BRIS GROUP · Company Formation & Taxation
Latvia Company Formation FAQ
Current guidance on Latvian SIA incorporation, reduced-capital companies, foreign owners, distributed-profit taxation and annual compliance.
Before you begin
Frequently asked questions about Latvia
Latvia offers a standard SIA and a reduced-capital SIA subject to specific ownership conditions. Its corporate tax generally arises on distributed or deemed-distributed profits, not ordinary retained earnings.
Company formation in Latvia
What is a Latvia company?
A Latvian company is an entity registered with the Enterprise Register under the Commercial Law. A private limited liability company (SIA) is the most common option for local and international entrepreneurs.
What types of companies can be formed in Latvia?
Common forms include the SIA (private limited liability company), AS (joint-stock company), partnerships and branches. A reduced-capital SIA is a special version of the SIA, not a separate offshore regime.
Who can incorporate a company in Latvia?
Residents and non-residents may generally establish a standard SIA, and corporate shareholders are permitted. A reduced-capital SIA has additional restrictions, including that shareholders must be natural persons and there can be no more than five.
How long does Latvia company registration take?
The Enterprise Register may review correctly filed applications within a few working days, depending on the service and documents. Preparation, signature authentication, foreign documents and bank onboarding can extend the overall process.
What documents are required for incorporation?
Usually an incorporation decision or agreement, articles of association, shareholders' register division, registered-office details, board information, capital-payment evidence as applicable, and beneficial-owner information. Identification and foreign-document formalities depend on the case.
What is the minimum share capital for a Latvian company?
The ordinary SIA requires at least €2,800. A qualifying reduced-capital SIA may be formed with capital below €2,800, including €1, but it must satisfy statutory conditions concerning natural-person shareholders and board members.
Do I need a local director or shareholder?
A standard SIA does not generally require a Latvian-resident shareholder or board member. It must have a registered legal address in Latvia, and foreign management can create practical banking or tax issues.
Can a Latvia company hold assets abroad?
Yes. An SIA may own foreign investments and assets subject to its articles, applicable foreign law, accounting and tax rules.
Is physical presence required to open a company?
Electronic filing is possible where the relevant parties have acceptable qualified electronic signatures. Other cases may need notarised signatures, apostilles or authorised representatives; bank identification is a separate matter.
How private is company ownership in Latvia?
The Enterprise Register makes substantial company and beneficial-ownership information available under Latvian law. Do not assume beneficial owners are disclosed only to authorities and banks.
Can I open a corporate bank account in Latvia?
An SIA may apply to Latvian or other EEA banks and payment institutions. Approval is independent of incorporation and depends on ownership, activities, source of funds and commercial connection.
What are the annual compliance requirements?
Maintain accounting records and file annual financial statements with the State Revenue Service, plus applicable corporate tax, VAT, payroll and statistical returns. Update the Enterprise Register when registered information changes.
Can a company be owned by another legal entity?
Yes, a standard SIA may have corporate shareholders. A reduced-capital SIA is subject to stricter natural-person ownership requirements.
How can I dissolve a Latvia company?
Voluntary liquidation involves shareholder decisions, appointment of liquidators, creditor notifications, settlement of obligations and registration of the liquidation and final removal.
Why choose Latvia for company formation?
EU access, a digital business registry and deferred corporate taxation of retained profits can be attractive. Review accounting, VAT, local management and the owners' foreign tax obligations.
Taxation and ongoing compliance
What is the corporate income tax rate in Latvia?
The standard corporate income tax is 20% of a tax base calculated by dividing distributed or deemed-distributed profit by 0.8 (equivalent to 25% of the net amount). From 2026, an optional regime for qualifying companies owned solely by natural persons may apply 15% corporate tax to grossed-up dividends together with 6% personal income tax; eligibility must be checked.
How does Latvia’s profit distribution tax system work?
Ordinary retained and reinvested profits generally do not trigger corporate income tax. Tax is due on dividends and deemed distributions, including certain non-business expenses, related-party loans and transfer-pricing adjustments.
Are dividends taxed in Latvia?
Under the standard system, dividends from profits already subject to Latvian corporate tax are generally not taxed again at the individual shareholder level in Latvia, subject to applicable conditions. A separate optional 2026 regime may involve personal income tax. Payments to certain low-tax jurisdictions can have special withholding rules.
Is there VAT in Latvia?
Yes. The standard VAT rate is 21%, with reduced rates of 12% and 5% for qualifying supplies. Registration, place-of-supply and cross-border rules must be considered.
Are there double taxation agreements (DTAs)?
Latvia has an extensive treaty network. Treaty relief depends on the specific agreement, tax residence, type of income and eligibility; treaties do not eliminate the need for domestic compliance.
Are there capital gains taxes?
Corporate gains normally enter the retained-profit system, so tax generally arises when profits are distributed or deemed distributed. Specific relief may apply to qualifying disposals of shares held for at least 36 months, subject to exceptions.
What about personal income tax for company owners?
The old personal-income-tax bands of 20%, 23% and 31% are outdated. Since 2025, general Latvian PIT rates include 25.5% and 33%, with an additional 3% charge on certain high annual income; dividend treatment is distinct.
Are there payroll or social security contributions?
Employment generally triggers Latvian payroll withholding and social insurance contributions. Standard social contribution rates are commonly 23.59% employer and 10.5% employee, subject to exceptions and annual changes.
Can a Latvia company benefit from EU funding?
Potentially. Latvian companies may apply for eligible EU or national programmes, but awards depend on sector, project, location, calls for proposals and programme rules.
Are there tax incentives for foreign investors?
Incentives may be available for qualifying activities in special economic zones or free ports and for other eligible projects. Tax relief depends on licences, investment conditions and state-aid limits.
Does Latvia have a holding company regime?
Latvia offers specific rules for dividends and qualifying share disposals, but there is no universal exemption for all interest, royalties or outbound payments. Withholding, treaty and anti-avoidance rules must be reviewed.
How are losses treated for tax purposes?
The old pre-2018 loss carry-forward system does not mean that all current losses may be carried forward indefinitely to offset distributed-profit tax. The present system taxes specified distributions and deemed distributions.
Are transfer pricing rules applicable?
Yes. Transactions between related parties must follow arm's-length principles. Documentation and reporting requirements depend on the transaction value, counterparties and applicable thresholds.
Can a Latvia company be tax resident elsewhere?
A company incorporated in Latvia is generally treated as a Latvian resident under domestic law. Foreign management may create additional residence or permanent-establishment issues abroad; treaty analysis may be necessary.
Why is Latvia attractive for international tax planning?
The deferral of tax on retained profits may help reinvestment, but corporate distributions, deemed distributions, VAT, payroll, reporting and shareholders' home-country rules remain relevant.
Continue your research
Further guidance
Explore the Latvia service page and related practical guides.
Official references: Enterprise Register — Business Types · Enterprise Register — SIA · State Revenue Service — Corporate Income Tax · State Revenue Service — 2026 Tax Rates