Foreign investors can open a subsidiary in Latvia under the form of a limited liability company (LLC). This structure offers a set of advantages when compared to the other typical forms of business organizations. Our team of company formation agents in Latvia can help you establish your presence on the market by opening a subsidiary.
| Quick Facts | |
|---|---|
| Applicable legislation (home country/foreign country) |
Foreign country |
|
Best used for |
Limited liability of shareholders Taxation system |
|
Minimum share capital |
EUR2,800 |
| Time frame for the incorporation (approx.) |
4 weeks |
| Management (local/foreign) |
Foreign |
| Local representative required |
No |
| Local bank account |
Yes |
| Independence from the parent company | No |
| Liability of the parent company | Limited liability |
| Corporate tax rate | 20% |
| Possibility of hiring local staff | Yes |
Table of Contents
Main characteristics of the subsidiary in Latvia
The subsidiary is a means of expanding a foreign business by creating an autonomous legal entity in the country where the company will establish its presence. Unlike the branch, which is fully dependent on the parent company, the Latvian subsidiary will be a separate business structure that is incorporated and registered as any other resident company.
Permanent establishments that have been operating in the country for less than one year may use a simplified regime in which the company only pays tax on 20% of its profit. One of our company formation agents in Latvia can give you more information on this taxation regime. This infographic might help when registering a subsidiary in Latvia:
What are the steps for opening a subsidiary in Latvia in 2025?
The joint-stock company and the private limited liability company are two business entities that may be used to incorporate a subsidiary. The LLC (SIA) is a suitable business form for small or medium companies, while the joint stock is preferred by larger corporations. Both types of companies have a minimum share capital and, for registration, the founders must submit the company documents, application forms, and personal identification documents to the Latvian Commercial Register.
Below are the main steps for opening a subsidiary in Latvia in 2025:
- choose a company name: the name must be unique and it can contain only Latin or Latvian letters;
- incorporation documents: the SIA must have its Articles of Association and the Memorandum of Association drafted;
- minimum capital: it is necessary to deposit the minimum share capital for the new SIA into a bank account opened for the company;
- register the business: once all the documents are complete, the SIA is registered with the Commercial Register. Registered companies are promulgated through a public announcement. Registration fees apply;
- register for tax purposes: additional registration for VAT purposes may be needed according to the commercial activities of the company.
Subsidiaries operating in selected business fields in Latvia in 2025 will need to obtain additional special permits and licenses, which means that an additional step will be needed. The procedure of company incorporation in Latvia seems simple, but it is recommended to get in touch with a company formation specialist to get things done quickly. If you are planning to open a company in Latvia, please discuss it with our local representatives.
Legal and licensing requirements for subsidiaries in Latvia
Setting up a subsidiary in Latvia involves more than just company registration as specific industries require additional permits. Sectors like finance, insurance, food production, healthcare, transportation, and energy are regulated and need sector-specific authorizations before operations can begin. Foreign investors are encouraged to check licensing needs early in the process.
For instance, a Latvian subsidiary offering financial advisory services will need approval from the Financial and Capital Market Commission (FKTK), while a firm in food processing might require certification from the Food and Veterinary Service (PVD). The process involves submitting detailed business plans, proof of professional qualifications, and occasionally on-site inspections. Failing to secure these before commencing operations may result in heavy fines or even a business ban.
Corporate tax for subsidiaries in Latvia
In 2025, the subsidiary in Latvia will be taxed as all other registered companies in the country, at the usual 25% rate. Other taxes for companies in Latvia include: the payroll tax, the real estate tax, and the natural resource tax. Our company formation agents in Latvia can give you more information about the taxation regime.
The assistance of our accountants in Latvia might be quite helpful when registering a firm and starting operations here. Make sure you get in touch with us and ask for comprehensive information on this topic.
In 2025, Latvia has introduced special economic zones offering favorable tax conditions to attract investments, especially in underdeveloped regions. Companies operating within these zones can benefit from reduced tax rates, exemptions, and other financial incentives.
Financial compliance for subsidiaries in Latvia
Before fully operating, a Latvian subsidiary must open a corporate bank account, used for depositing share capital and conducting business transactions. Due to rigorous anti-money laundering (AML) regulations, the account setup process can be detailed and time-consuming. Latvian banks may request in-person interviews, especially for foreign parent companies looking to set up a subsidiary in Latvia, and require transparency regarding company ownership and operations. Required documents typically include:
- proof of share capital deposit;
- incorporation documents;
- parent company’s registration certificate;
- business plan and description of activities;
- proof of shareholder and director identity.
Get support from our specialized Latvian company formation agents in order to successfully end the process of company incorporation in Latvia.
Advantages of opening a subsidiary in Latvia
Latvia is actively supporting foreign-owned subsidiaries in high-potential industries, offering tax incentives, EU funding, and access to a skilled workforce. The most favorable sectors include IT and fintech, logistics, green energy, wood processing, and light manufacturing. Large-scale projects like Rail Baltica also create strong demand in infrastructure, engineering, and smart logistics services. Foreign investors benefit from:
- EU market access with free movement of goods and services;
- special economic zones (SEZs) with tax advantages;
- innovation grants for tech-based subsidiaries;
- low operating costs compared to Western Europe.
Most attractive industries in Latvia
Foreign businessmen invest in different industries of Latvia, this way they get a chance to connect with the marketplace of the eastern and the western sides of the globe. The top 4 most beneficial Latvian industries in which bulk foreign investments are allocated are as follows:
- manufacturing industries (11.7%);
- insurance and financial activities (24%);
- real estate (15.3%);
- wholesale and retails (16%).
Besides these industries, the state of Latvia also benefits from major investments in the textile industry, wood processing industry, technology and equipment, food processing industry, etc. If you are interested in investing in Latvia by setting up a company, the services of our incorporation agents are at your disposal. Plus, you can also watch this video with details on this topic:
Facts about the economy of Latvia
The latest data shows that Latvia’s economy in 2024 was largely supported by the growth of public and private consumption, among others. Let’s review some interesting facts about the Latvian economy, which will help you decide if you should start a business here:
- In 2024, the Latvian economy stagnated.
- About 50% of Latvia’s GDP represents gross public debt in 2024.
- Expert estimates show that the Latvian economy will grow by about 1% and even more in 2025.
- The unemployment rate of about 6.7% is expected to decrease in 2025 and 2026.
- In 2025 and 2026, the goods exports of Latvia are expected to increasingly recuperate, considering the negative direction in 2024.
In addition to Latvian company formation services for opening a subsidiary in Latvia, we also offer access to a team of specialized accountants in Latvia who can support your business with a full range of financial and compliance services. Our Latvian accounting experts provide assistance with bookkeeping, VAT registration and reporting, monthly and annual tax filings, payroll processing, financial statement preparation, and compliance with local tax regulations.
For more information about the requirements for a subsidiary in Latvia, please do not hesitate to contact us. We provide assistance in company incorporation in Latvia.