Company Formation in Latvia

Why Founders Choose Latvia

Latvia isn’t chosen because it’s the cheapest option. It’s chosen because it solves more than one problem at once.

It works best for:

• entrepreneurs entering the EU market for the first time
• founders relocating with family
• international service businesses (IT, consulting, e-commerce)
• companies building EU-based holding or operating structures

The comparison with Estonia, Cyprus, or the UK comes down to one thing: Latvia is the only jurisdiction in that group where you can directly combine an operating company with a founder residence permit under a single setup.

Corporate Tax — How It Actually Works

Latvia applies a deferred corporate tax model. Retained profits are taxed at 0%. The 20% corporate tax only applies when dividends are distributed.

In practice, this means you reinvest and scale without triggering a tax event. You pay when you take money out — not before.

Latvia is not a zero-tax jurisdiction by default. The outcome depends on how the structure is built and how the company is actually operated. In our experience, clients who treat the tax model as automatic often run into issues at the dividend distribution stage.

VAT:

• Standard rate: 21%
• Registration required for EU operations or when statutory thresholds are reached

Dividends:

• Tax treatment depends on shareholder structure and residency status

The Registration Process

Registration is relatively fast. What defines the result is the structure behind it.

Typical steps:

1. Analysis of your business model and goals
2. Preparation of incorporation documents
3. Remote signing via secure electronic signature
4. Registration with the Register of Enterprises
5. Setup in the tax system (EDS)
6. Banking or payment institution setup

In most cases, the company is registered within 5–7 working days.

Timeline and Costs

The main delays in any Latvia company formation are rarely from registration itself. Banking and compliance preparation take longer, and that’s where advance planning makes a difference.

Banking

For international clients, banking is consistently the most time-sensitive part of the process.

Options include:

• Latvian licensed banks
• EU electronic money institutions (EMI)
• Alternative solutions depending on activity type and geography

There is no universal answer. The right setup depends on your business model, expected turnover, and client geography. Picking a bank because it’s available isn’t the same as picking one that will work for your specific activity.

Fully Remote Registration

Latvia SIA registration can be completed without visiting the country. Documents are signed electronically at the incorporation stage.

If you proceed with a residence permit, a personal visit to Latvia will be required later for biometrics. Plan for that from the start.

Company and Residence Permit — Combined Structure

This is the primary reason many clients choose to register in Latvia rather than another EU jurisdiction.

A properly structured SIA can serve as the legal basis for a temporary residence permit. Available routes:

• Residence permit as a company board member
• Employment-based permit (payroll solution)
• EU Blue Card for qualified specialists

The permit covers Latvia residency and free movement across the Schengen area. Each case is structured individually — the right route depends on your role in the company, salary level, and long-term plans.