Since Brexit, many international entrepreneurs have been asking whether it still makes sense to form a Ltd in London, or whether to consider other options. Latvia, with its SIA, is emerging as a credible alternative. What are the differences, and why might Latvia be your next strategic choice?
The Impact of Brexit on Forming a Ltd in London
Brexit has upended the business environment in the UK. For entrepreneurs who were considering forming a Ltd in London, several new complications have emerged.
Loss of the European Passport and Its Consequences
Losing the European passport means UK companies can no longer operate freely within the European Union. This makes it harder for Ltds to access the European single market, forcing companies to set up new structures within the EU to continue their cross-border activities.
Increased VAT Complexity for Trade With the EU
With Brexit, VAT rules for trade between the UK and the EU have become more complex. Companies now have to manage separate VAT returns, which can generate additional costs and heavier administrative work.
- Mandatory VAT declaration for every transaction with the EU
- Possibility of double taxation in certain cases
- Longer administrative processing times
Comparing a London Ltd and a Latvian SIA
Let's see how a London Ltd compares with a Latvian SIA on several key aspects.
Formation Costs and Administrative Requirements
| Aspect | London Ltd | Latvian SIA |
|---|---|---|
| Formation cost | Approx. £150 | Approx. €200 |
| Formation time | Around 24 hours | Around 5 days |
| Administrative requirements | More complex post-Brexit | Streamlined procedures |
Taxation and Accounting Obligations
In terms of taxation, Latvia offers advantages that can be decisive for many entrepreneurs.
- Corporate tax: 19% for a Ltd, against 0% on reinvested profits for an SIA (0% tax on profits)
- Fewer accounting constraints in Latvia
Advantages of a Latvian SIA for International Entrepreneurs
Latvia offers a business-friendly environment for international entrepreneurs, particularly thanks to its access to the European single market and a positive brand image.
Good to know
By choosing Latvia, entrepreneurs benefit from direct access to the European single market, which makes trade easier and reduces the administrative burden linked to import/export.
What's more, client perception of a company based in Latvia is often positive, thanks to its reputation for stability and innovation.
Why Has Latvia Become a Natural Alternative to London?
Since Brexit, Latvia has positioned itself as a strategic alternative to London for several reasons.
A Favourable Tax Environment
Latvia's tax regime is particularly attractive for companies looking to optimise their costs. With 0% tax on undistributed profits, companies can reinvest in growth without being penalised. For a more detailed analysis, see our article on Latvia's favourable taxation.
Administrative Simplicity for International Founders
Latvia offers an administrative simplicity that appeals to many entrepreneurs, thanks in particular to clear procedures and an administration that's accessible to English speakers. For example, a case study showed that entrepreneurs could save up to 30% in administrative time in Latvia compared with London.
For more information on setting up a company in Latvia, contact us today for personalised support.