Latvia offers a business setup route for foreign entrepreneurs seeking access to the European Union market, with low incorporation costs, a tax system that does not tax reinvested profits, and a residency option through qualifying business investment.
Why Latvia Appeals to Foreign Entrepreneurs
Latvia combines relatively low business costs with access to the Eurozone, Schengen Area, and the wider EU market. Businesses established in Latvia can operate from an EU member state with access to more than 450 million consumers.
One of the main tax advantages is Latvia’s treatment of reinvested profits. Companies pay 0% tax on profits retained and reinvested in the business. Corporate income tax applies only when profits are distributed as dividends.
Latvia also offers a digital-friendly registration environment. In some cases, a Limited Liability Company, known as an SIA, can be registered online in as little as one business day.
Other advantages include:
- 0% tax on reinvested profits: Corporate tax of 20% applies only when dividends are distributed.
- Special Economic Zones: Areas such as the Freeport of Riga and the Latgale SEZ may offer rebates of up to 80% on corporate and real estate taxes.
- Low setup costs: Some small-capital SIAs can be formed with share capital starting from €1.
- EU market access: Latvia is part of the Eurozone and Schengen Area.
- Multilingual workforce: Latvia has a well-educated workforce with English skills and regional language knowledge.
- Residency through investment: Foreign entrepreneurs may qualify for residence through a business investment route.
Main Company Structures in Latvia
Foreign investors can choose between several business structures depending on the size and purpose of the operation.
| Structure | Best For | Minimum Share Capital | Liability | Legal Personality | Management | Profit Tax | Commercial Activity |
|---|---|---|---|---|---|---|---|
| Limited Liability Company (SIA) | SMEs and private businesses | €2,800 standard / €1 for small-cap SIA | Limited to company assets | Independent legal entity | Board with at least 1 member | 20% only when dividends are distributed | Yes |
| Joint-Stock Company (AS) | Large companies and IPOs | €25,000 | Limited to company assets | Independent legal entity | Board and council required | 20% only when dividends are distributed | Yes |
| Foreign Branch | Expanding an existing foreign company | None | Parent company has full liability | Part of the parent company | Local representative | 20% on local profits | Yes |
| Representative Office | Market research and representation | None | Parent company has full liability | Part of the parent company | Local representative | Not applicable | No |
For most foreign entrepreneurs, the SIA is the most practical structure. It is suitable for startups, small and medium-sized businesses, and international companies establishing a Latvian presence.
Latvia Golden Visa Through Business Investment
Foreign entrepreneurs can obtain Latvian residency through a business investment route under the Latvia Golden Visa program. One common option is investing in the equity capital of a Latvian company.
To qualify through the smaller-company route, the applicant must:
- Invest at least €50,000 into a Latvian company
- Invest in a company with fewer than 50 employees
- Ensure the company has annual turnover or a balance sheet total not exceeding €10 million
- Pay a one-time government fee of €10,000 after residence permit approval
- Ensure the company pays a cumulative minimum of €40,000 in taxes each year to maintain residency status
- Maintain the investment throughout the five-year residence period
For larger companies with 50 or more employees or turnover above €10 million, the required investment rises to €100,000.
Successful applicants receive a temporary residence permit allowing them to live in Latvia and travel visa-free within the Schengen Area.
How to Start a Business in Latvia in 2026
Once documents are prepared, starting a business in Latvia generally takes between one and three business days.
Choose the Business Structure
The most common option for foreign entrepreneurs is the Limited Liability Company, or SIA.
There are two main SIA types:
- Standard SIA: Minimum share capital of €2,800, with at least 50% paid upfront.
- Small-Capital SIA: Share capital from €1 to €2,799, available only if shareholders are individuals and there are no more than five shareholders.
Prepare Incorporation Documents
The required documents include:
- Memorandum of Association or establishment decision
- Articles of Association
- Register of Shareholders
- Consent from the property owner for the registered business address in Latvia
Deposit Share Capital
Before registration, founders must deposit the required share capital into a temporary bank account or licensed EU fintech account.
After the deposit, the bank issues a proof of payment certificate, which must be submitted during registration. For small-capital SIAs, this may be handled digitally during the application.
Register with the Latvian Register of Enterprises
Applications can be submitted through the official Latvian Register of Enterprises portal.
Entrepreneurs with an EU-recognized electronic signature can complete the process fully online. Applicants without an accepted e-signature may need to sign documents before a notary or at a Latvian consulate.
Complete Tax and VAT Registration
After company registration, the business must comply with Latvian tax requirements. This includes registration with the State Revenue Service, known as VID.
A VAT number is required if annual turnover is expected to exceed €50,000. Businesses should also obtain a Latvian electronic signature, eParaksts, to manage tax filings and official communications online.
Cost of Starting a Business in Latvia
Startup costs depend on whether the founder chooses a small-capital SIA or a standard SIA.
| Cost Category | Small-Capital SIA (€1–€2,799) | Standard SIA |
|---|---|---|
| State registration fee | €20 standard / €60 express | €150 standard / €450 express |
| Official publication fee | €27 | €27 |
| Minimum share capital | €1 | €2,800, with 50% paid upfront |
| Legal / registered address | €150–€400 per year | €150–€400 per year |
| E-signature or notary costs | €0 with e-signature / €50+ with notary | €0 with e-signature / €50+ with notary |
| Bank compliance fee | €0–€300, usually higher for non-residents | €0–€300, usually higher for non-residents |
| Estimated total startup cost | Around €200–€750 | Around €3,150–€4,000 including share capital |
The small-capital SIA is the lower-cost route, but it is subject to shareholder restrictions. The standard SIA requires more capital but may be more suitable for larger or more conventional business operations.
Company Taxes in Latvia
Latvia’s corporate tax system is centered on taxing distributed profits rather than retained profits.
| Tax Type | Rate | Key Details for 2026 |
|---|---|---|
| Corporate Income Tax | 0% / 20% | Reinvested profits are taxed at 0%. A 20% tax applies only when dividends are distributed. |
| Value Added Tax | 21% | Standard VAT rate. Registration is mandatory if annual turnover exceeds €50,000. |
| Micro-Enterprise Tax | 25% | Simplified tax on annual turnover up to €40,000, covering corporate, social, and personal taxes. |
| Reduced VAT on food | 12% | Applies to local fruits and vegetables, with a temporary reduced rate for bread, milk, and eggs. |
| Reduced VAT on books | 5% | Applies to publications in Latvian, official EU languages, and OECD languages. |
Practical Considerations
Latvia may suit entrepreneurs who want an EU company with relatively low operating costs, online registration options, and a tax structure that favors reinvestment.
The main decision points are:
- Whether a small-capital SIA is sufficient or a standard SIA is more appropriate
- Whether the founder has access to an EU-recognized electronic signature
- Whether the business is likely to exceed the €50,000 VAT threshold
- Whether the company can meet the annual tax contribution required for residency
- Whether the investment must support a Latvia Golden Visa application
- Whether the business would benefit from operating in a Special Economic Zone
For entrepreneurs using the business route for residency, the company must be more than a formal registration. The investment must be maintained, and the company must meet ongoing tax contribution requirements during the residence period.
Source article: www.globalcitizensolutions.com
