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Starting business in Latvia

  • Latvia
  • Corporate

20-12-2021

Most businesses in Latvia are conducted in the form of a capital company. There are two general types of capital companies in Latvia – limited liability companies, in Latvian "sabiedrība ar ierobežotu atbildību" abbreviated as "SIA", and joint stock companies, in Latvian "akciju sabiedrība" abbreviated as "AS". Other forms of business include different types of personal liability of the founders and members (partnerships). It is also possible to establish branches, representative offices and permanent establishments in Latvia.

Both limited liability companies and joint stock companies are considered independent legal entities, which are liable for their obligations with all their property. The minimum share capital of a limited liability company in Latvia is EUR 2,800, for joint stock companies it is EUR 35,000. Upon incorporation of an entity, its governing bodies have to be elected – for a limited liability company – at least one board member, for joint stock companies – at least one board member and at least three supervisory board members. Board members have to be natural persons and there are no specific nationality or residency requirements for board members.

Limited liability companies can be established to carry out most types of business activities, however exceptions may apply. Joint stock companies may also pursue various business activities, including regulated business activities such as insurance or financial services.

In some cases, it may be easier and more convenient to establish a branch, representative office or a permanent establishment in Latvia. A branch is an organisationally independent part of the company, which is separated from the principal company, either territorially or otherwise. The branch performs commercial activities in the name of the merchant and is registered with the Commercial Register.

Representative offices are established for the purposes of market research, information exchange and creating business opportunities, however they are not considered a legal entity and do not have the right to conduct commercial activities in Latvia.

Permanent establishment is a separate taxpaying entity registered with the local tax authority (State revenue service) for the purpose of application of all taxes.

It is important to choose a unique name for the company and to maintain a registered address in Latvia. The company name may include the country name "Latvia" and must specify the legal form. Only letters of the Latvian or Latin alphabet may be included in the writing of a company name. Name reservation is not available.

Note that the Latvian Commercial Register will not allow registration if there is already a company registered with such name.

AML requirements must be observed upon registering a company in Latvia. Companies in Latvia are obliged to submit to the Commercial Register information on their ultimate beneficial owners (and documentary evidence supporting such information). Note that information on the beneficial owners has to be updated upon changes in the company, such as changes to the management board or the shareholders.

Upon preparation of the incorporation documents, such as incorporation resolution, articles of association, shareholders' register, and other documents, the documents are signed and filed with the Commercial Register. Upon filing of the documents, the registration process takes three business days.