OpusGuide: Latvia – Limited Liability
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
|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
|Not provided for in Latvian law, trustee confidentiality is not respected by courts.|
|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|
|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
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
Note: there is a “black list” of countries engaged in harmful tax competition.
* data binding as of 28th April 2014