Doing business in Latvia

If you're looking to start a company in Europe, Latvia may be the perfect place for you. This Baltic country is located in the heart of the continent, and it has a thriving economy that offers plenty of opportunities for businesses of all sizes. In this blog post, we'll discuss everything you need to know about doing business in Latvia. We'll cover topics such as getting funded, the advantages and disadvantages of doing business here, and how Latvia compares to its neighbors on the continent. So if you're thinking about starting or expanding your business into Europe, be sure to read this post!

Business opportunities in Latvia

Latvia offers plenty of business opportunities for companies of all sizes. The country has a thriving economy with a favorable tax regime for startups.

Latvian businesses also have access to all sorts of funding opportunities and support from the government, which makes it easier to get started here. Additionally, Latvia is well-positioned as a gateway to the larger Eastern markets and even the Nordics.

Challenges of doing business in Latvia

However, there are also some challenges that businesses face in Latvia. The country is relatively small, so it can be difficult to reach a large audience. The country is closely connected to its Baltic and Eastern European neighbours, so you can use Latvia as a base for the rest of the region.

Furthermore, many skilled workers in Latvia move abroad to earn better wages and a better living, which can make it a challenge to find new employees.

Additionally, the business environment can be competitive and challenging to navigate. But with the right planning and preparation, doing business in Latvia can be very rewarding.

Finally, not everyone speaks English very well. The younger generation generally does speak English, but this is something you should be aware of.

Company formation in Latvia

1. First, you'll need to choose a business structure for your company. Latvia offers a variety of options, including limited liability companies (LLCs), joint stock companies (JSCs), and partnerships.

2. Next, you'll need to register your company with the Latvian government. This process can be done online, and you'll need to provide some basic information about your company.

3. Once your company is registered, you'll need to open a bank account and obtain a tax identification number. These steps can be completed at any local bank or through the Latvian Tax Authority.

4. Finally, you'll need to get your company up and running! This may include hiring employees, setting up an office, and marketing your business to consumers in Latvia and beyond.

You can find the full process on the website of the Latvian authorities.

Taxes and obligations for businesses in Latvia

Every business in Latvia pays the following taxes:

• Corporate income tax (CIT)
• Personal income tax (PIT)
• Mandatory state social insurance contributions (MSSIC)

Depending on your type of business you may also have to pay:

• Vehicle operation tax
• Company car tax
• Electricity tax
• Subsidised electricity tax
• Immovable property tax
• Labour resource tax
• Excise duty
• Lottery and Gambling Tax
• Value added tax

Tax advantages of doing business in Latvia

Latvia offers a number of tax advantages for businesses operating in the country. Firstly, businesses can benefit from a flat corporate tax rate. Additionally, businesses can also receive a number of deductions and exemptions for expenses related to their business activities.

Furthermore, taxation of profits is postponed until those profits are distributed as dividends or deemed to be distributed. What this means is that businesses can keep their profits in the company without paying taxes on them, as long as the profits are not distributed as dividends or deemed to be distributed. This can be a helpful tax advantage for businesses looking to expand and reinvest their profits back into the company.

Latvia offers a number of favorable conditions for startups. For example, the government offers startup grants and tax breaks to help businesses get started. Additionally, the business environment is relatively easy to navigate, and most people in Latvia speak English.

Then there is the so-called Startup Law. This law foresees two benefit scenarios: 1) a special flat tax regime, around 350 euros per month per employee, regardless of salary paid, combined with the 0% individual income tax rate, or 2) 45% co-financing for the highly qualified specialists.

Another great feature are Latvia's free ports and special economic zones (SEZs) that provide tax exemptions and other benefits to businesses operating within them. The most notable free ports are in Riga and Ventspils, while the most notable SEZs are in Liepaja and Rezekne.

If you're interested in starting or expanding your business into one of these areas, be sure to contact the local authorities for more information. They can provide you with all the details about the tax exemptions and other benefits offered by each area.

Business bank account in Latvia

Opening a business bank account in Latvia can be a challenge, but it's definitely doable. Here are some tips to help you get started:

1. Make sure you have all the required documents. Most banks will require a copy of your company's registration documents, as well as your tax identification number and proof of address.

2. Contact the bank in advance to inquire about their requirements. Each bank has its own set of rules and regulations, so it's important to make sure you're aware of them before you start the process.

3. Be prepared for a long wait time. Opening a business bank account in Latvia can take longer than in other countries, so be patient and allow plenty of time for the process.

4. Be prepared to pay fees. Business bank accounts in Latvia come with various fees, including account maintenance fees, wire transfer fees, and more. Make sure you're aware of these fees before opening an account.

5. Have a local representative if possible. If you don't speak Latvian or Russian, it might be helpful to have someone on-site who can help you with the process and act as your representative.

Visa and relocation to Latvia

Latvia is a member of the EU and therefore EU and EEA citizens can freely live, work and start up a business here.

Non-EU citizens on the other hand, should apply for a working and residence permit.

If you're interested in starting a business in Latvia, the government offers a startup visa to help you get started. This visa is a temporary residence permit that's offered to all non-EU startup founders who are willing to come and develop their startup ideas in Latvia.

The process of obtaining a startup visa is relatively easy, and the government offers a number of benefits to help you get started. One startup can have up to 5 founders with a startup visa. The application process takes one month. The visa is given for the period of maximum 3 years and it is spouse and children-friendly.

Legal compliance in Latvia

When doing business in Latvia, it's important to have a number of legal documents and contracts in place. Here are some of the most important ones:

1. Corporate documents. These include your company's articles of association, bylaws, and shareholders agreement. Make sure you have a copy of each document in English, as well as Latvian, to ensure that you're compliant with local law.

2. Employment contracts. It's important to have written employment contracts in place for all employees in Latvia. The contracts should specify the rights and obligations of both the employer and employee, as well as any benefits that are provided.

3. Lease or purchase agreement for office space. If you're renting or purchasing office space in Latvia, it's important to have a written agreement in place. The agreement should state the terms and conditions of the lease or purchase, as well as any penalties for early termination.

4. Service contract template. When hiring a service provider in Latvia (such as an accountant, lawyer, or marketing firm), it's important to have a written contract in place detailing the services to be provided, as well as the fees and payment terms.

5. Partnership or shareholders' agreement. If you're starting a business partnership or limited company in Latvia, it's important to have a written agreement specifying the rights and responsibilities of each partner, as well as how profits will be shared.

Virtual office and office space in Latvia

If you're looking for a cost-effective way to get started in business in Latvia, a virtual office might be the perfect solution. A virtual office provides all the benefits of having an office space without the added expense of renting or purchasing a physical space.

There are a number of providers of virtual offices in Latvia, so be sure to do your research before choosing one. Make sure you read reviews and compare pricing and services offered by different providers.

If you're not ready to commit to a full-time virtual office, many providers also offer part-time options, which can be great for freelancers or entrepreneurs who are just starting out.

For businesses that are ready to take the next step, there are also a number of options for renting or purchasing office space in Latvia. The most notable free ports are in Riga and Ventspils, while the most notable SEZs are in Liepaja and Rezekne.

Be sure to contact the local authorities for more information about these areas and what benefits they offer businesses operating within them.

Fund your company in Latvia

There are a number of ways to fund your company in Latvia. Here are some of the most popular options:

1. Bank loans. There are a number of banks in Latvia that offer business loans. Be sure to compare interest rates and terms before applying.

2. Venture capital. Latvia is home to a number of venture capital firms that are eager to invest in promising businesses. If you have a solid business plan, you may be able to secure funding from one of these firms.

3. Grants and subsidies. The Latvian government offers a variety of grants and subsidies for businesses operating in the country. These funds can be used for a variety of purposes, including start-up costs, marketing, and hiring new employees.

4. Crowdfunding. A growing number of businesses in Latvia are using crowdfunding to raise money from individual investors online. This can be a great way to get your business off the ground without having to take out a loan.

Hiring employees in Latvia

If you're looking to hire employees in Latvia, there are a few things you should keep in mind:

1. The minimum wage in Latvia is around EUR 500 per month.

2. In order to hire an employee in Latvia, you must first register with the State Employment Agency.

3. Employees in Latvia are entitled to a number of benefits, including paid vacation, sick leave, and parental leave. It is not as strict or expensive as in many other European and particularly Scandinavian countries. For example, the employer must pay sick pay from the second to the 10th day of the illness period (no payment for the first day).

4. Be sure to have a written contract in place detailing the terms and conditions of employment.