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Establish a Branch in Latvia

Establish a Branch in Latvia

A 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. Our team of company formation agents in Latvia can give you complete information about the registration of a branch office.

 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

Steps for opening a branch in Latvia in 2024

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 2024 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. Accounting records must be made available upon request to the State Revenue Service, for instance, in the event of a tax audit.

We invite you to discover an infographic about branches in Latvia:

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 2024. 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.

Branches in Latvia are not legal entities. As such, the foreign company is accountable for the obligations arising from the activities of these branches established in Latvia. However, the branches in Latvia are seen as separate taxpayers. Therefore, at the liquidation process of a branch, the parent enterprise cannot be entitled to accept overpaid taxes.

Documents required to open a branch in Latvia

A foreign or local company seeking to set up a branch office in Latvia in 2024 must submit various documents to 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:

  1. the details of the parent company (name, address, registration number);
  2. the parent company’s Certificate of Registration (a notarized copy);
  3. the resolution through which the opening of the branch office was decided and approved;
  4. the document attesting to the appointment of a Latvian representative for the branch;
  5. information about the person appointed to represent the branch;
  6. details about the branch (Latvian legal address, trading name).

The creation of the branch office will be then completed in a matter of days. In case you are interested in opening a branch office in a neighboring country, for example in Lithuania, we recommend our Lithuanian partners who are experts in company formation matters – CompanyFormationLithuania.com.

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.

Foreign entrepreneurs wanting to open a branch in Latvia should also consider the immigration requirement, particularly if they come from non-EU countries. As such, the type D visa should be obtained if they intend to live more than 3 months in Latvia. Such a visa is also known as a Schengen visa which allows free movement throughout the Schengen area.    

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 are document preparation, legal address provision (under the form of a virtual office), paperwork filing, and 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, a 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 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.

Foreign entrepreneurs wanting to open a branch in Latvia should also consider the immigration requirement, particularly if they come from non-EU countries. As such, the type D visa should be obtained if they intend to live more than 3 months in Latvia. Such a visa is also known as a Schengen visa which allows free movement throughout the Schengen area.    

Licensing requirements upon branch registration in Latvia in 2024

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 representing the industry to operate;
  • 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 on 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.

Operating in a free trade manner is one of the advantages of a branch in Latvia. Being a member of the World Trade Organization, European Union, and Organization for Economic Cooperation and Development, Latvia is considered a solid business destination for entrepreneurs interested in establishing their activities through branches.

Our consultants will guide you on which company structure will suit you 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.

So, if you are seeking any incorporation help to form a company in Latvia in 2024, the services of our company formation consultants are at your disposal. They can guide you about the type of company that can help you flourish your business in this country. 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.