Latvia has a favorable location in the Baltic region and provides easy access to Northern and Eastern Europe. This is why foreign investors will often choose to establish a branch in Latvia and run their regional operations form this location.
The branch is an extension of the parent company abroad that performs the same business activities and functions under the same name. It is a common manner of expanding a business to another market because of the lower costs compared to opening a new legal entity in a country.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) |
Home country’s legislation is applicable for opening a branch in Latvia. |
|
Best used for |
Expanding businesses in other countries. |
|
Minimum share capital (yes/no) |
Yes, 2,800 EUR |
| Time frame for the incorporation (approx.) |
4 weeks |
| Documents to be filed by the parent company |
– Memorandum of Association; – Articles of Association, – bank statement confirming that share capital is paid up; – shareholders' register |
| Management (local/foreign) |
Foreign for the branch in Latvia |
| Legal representative required (yes/no) |
No |
| Local bank required (yes/no) |
No, branch offices in Latvia are not required to have local bank accounts. |
| Independence from the parent company |
No |
| Liability of the parent company | Limited liability |
| Corporate tax rate | 15% |
| Annual accounts filing requirements |
Yes |
| Possibility of hiring local staff (yes/no) |
Yes |
| Travel requirements for incorporating branch/subsidiary (yes/no) |
No |
| Double tax treaty access (yes/no ) | Yes |
Our team of company formation agents in Latvia can give you complete information about the registration of a branch office.
Table of Contents
Steps for opening a branch in Latvia in 2023
A Latvian branch is incorporated once the parent company has adopted a special Decision for this purpose. The branch will act as the Latvian counterpart of the foreign company. It will be an independent unit in terms of location but it will depend on the parent company in case of liabilities. All of its activities will be conducted on behalf of the main company and according to the existing business and management plans.
An important advantage of opening a branch in Latvia in 2023 is that this business form has lighter incorporation and reporting requirements compared to a subsidiary which acts as an independent Latvian company.
Company registration in Latvia is a simple process for a branch and one of our agents can assist you throughout the needed steps. You can also avail of the services of our accounting firm in Latvia if you need help with the accounting of your branch office in this country. Please keep in mind that Accounting should be kept on the territory of Latvia in the local language. Beginning on January 1, 2014, all accounting must be done in euros. Accounting records must be made available upon request to the State Revenue Service, for instance, in the event of a tax audit. The company’s board of directors is in charge of accounting. To learn more, get in touch with our accountants.
Conditions for operating a branch in Latvia
A few formalities need to be observed when registering a branch of a foreign company in Latvia in 2023. The corporation opens the branch through a special Decision which is submitted together with the rest of the incorporation documents. The next step is to draw up the articles of association and to sign the documents in front of a notary public. Once it is registered with the Latvian Commercial Registry, the branch can begin its business activities.
The branch needs to have a registered address in Latvia and it will be registered for tax and VAT purposes. Such registration with the State Revenue Service is required for VAT purposes, and VAT returns must be filed every month. Taxation in Latvia will fall under the provisions of a double tax treaty, should this type of agreement exist between the foreign company’s country of origin and Latvia. It also needs to observe the ongoing requirements for employment.
Documents required to open a branch in Latvia
A foreign or local company seeking to set up a branch office in Latvia in 2023 must submit various documents with the local office of the Trade Register in order to obtain the Certificate of Registration. However, the dossier with the papers to file is easy to compile which is why the establishment of such an entity is also rather simple.
Here are the documents to prepare and file when opening a Latvian branch office:
- the details of the parent company (name, address, registration number);
- the parent company’s Certificate of Registration (a notarized copy);
- the resolution through which the opening of the branch office was decided and approved;
- the document attesting to the appointment of a Latvian representative for the branch;
- information about the person appointed to represent the branch;
- details about the branch (Latvian legal address, trading name).
The creation of the branch office will be then completed in a matter of a days.
With respect to the person in charge of registration and activities once the branch office is up and running, this can be a Latvian citizen, or an employee of the foreign company sent to Latvia. In the case of EU citizens, the intra-company transfer is easy to complete, however, in the case of non-EU citizens, a work permit must be obtained first. However, the procedure is not complicated, as Latvia is welcoming to overseas investors and workers.
Our company formation agents in Latvia can also represent foreign companies interested in opening branches in this country. For this purpose, we offer multiple services, among which document preparation, legal address provision (under the form of a virtual office), paperwork filing, tax and VAT registration.
Trading name reservation when setting up a Latvian branch
The Latvian company formation procedure implies after the selection of the legal form the reservation of a trading name. In the case of a branch office, the name will usually be the same as the parent company’s, however, the reservation still needs to be completed.
There are also cases where the name can already be taken, case in which the Latvian branch office will bear a different name. However, this is seldom the case, as most companies register their names as trademarks and obtain international recognition for them in order to ensure the security of their brands.
If you want to open a branch in Latvia, our specialists can perform trading name checks and let you know if the name you selected can be used.
Opening a bank account for a branch in Latvia
One of the main particularities of creating a branch office in Latvia is that this entity is not required to have a local bank account, as it can also use the parent company’s account. However, the representative must convey the bank account number to the Latvian Tax Authorities.
Most foreign companies operating in Latvia decide to set up bank accounts with banks here, as they can use the services of local or foreign financial institutions, if the latter also have offices in their home countries. Apart from this, Latvia has one of the most advanced and modern banking systems in Europe.
The creation of a corporate and even merchant bank account in Latvia can be handled by our agents.
Licensing requirements upon branch registration in Latvia in 2023
Using a branch office to complete activities in Latvia comes with a few particularities, among which:
- the branch is not allowed to complete other activities than the parent company;
- the licenses to be obtained, however, must be issued by the Latvian authority in charge of the representing the industry to operate in;
- in most cases, the parent company is required to submit information about itself;
- the representative of the branch office in Latvia is not required to be a resident.
For certain activities, specific share capital requirements are imposed. This is usually the case of financial companies and insurance and reinsurance enterprises.
If you want to open a company in Latvia and decide for a branch, our local representatives can offer more information on the licensing requirements available in different economic sectors. Please get in touch with our company incorporation consultants if you want to discuss your business plans.
Our consultants will guide you on which company structure will suit best to execute your business plan. With their assistance, you will not only be able to open a company in Latvia but also get the relevant permits and licenses for operational purposes.
Taxation of branches in Latvia
The taxation of companies in Latvia is the same for domestic entities and branches, as these are imposed with the corporate tax after the profits are distributed. However, the tax base for branch offices is made of the income generated in Latvia only.
With respect to all the taxes and rates applicable, here are the most important aspects:
- the standard rate of the corporate tax is 20%;
- however, because of the 0.8 coefficient applied to the tax base, the actual rate is 25%;
- withholding taxes are levied at a rate of 20%, however, deductions and exemptions are available under double tax treaties.
Contact our team of agents who specialize in company registration in Latvia for complete details on how we can assist you in opening a branch. In September 2022, Latvia’s foreign direct investments increased by 5.9%. It is an optimal time to incorporate a company in this country. So, if you are seeking any incorporation help to form a company in Latvia in 2023, the services of our company formation consultants are at your disposal. They can guide you about the type of company which can help you flourish your business in this country. With their assistance, you can open your desired company without wasting any unnecessary time.