Latvian Tax System
Since 2018, a new tax system has been established in the Republic of Latvia, which is essentially similar to the one of Estonia.
From now on, a company’s undistributed profits are not subject to income tax, and the VAT rate for transactions outside Latvia is 0%. In light of these changes, we conducted a detailed analysis of the Latvian legal framework.
Latvian Company in nutshell
A company registered in Latvia offers the following advantages:
1. Income tax on the company’s undistributed profits = 0%;
2. VAT on transactions outside Latvia = 0%;
3. Clear and reasonable rules for conducting banking transactions;
4. No requirement for the business to have a connection to Latvia;
5. The Latvian company and Latvian bank share the same tax residency status;
6. A basis for obtaining an EU residence permit.
Business purpose of Latvian Company
Based on our experience, a Latvian company will be of particular interest for the following business sectors:
- International trading company (operating in USD).
- An online trading platform with a connected merchant account.
- Implementation of large-scale IT projects, provided there is a corresponding resident business.
- International business activities requiring compliance with the “same resident” rule for the company and the bank.
Our support
We have retained the operational philosophy implemented in Estonia and carry out all activities necessary for the company’s operation:
- Preparation of the entire set of documents in Latvian.
- Comprehensive annual support for the company and filing of reports.
- Preliminary audit for compliance with banking requirements.
- Ensuring the company’s factual and legal substance.
- A fully functional and maintained legal address in a business center (not an apartment or small architectural structure).
- Opening of temporary and permanent bank accounts.
- Accounting support.
Riga City