OpusGuide: Latvia – Limited Liability
Companies*

Latvia is an EU country and the Latvian government is openly focussing on attracting foreign businesspeople by offering them low CIT, untaxed dividends and special economic zones. Registering a company takes 3 days in Latvia

 

LEGAL FORM	A Latvian Limited Liability Company is called “Sabiedrība ar ierobežotu atbildību” (SIA).
SPHERE OF ACTIVITIES	All are legally allowed; there is no requirement to get permission (this does not apply to regulated activities).
POLISH EQUIVALENT	Spółka z ograniczoną odpowiedzialnością prawa polskiego.

FUNCTION OF THE EQUIVALENT BODY	ownership	A Partner (shareholder) in the Company may be a legal or natural person; single-person companies can be set up; shareholders are disclosed in the Latvian Register of Companies – “Latvijas Republikas Uznemumu Registrs”.
	management	The management (“Valde”) is an obligatory body and must consist of only natural persons of which there must be at least one.
	supervisory	The supervisory board (“Padome”) is an optional body; if one is appointed it should consist of a minimum of three members; the functions of a management board member cannot be combined with those of a supervisory board member.
USE OF TRUSTEESHIPS	Nominee shareholder	Not provided for in Latvian law, trustee confidentiality is not respected by courts.
	Board of Trustees	Not regulated by Latvian law, trustee confidentiality is not respected by courts but is admissible based on freedom of contract.
MINIMUM SHARE CAPITAL		Minimum share capital is 2,846 Euros. 50% of the value of the share capital should be paid prior to beginning the Company’s registration procedure. It is possible to register a company with a reduced share capital amounting to a minimum of 1 Euro.
ACCOUNTING / AUDITING		The Company’s accounts are conducted according to the Latvian Act on Accounting; the Company is obliged to submit annually a financial statement examined by an auditor to the Latvian Register of Companies as well as the Tax Office. Exemptions from conducting an audit or provided for.
HEARDQUARTERS		Required in the territory of the Republic of Latvia.

TIMESCALES	foundation	Type of entry: constitutive. Waiting period: 3 days.
	winding up	Waiting period: at least 6 months.
BANK ACCOUNT		In any bank including those outside Latvia.
NATIONAL CURRENCY		The Euro
OFFICIAL LANGUAGE		Latvian
FISCAL YEAR		The same as the calendar year or financial year, but cannot be shorter than 12 months.

TAXES	income (CIT)	Tax rate: 15%, microenterprises 9%. Residence: the Company obtains residency on the basis of being entered in the Register of Companies. Residents are subject to unlimited tax obligations. Non-residents are subject to limited tax obligations regarding income obtained from sources based in Latvia. Income subject to taxation is calculated according to the company’s books.
	taxation of particular sources of income	Dividends received by Latvian companies are exempt from tax. An exception is made for dividends received from entities based in a country on a “black list” (socalled “tax havens”). Profits from the transfer of title to shares are tax free. Others are subject to 15% tax.
	withholding tax (WHT)	Dividends, royalties and interest paid to non-residents of Latvia are exempt from WHT (with the exception of those paid to residents of countries on the black list).
	special tax regime	Holding companies: under Latvian law there is an advantageous law for holding companies (exemption from CIT on dividends and capital gains, as well as from WHT as mentioned above). Special economic zones: entities can conduct activities, via a special licence, in an economic zone or free port while taking advantage of tax breaks of up to 80%.
ANTI-TAX-AVOIDANCE RULES		Transfer pricing: YES Thin capitalisation: YES CFC: NO Note: there is a “black list” of countries engaged in harmful tax competition.

* data binding as of 28th April 2014