of the representative office – 28,46 EUR

The cost of the publication in the official publisher “The Latvian Herald” – 0 EUR

Signature certification – 7,11 EUR (one signature)

Legal costs – 300 EUR.

3. Company formation in Latvia

To register a company in Latvia, first of all, you must choose the correct legal form of business in Latvia. Registration in the Register of Enterprise in Riga is mandatory for doing business in Latvia. Foreign entrepreneurs usually register the following types of undertakings: limited liability company (SIA), joint stock company (AS), branch, representative office of foreign merchant. Founding SIA or AS, client must remember that there will be additional costs of share capital. Founding SIA you will need to invest in the share capital of 2 800 EUR or there may be formed micro-enterprises, where the share capital is lower, as indicated in the SIA case (it can also be 1 EUR). Founding AS share capital to be paid not less than 35 000 EUR. In addition, the Board of both forms is responsible with their belongings on the company’s tax liabilities. Afterwards, the company can legally enter into transactions and run the business. There is required to apply at State Revenue Services and to register as Value Added Tax payer.

Necessary incorporation documents

At the very beginning it is necessary to adopt a Decision on foundation. The decision on foundation might be equitable to Memorandum of Association in Western Europe countries. Secondly, Articles of Association should be drafted. According to Latvian Commercial Law, Articles of Association is most important document for company`s internal organization perspective which should be in line with the Decision on foundation and following records in the Commercial Register. It is necessary to pay the equity capital. The minimum of equity capital is EUR 2850 and it is not required to pay the entire equity capital at the moment of registration; the remaining sum might be paid within one year. Usually the founders open a temporary bank account in order to pay the equity capital. At this stage, the banks frequently ask questions related to the business and expected money flow in the account. Usually it is not problematic for foreigners to open a bank account, though our office has supported the clients at this stage if necessary.

Legal office LM LAW OFFICE may assist and draft other documentation necessary for running business in Latvia, for example, to obtain license, certificate or registration before the competent state authorities.

Company formation procedure in Latvia

After receiving the information from the client and after all legal documentation is made, legal office LM LAW OFFICE will organizes signing of made documents. There shall be opened in the bank in Latvia temporary account where shall be paid share capital of the company (at the time of establishment of the company may be paid 50% within 1 year there shall be paid second part of 50%). After a temporary account is opened and document signed by all parties’ legal office LM LAW OFFICE submits documents, as well as a receipt for the payment of the share capital, in the Register of Enterprise in Riga. After the establishment of the company there shall be opened in the bank an independent company account.

Company formation costs

SIA with the share capital of 2800 EUR: state fee for registration the company – 150 EUR, cost of the publication in the official publisher “The Latvian Herald” – 27,03 EUR

SIA with share capital under 2800 EUR: state fee for registration the company – 20 EUR, cost of the publication in the official publisher “The Latvian Herald” – 14,23 EUR

AS formation state fee – 350 EUR, cost of the publication in the official publisher “The Latvian Herald” – 27,03 EUR

Signature certification – 7,11 EUR (one signature)

Legal costs – 200-300 EUR.

4. Residence permit in Latvia

A residence permit is a document providing a foreigner the rights to reside in the Republic of Latvia for a definite period of time (a temporary residence permit) or permanently (a permanent residence permit). A residence permit is necessary if you are willing to reside in the Republic of Latvia for a period of time exceeding 90 days within half a year counting from the first day of entrance. A residence permit is issued by the Office of Citizenship and Migration Affairs in Latvia (OCMA). Latvian Immigration Law provides several ways for foreign investor to obtain a residence permit in Latvia.The most usual options are:

Residence permit by investment in real estate, for example, purchase of apartment. The minimal investment level for real estate purchase is EUR 250 000 – this should be the price of one property unit.
Residence permit for company manager, for example, Manager Director, Chief Executive, Board Member – if a foreigner is registered in Register of Enterprise in Riga as a member of the board or member of the council, procurator, administrator or liquidator of the company, who have the right to represent the company or as a person, who is authorized to represent a merchant (a foreign merchant) in activities related to the branch, if commercial activities of the company or branch of a foreign merchant is entered in the commercial register at least 1 year prior to requesting of a temporary residence permit, and the enterprise operates an active economic activity, which results as economic benefit of Latvia.
Residence permit through investment in share capital in the status of shareholder, for example, company formation and registration or acceding to existing company with significant investment:

– 35 000 EUR, this company employs not more than 50 employees, an annual budget does not exceed 10 million EUR and the undertaking has paid taxes to the state budget and local government budget in the amount of at least 40 000 EUR during the financial year (unless a new company is established, confirming the payment of taxes is not required); carrying out investments in fixed assets, a temporary residence permit may be asked for not more than three foreigners;

– 150 000 EUR, the company employs more than 50 employees, an annual budget is over 10 million EUR (in this case, the presentation of any evidence on paid taxes is not required).

Residence permit through investments in subordinated capital of credit institution – if a foreigner has subordinated liabilities to credit institutions of Latvia in the amount of not less than 280 000 EUR, the term of the transaction concluded with the credit institution is not less than 5 years, and he has paid to the state budget a contribution in the amount of 25,000 EUR.
Formation representative office in Latvia – see below.

Other options (non-investment related)

Student visa: Latvian Immigration Law also provides residency for students. Residence permit for students. EU Blue card: If you are highly qualified you can apply for Blue Card.

Costs for receiving residence permit

State fee for submission of documents ~ 200EUR

Legal costs – 500 EUR.