Good to know
Good to Know
- You do not need to be a Latvian resident, live in Latvia, or have a local partner to own 100% of a company here — this makes Riga genuinely accessible for remote incorporation by foreigners.
- Opening a real operating bank account is usually the slowest part of the process, often taking longer than the registration itself, especially for founders with no physical presence, employees, or local business activity in Latvia — plan for this bottleneck rather than assuming you'll be operational the same week you register.
- The €1 'low-capital' SIA sounds appealing but is restricted to individual (non-corporate) founders, capped at five shareholders, cannot pay extraordinary dividends, and must set aside a share of annual profits into a reserve fund until capital reaches €2,800 — many serious nomad businesses still opt for the standard €2,800-capital SIA for credibility with banks and clients.
- All official filings and annual financial statements must be in Latvian, so budget for certified translation if your documents are in English, unless you're using electronic signatures with pre-approved bilingual templates.
- Latvia's headline feature is that a company (SIA) pays 0% corporate tax on profit it keeps and reinvests — tax only becomes due when profit is actually paid out as dividends, so cash-flow planning around distribution timing matters a lot.
- The 20% distributed-profit rate is applied to a grossed-up base, so the real-world cost of paying out €1,000 net to shareholders is about €250 in tax — effectively a 25% rate, not 20%.
- From 2026 there's a new opt-in regime (15% CIT + 6% personal tax withheld) aimed specifically at companies owned only by individuals — useful if your home country won't credit Latvia's company-level tax against your personal tax bill there, but this is very newly introduced so practical implementation details are still settling.
- As a solo foreign freelancer, self-employed registration is far simpler and cheaper to set up than a SIA, but you carry unlimited personal liability and owe minimum social security contributions even in months with no income.
- A SIA's paperwork bottleneck usually isn't the company registration itself (a few business days) — it's getting a functioning business bank account, which can take several weeks and is worth starting in parallel with registration.
- VAT registration only becomes mandatory once annual taxable turnover passes €50,000; below that it's optional, which matters for smaller nomad-run service businesses invoicing mostly non-Latvian clients.
VAT
- Standard Rate Pct
- 21
- Mandatory Registration Threshold
- €50,000
Mandatory VAT registration once annual taxable turnover exceeds this threshold; registration is optional below it.
- Note 2026 Pilot
- A temporary pilot from 1 July 2026 to 30 June 2027 cuts VAT on a short list of essential foods (bread, milk, fresh poultry, fresh eggs) from 21% to 12%; this is a household cost-of-living measure and not directly relevant to most nomad service businesses.
Reduced Rates Pct
- 12
- 5
Corporate Income Tax System
- Retained Reinvested Profit Rate
- 0% — profit kept in the business (not paid out as dividends or used for non-business purposes) is not taxed.
- Model
- Latvia only taxes corporate profit when it is distributed, not when it is earned.
- Capital Gains
- Taxed as part of ordinary corporate income only when the gain is distributed — 0% while retained.
- Alternative Minimum Tax
- A minimum annual CIT of €50 applies if no salary-related tax payments were made during the calendar year.
- Dividends Received From Other Companies
- Generally excluded from the CIT base (participation exemption), except dividends from blacklisted tax-haven jurisdictions or artificial structures.
- Withholding Tax On Dividends To Foreign Owners
- No separate Latvian withholding tax on dividends paid to non-resident individuals or companies — tax is captured at the distributing company level via the mechanism above.
New 2026 Alternative Regime
- Purpose
- Introduced from 1 January 2026 mainly so non-resident shareholders can more easily claim a foreign tax credit at home, since many countries (Germany, US, etc.) do not recognise Latvia's company-level CIT as tax paid by the individual under the old system.
- Structure
- Alternative option of 15% CIT (grossed up on a 0.85 coefficient) plus 6% personal income tax withheld from the dividend paid to the individual shareholder.
- Applies To
- Companies whose direct shareholders are exclusively natural persons (individuals, not other companies).
- Total Burden Note
- Overall combined burden stays roughly similar to the standard ~20-25% system; companies choose which regime to apply for each distribution.
Standard Distributed Profit Rate
- Nominal Rate Pct
- 20
- Effective Rate Pct
- 25
- Mechanism
- The taxable base is divided by a coefficient of 0.8 before the 20% rate is applied, which produces an effective rate of about 25% on the net amount distributed.
Structure Comparison For A Foreigner
- Transition Path
- It is common and administratively straightforward for a foreigner to start as self-employed and later deregister that status and register a SIA once revenue and client base justify the added cost and complexity.
Self Employed Person
- Taxes
- Progressive personal income tax on (revenue minus allowable expenses minus social contributions), paid via quarterly advance payments, plus mandatory state social insurance contributions (VSAOI).
- Best Fit
- Simple freelance/consulting work, lower income levels, low liability risk, wanting minimal paperwork.
- Liability
- Unlimited personal liability — no legal separation between personal and business assets.
- Latvian Term
- saimnieciskās darbības veicējs / pašnodarbinātā persona
- Legal Nature
- A personal tax/registration status for a natural person, not a separate legal entity — no share capital, no articles of association, no obligation to file annual company accounts.
- Who Can Use It
- EU/EEA citizens with registered residence in Latvia face no extra requirements; third-country nationals need a residence permit that permits economic activity.
- Minimum Social Contribution
- Self-employed persons who are not also employees must make minimum mandatory state pension insurance contributions regardless of actual income level, based on minimum-wage-linked calculations by the Social Insurance Agency.
Individual Merchant Ik
- Taxes
- Same personal income tax treatment as self-employed status, but with the added formality of commercial registration.
- Best Fit
- Cases where having a registered trade name/commercial registration matters for client trust or contracts, but a full SIA structure isn't wanted.
- Liability
- Unlimited — owner is personally liable for all business debts.
- Latvian Term
- Individuālais komersants (IK)
- Legal Nature
- A sole proprietorship registered in the Commercial Register — still not a separate legal entity from its owner.
- Who Can Use It
- Foreigners can register as an IK provided they have a legal address, valid ID, and meet any migration/residence permit requirements; documents typically need to be in Latvian or officially translated.
- Minimum Capital
- None required.
Sia Limited Liability Company
- Best Fit
- Growing businesses, anyone hiring staff or carrying liability exposure, and higher-revenue freelancers/consultants — the tax gap between self-employed and SIA widens substantially in the SIA's favor as income grows, largely because of the 0% rate on reinvested profit.
- Liability
- Limited to the company's assets — the owner's personal assets are protected from business debts.
- Latvian Term
- Sabiedrība ar ierobežotu atbildību (SIA)
- Legal Nature
- A separate legal entity; the most commonly used company form in Latvia.
- Registration Time
- The Commercial Register entry itself is typically completed in 1–5 business days once documents are ready; opening a working bank account is usually the real bottleneck, commonly taking 2–4 additional weeks.
- Ongoing Obligations
- Requires bookkeeping under Latvian GAAP or IFRS, annual financial statements filed with the Register of Enterprises, and monthly CIT declarations whenever a distribution or deemed distribution occurs.
Minimum Share Capital
- Standard
- €2,800
- Micro Capital Variant
- A low-capital SIA can be formed with share capital from as little as €1–€2,799, but comes with ownership and profit-distribution restrictions.
- Deposit At Registration
- €1,400
At least 50% of standard share capital must be deposited before registration; the remainder within the first year.
Incorporation Process And Requirements
- Overview
- Latvia is broadly open to foreign-owned company formation. There is no requirement for a local partner, local sponsor, resident director, or Latvian citizenship/residency to incorporate. The most common vehicle for foreign entrepreneurs is the SIA (Sabiedrība ar Ierobežotu Atbildību), the Latvian limited liability company.
- Official Registry Link
- https://www.ur.gov.lv/en/register/company-or-merchant/limited-liability-company-sia/
Timeline
- Official Review Time
- 1-3 working days from submission of complete documents to the Enterprise Register, though this can be extended by the registrar under administrative procedure rules.
- Realistic End To End Timeline
- 5-10 working days from having all documents ready to receiving registration confirmation; the full process from initial decisions to a fully operating company (including opening a permanent bank account) commonly takes 3-6 weeks, since bank account opening is usually the bottleneck rather than the registration itself.
- Notes
- Electronic filing with a Qualified Electronic Signature is the fastest route; paper submissions with notarization and courier delivery of documents add time.
Cost Estimate
- State Registration Fee AS
- €85
- Share Capital Standard SIA
- €2,800
- Share Capital Low Capital SIA
- €1.00
- State Registration Fee Branch
- €30
- State Registration Fee Standard SIA
- €75
- State Registration Fee Low Capital SIA
- €20
- Notes
- These are official state fees only. Notary fees (if used instead of electronic signatures), certified translations into Latvian, registered-address services, and accountant/lawyer assistance are extra and vary by provider; using full electronic signatures (eID/Smart-ID/eParaksts) avoids notary costs entirely.
Documents Required
- Application Form KR4 (signed with a Qualified Electronic Signature or notarized)
- Articles of Association
- Memorandum of Association (if more than one founder)
- Proof of share capital deposit (bank statement from the temporary account)
- Founders' and board members' passport/ID copies
- Proof of registered legal address in Latvia (lease, ownership document, or landlord consent letter)
- Board members' signed consent to serve
- Beneficial owner (UBO) disclosure — required for any individual owning or controlling more than 25% of shares
- State fee payment slip/receipt
Standard Process Steps
- Check and reserve a unique company name via the Enterprise Register's online name-check tool.
- Draft the Articles of Association (a standard template is available on the Enterprise Register portal for simple, single-founder companies).
- Open a temporary account at a Latvian bank or licensed payment institution and deposit the share capital (at least 50% of the €2,800 minimum for a standard SIA before filing, or 100% for a low-capital SIA).
- Prepare supporting documents: passport/ID copies of founders and board members, proof of registered office (lease agreement, ownership document, or landlord consent), board members' written consent, and beneficial-owner (UBO) disclosure.
- Complete and submit application Form KR4 plus the founding documents to the Register of Enterprises (Uzņēmumu Registrs, UR), either electronically (with a Qualified Electronic Signature / eID / Smart-ID) or in person/by post with notarized signatures.
- Pay the state registration fee.
- Receive confirmation of registration in the Commercial Register — the company legally exists from the date of entry.
- Register with the State Revenue Service (VID) for tax purposes; this typically happens automatically once UR data is transferred, and the company must additionally register for VAT if turnover is expected to exceed the threshold.
- Convert the temporary bank account into a permanent business account, or open one separately.
Entity Types Available To Foreigners
Standard SIA (LLC)
- Min Share Capital
- €2,800
- Notes
- Founders can be individuals or legal entities, including non-residents. Shareholder liability is limited to their capital contribution.
Low-capital / Micro SIA (Mazkapitāla SIA)
- Min Share Capital
- €1.00
- Notes
- Limited to natural persons only (no corporate founders), maximum five shareholders/founders, and profits must be partly retained in a reserve fund until capital reaches €2,800. Not available to corporate shareholders.
Joint-Stock Company (AS)
- Min Share Capital
- €35,000
- Notes
- Used mainly for larger enterprises or those seeking outside investment; capital must be fully paid before registration.
Branch of a Foreign Company
- Notes
- An alternative for foreign companies that want a Latvian presence without forming a fully separate legal entity.
Local Partner Or Sponsor Requirement
- Details
- A standard SIA has no residency requirement for founders or board members, and foreigners can hold 100% of the shares. A registered legal address in Latvia is mandatory, but this can be a virtual office or registered-address service rather than a local co-owner.
- Required
- No
Micro Enterprise Tax Regime
- Flat Rate On Turnover Pct
- 25
- Status
- Fully legal and regulated
- Eligibility
- Available to sole traders, individual undertakings, farm/fishery operations, and SRS-registered traders who are not VAT-registered; a company (SIA) can also elect a micro-enterprise variant if turnover stays low.
- Revenue Allocation
- 80% of the collected micro-enterprise tax is allocated to mandatory state social security contributions, with the remainder covering personal/corporate income tax.
- Practical Note
- This regime has been progressively made less attractive over the years and is generally only worth considering for very small, low-turnover activity; most accountants now steer growing freelancers toward self-employed status or a standard SIA instead.
Filing Obligations For A Company Sia
- Tax Period
- Calendar month for CIT purposes.
- VAT Filing
- VAT-registered businesses file periodic (typically monthly) VAT returns electronically through the State Revenue Service's EDS (Electronic Declaration System).
- Monthly Filing
- If a taxable event occurs (a dividend is declared, or a non-business/deemed-distribution expense is booked), a CIT return must be filed by the 20th of the following month and the tax paid by the 23rd.
- No Activity Months
- If there are no taxable distributions or deemed distributions in a given month, no CIT declaration is required for that month.
- Annual Requirements
- SIAs must maintain double-entry bookkeeping, prepare annual financial statements/annual report, and file a CIT return for the final month of the financial year covering all other taxable items.
AI-generated estimateData refreshed July 2026
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Data last updated July 2026 · Verify anything important.