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Create a SIA (LTD) Company in Latvia

Create a SIA (LTD) Company in Latvia

Starting a business in Latvia implies completing several steps, however, before reaching that part, it is important to choose a legal vehicle under which it will operate. One of the most entities appreciated by local and foreign investors is the private limited liability company (LTD or SIA in Latvian).

In order to create a private limited liability, you can rely on our company formation agents in Latvia.

Requirements to register a LTD in Latvia

Just like all other business forms, the SIA is also subject to various requirements before the actual incorporation of the business. The following must be ensured in order to benefit from quick and simple company registration in Latvia:

  • –  draft the Memorandum and Articles of Association of the business;
  • –  find an address that can be used as legal or registered address the company;
  • –  prepare the minimum amount of money necessary as a share capital;
  • –  elect the person(s) who will act as company director(s) or manager(s).

In the case of foreign citizens, it should be noted that their identification papers must be translated into Lettish and certified before filing them with the local office of the Trade Register.

As a general note, any company established in Latvia must be incorporated with the Commercial Register’s division in the city the business will operate and have its address.

If you need assistance in preparing and filing the paperwork related to the creation of a SIA in Latvia, you can confidently request our services. If you need legal services, we can put you in touch with the Latvian lawyers, our local partners.

The main features of a SIA in Latvia

Opening a company in Latvia implies meeting certain requirements imposed by the Companies Act. In the case of a SIA, the law dictates that the following must be prepared for its incorporation:

  • – it must have at least one shareholder;
  • – it must have at least one director;
  • – it must have a legal address in Latvia in order to be considered a domestic business;
  • – it must have a minimum share capital of 2,800 euros.

Among the reasons why this legal form is often chosen by foreign investors we mention the fact that there are no restrictions in terms of nationalities for both shareholders and directors. This means that these can come from any country, apply for residence permits here and start their operations.

In terms of capital, this is one of the lowest amounts in terms of mandatory requirements to start a business in an European country. If we add the fact that only half of it must be deposited upon incorporation, it becomes more obvious why this legal entity is one of the best options to start a company in Latvia.

If you need assistance in choosing another business for your operations in Latvia, our local specialists are at your service.

How to register a private limited liability company in Latvia in 2023

The SIA is the Latvian equivalent of the limited liability company, a business entity that has its share capital divided into shares and in which each shareholder is only liable according to the amount he’s invested in the company.

Foreign investors who wish to create an SIA (LTD) company in Latviain2023 need to follow a few steps for the incorporation of the company and must observe the requirements for a minimum share capital and for the management of the company.

Below are the main steps needed to open an SIA company in Latvia:

  1. Draw up the company documents: the company’s Articles of Association or constitutive documents that state the company name, scope, registered address, members and their details and other information.
  2. Open a bank account: this is needed in order to deposit the share capital for the SIA; it needs to be opened at a local bank of choice.
  3. Notarize the company documents: the founders will need to notarize the company needs; various notary fees will apply during this step.
  4. Register the company: this is the actual registration step where all of the constitutive documents and application form are submitted with the Register of Enterprises.

This is just a brief description of the company formation steps needed to start a limited liability company in Latvia in 2023 .  Under normal conditions, it will take approximately 4 weeks to open an SIA company in Latvia. Foreign investors who cannot be present in the country during the entire company registration procedure can appoint an agent through a power of attorney. 

Our Latvia company formation agents describe the main characteristics of the SIA company and can assist you during the entire company formation process. In Latvia, this is the most typical type of corporate entity. The shareholders and directors of a Latvian LLC must be at least one each and may be from any country. LLC must have a share capital of at least €2,800 and at least 50% submitted at registration to be formed. For anyone interested in starting a company in Latvia, our agents can also assist them with company registration. Get in touch with our company formation agents for more details about our available services.

The limited company in Latvia in 2023

The SIA or the Latvian LLC is the most commonly used business type among local and foreign investors in this country in 2023. This business structure is typically suited to small or medium-sized companies and it must have at least one shareholder and one director. If the company has only one shareholder, he can also act as the company director.

An SIA in Latvia can be 100 percent foreign-owned, this is why this business form is preferred by foreign investors. Moreover, as its name suggests, the business structures allows investors to benefit from limited liability, only up to the amount they’ve invested in the share capital. 

The SIA is a company that can be incorporated in approximately three days when the founders have duly prepared the needed documentation. Investors or foreigners not accustomed to company formation in Latvia can request special assistance from one of our agents.

Conditions for LLCs in Latvia

For 2023, the limited liability company in Latvia needs to be registered with the Register of Enterprises before it can commence any business activities. The application for registration will include the articles of association, proof that the share capital has been deposited in a Latvian bank account and other documents proving the identity of the founders, as needed. The application is signed by all of the company founders.

The LLC also needs to be registered for VAT purposes, and a special number for VAT will be assigned upon company registration. At the Register of Enterprises, it takes almost three days to approve the application for setting up an SIA in Latvia.

The micro-LLC in Latvia in 2023

At the level of 2023, most countries in Europe have enabled the creation of small enterprises under the form of micro-LLCs which have slightly simpler requirements to incorporate. Among these, the minimum share capital of 1 euro and the condition for all shareholders to be natural persons.

In Latvia, a micro-LLC is a type of limited liability company that is designed to simplify the process of setting up and running a small business. Micro-LLCs are subject to certain size and turnover restrictions, and they are eligible for certain tax benefits and exemptions in 2023. In order to qualify as a micro-enterprise, the LLC must also meet the following requirements simultaneously:

  • –  it must have an annual turnover of no more than 100,000 euros;
  • –  it must have a maximum number of 4 employees.

You can obtain more information on the creation of a micro-SIA company in 2023 from our Latvian company formation consultants. Furthermore, note that, during the registration process, you may be required to open a temporary bank account in which you will deposit your share capital.

The main uses of an LLC in Latvia

The private limited liability in Latvia is one of the most versatile legal entities as it can be used for various purposes. Among the most employed ones are:

  • –  that of a holding company which can be used as great tax optimization solution;
  • –  that of a subsidiary company through which foreign enterprises can expand and adapt their operations to the Latvian market;
  • –  that of a trading company for which specific licenses must be obtained;
  • –  that of a startup which is one of the newest ways of launching a small innovative business on the market.

No matter how you plan to use your Latvian LLC, you can rely on our advisors for assistance in registering it. Furthermore, if you need accounting services for your limited liability company in Latvia, our CPA can assist you. The maintenance of the company’s financial records is one of the most crucial roles played by accounting. The management can utilize these financial records for a variety of other tasks and services, including auditing and tax filing. You are welcome to avail the expert services of our accounting firm in Latvia.

The Latvian LTD from a taxation point of view

Once registered, a Latvian company must also obtain a tax identification number with the Tax Authority.

From a taxation point of view, here are the main aspects to consider:

  • –  the LLC is subject to the corporate tax levied at a rate of 15%;
  • –  micro-enterprises are taxed at a lower rate of only 9%;
  • –  the VAT paid by companies in Latvia has a standard rate of 21%, however, lower rates also apply to certain goods;
  • –  capital gains are imposed with a tax at the rate of 15%.

Certain businesses can register for micro business tax by fulfilling the criteria. In general, MBT status is allowed to a micro-business that has a revenue of up to EUR 40,000. Our team who specializes in Latvia company formation can help you open a limited liability company. Contact us for more information about the company set-up process and the conditions for opening a company in the country.