Doing Business in Latvia
As a thriving democracy, Latvia has consistently pursued liberal economic policies, and it welcomes investments that foster principles and benefits associated with free markets. Along with most other industrialized nations, the global economic crisis of 2008 impacted economic growth in Latvia. As a response, Latvia reduced government expenses, implemented several pro-business reforms and focused policy on being a true partner for investors. The government and private businesses successfully implemented difficult measures that led the country out of the crisis and has laid the groundwork for sustained growth.
Latvia thus offers a host of advantages for your business, including access to large markets (500M customers in the developed countries across Europe and 250M customers in emerging markets such as Russia), a skilled and motivated workforce and opportunities for reducing costs. Latvia has a developed and strategic infrastructure, providing all services and security needed to conduct business successfully.
What Latvia offers for foreign investors
Secure business environment:
- Open market economy: EU, NATO, WIPO, WTO membership
- Clearly defined government policy to strengthen the national economy
- National strategy for investment promotion, Polaris process
- Coordinated cooperation between public, private and academic sectors
- Science and knowledge management
- Increased support for promising sectors
- Assistance throughout project implementation
- Active dialogue with the Foreign Investors Council in Latvia Business Friendly
Business friendly environment:
- Latvia ranked 21st in the world for ease of doing business (World Bank Report, "Doing Business", 2012).
- With only 7 payments necessary to pay all taxes, Latvia is ranked as No.11 in Tax Payments out of 183 countries globally (by PwC and the World Bank)
- Transparent legal and judicial system, lawful treatment of foreign investors (by law foreign investors have the same rights and duties as local investors).
- Competitive tax system (CIT 15% - amongst the lowest in Europe).
- Four Special Economic Zones *:
- Corporate tax discounts (as high as 80%, CIT in SEZ - 3%)
- 0% VAT and no customs duties
- Services provided by LIAA (free of charge, tailor-made to suit clients' individual needs; and provided during all stages of clients' business projects).
(*) Free Port of Ventspils ramked 5th in the world in terms of its economic potential, cost effectiveness, facilities, transportation, incentives, and other parameters, according to the FT's FDI Magazine's survey of "Global Pree Zones of the Future 2010/2011". Specifically in terms of cost effectiveness, Ventspils ranked 4th in the world and Rezekne Special Economic Zone ranked 6th in this survey).
Access to Knowledge and Skills:
- Highly educated and multi-lingual workforce, ready to take on new challenges and well motivated.
- Northern European culture and work ethic.
- Business knowledge and experience with Russia / CIS.
- Country with most foreign languages spoken per-capita in the EU, according to Eurostat.
Gateway to EU and Russia / CIS:
- European Union border with Russia, making it ideal for east/west trade.
- Three ice-free international ports integrated with well developed transport infrastructure to the East, including a reliable and developed railway system (used by the U.S. and other NATO countries to deliver non-military supplies directly from ships through Latvian ports to Afganistan, and transit to eastern countries (regularly scheduled container block trains to Moscow and Kazakhstan).
- One of the fastest growing airports in Europe, leading air transportation hub in the region with more than 80 direct connections providing convenient accessibility for business and leisure travel.
- Highly developed communications infrastructure:
- Latvia ranks 4th globally by download speed 26.35 Mb/s and upload speed 16.38 Mb/s (by The Global Broadband Speed Test).
- Latvia ranks 4th globally by average measured internet connection speed 8.9 Mb/s (by State of the Internet report by Akamai, Q3, 2011).
Register of Enterprises of Latvia: a place to register a company
Register of Enterprises is the central institution which keeps all data and records up to date. It is mandatory to submit incorporation documents with the registry at the moment of company establishment, as well as to file all amendments in the company board (directors) or shareholder registry.
The unified register is also available electronically.
The Register of Enterprises has the following functions:
- to register undertakings and their branches, representative offices and representatives of foreign undertakings and organizations, co-operative companies,
- to register European Economic Interest Groupings, European companies, European co-operative companies, political parties and associations thereof, administrators, insolvent entities, associations and foundations for legal protection and insolvency proceedings, religious organizations and institutions thereof, trade unions, mass media, public and private partnership agreements, decisive influences, commercial pledges, property arising out of a matrimonial relationship and courts of arbitration and to ensure record-keeping of the relevant registers;
- to provide information on registered entities and facts of legal relevance;
- carry out other functions referred to in laws and regulations.
Company registration in Latvia Fast, reliable company registration and ready made companies. Register of Enterprises examines the submitted documents whether they comply with law. In this respect, lawyer assistance might be helpful.
Documents should be in Latvian language or supported by certified translation.
If the documents are signed in abroad except European Union, it is necessary to legalize the document or to attach an apostille.
Information received at the Registry is considered as true and reliable and possess legal force. The Register of Enterprises maintain official registry of all type of companies and information of Registry is publicly available and reliable.
The Register of Enterprises provides the following services:
- Register of Enterprises holds an authority to register enterprises or companies (names of enterprises are governed by specific provisions. For example, a name has to be created avoiding inclusion of any misleading information concerning important conditions of entrepreneurship, in particular the legal form of an enterprise (a company) or volume of business. It must also be taken into account that the name is not to be translated.), mass media, commercial pledges, decisive influences, property arising out of a matrimonial relationship, representative offices and representatives of foreign undertakings and organizations, European companies, European co-operative companies, as well as public and private partnership agreements;
- Register of Enterprises holds an authority to ensure record-keeping of the following registers of entities: the Register of Public Organizations, Commercial Register, Register of Trade Unions, Register of Associations and Foundations, Register of European Economic Interest Groupings, Register of Courts of Arbitration, Register of Political Parties, Insolvency Register and the Register of Religious Organizations and Institutions Thereof;
- Register of Enterprises holds an authority to accept and examine the documents to be submitted for registration of entities and facts of legal relevance referred to in laws and regulations, and keeps the said documents;
- Register of Enterprises holds an authority to confirm signatures (signatures are confirmed only for natural persons registered in Latvia and representatives of legal entities, whose representative rights are registered in the public registered of Latvia.
- Upon confirming a person's signature, an official of the Register of Enterprises verifies the identity and legal capacity of the signatory. The official of the Register of Enterprises confirming a person's signature is not responsible for the content of documents.);
- Register of Enterprises holds an authority to verify the names (companies) entered into registers maintained by the Register of Enterprises and the relevance of this information;
- Register of Enterprises holds an authority to examine and prepare replies to the received submissions and requests for information, drafts derivatives of registration files and official documents of the Register of Enterprises, as well as provides the interested parties with the possibility to access the registration files;
- Register of Enterprises holds an authority to impose sanctions determined by international organizations and deals with cross-border mergers of capital companies.
Decisions and entries in the Register of Enterprises
The official of the Register of Enterprises adopts decision and makes entries to the registration file. Also attach submitted documents to the registration file if prescribed by law.
Register of Enterprises also issue registration certificate and approved Articles of Association. Registry make certified copies under request and allow access to the registration file if there is a grounded reason. The personal data are excluded and are not available for third parties.
The number of entities registered in the Register of Enterprises has rapidly increased during the recent months. For example, by 31 May of this year already 262 108 entities were registered, and out of those entities 179 315 are active, while over the course of 2010 only 262004 entities were registered, out of which 179 271 are active. In its turn, during the year 2009 the number of registered entities amounted to 261 922, out of which 179 240 are active.
According to the distribution of registration activities performed by the Register of Enterprises per register, the highest level of activity (during the last three weeks of August) was demonstrated by the Commercial Register, it performed 347 activities, 55 out of which were to register new entities. A relatively high amount of entries was made also in registers of commercial pledges, insolvency and association and foundations.
License for the information of the Register of Enterprises
In order to be able to sell the information provided by the Register of Enterprises, a license must be purchased.
Company registration: how to start business in Latvia?
Registration with the state registry (Commercial Registry of Republic of Latvia) is mandatory for doing business in Latvia. The Company is considered a legal entity only after registration at the Commercial Registry. Afterwards, the company can legally enter into transactions and run the business.
1. Legal Form of the Company
Prior to establishing an enterprise it is essential to assess and choose the most appropriate type of an undertaking in terms of law and economics. This choice will affect not only the amount of necessary equity capital, but also the legal status of the enterprise and other business related issues.
Foreign entrepreneurs usually register the following types of undertakings:
- limited liability company (SIA);
- joint stock company (AS);
- representative office of foreign merchant
2. Incorporation documents
- At the very beginning it is necessary to adopt a Decision on foundation. The decision on foundation might be equitable to Memorandum of Association in Western Europe countries.
- Secondly, Articles of Association should be drafted. According to Latvian Commercial Law, Articles of Association is most important document for company`s internal organization perspective which should be in line with the Decision on foundation and following records in the Commercial Register.
- It is necessary to pay the equity capital. The minimum of equity capital is LVL 2000 and it is not required to pay the entire equity capital at the moment of registration; the remaining sum might be paid within one year. Usually the founders open a temporary bank account in order to pay the equity capital. At this stage, the banks frequently ask questions related to the business and expected money flow in the account. Usually it is not problematic for foreigners to open a bank account.
3. Business start-up
Business start-up sometimes requires diving more deeply in the proposed business in order to understand the necessity for specific permits, licenses, or registration with competent state authorities.
According to the proposed business area, it might be required to apply at State tax authority (State Revenue Services) and to register as Value Added Tax payer. Preferable to register at Tax Authority at the moment of company establishment. In this case, the paperwork is minimized..
The process of company formation and registration is not considered complex. The registration takes only four business days from the moment all incorporation documents are drafted and submitted with Commercial Registry of Republic of Latvia. The registration time might be reduced up to two business days upon such a request. The registration with other institutions may take from few days up to one month.
LIAA - One-Stop-Shop for Foreign Investors and Buyers interested in Latvia
The Investment and Development Agency of Latvia (LIAA) is a state institution reporting to the Ministry of Economy. LIAA offers assistance throughout the process of setting up operations in Latvia, acting as a first point of contact and as a 'one-stop-shop' in assisting investors and in developing tailored solutions to meet their specific needs. The Agency has its own regularly updated database of Latvian enterprises to facilitate partner searches for investment projects and for exporting or subcontracting businesses.