How much share capital do you need to set up an SIA, Latvia's limited liability company? It depends on which variant you choose: €2,800 for a standard SIA, or from as little as €1 for a micro-SIA under certain conditions. In this article, we break down these rules to help you choose the structure best suited to your project.
What Is an SIA in Latvia?
The SIA, or Latvian limited liability company, is the equivalent of a limited company. It's the most widely used legal form in Latvia (over 90% of companies), thanks to the flexibility and limited liability it offers shareholders. Here's what you need to know before getting started, whether you're a first-time or experienced entrepreneur.
Good to know
The SIA suits small businesses and companies with growth ambitions alike. It offers a simple structure and effective legal protection.
Minimum Share Capital in Latvia: The Amounts to Know
Standard SIA: €2,800 in Capital
The minimum share capital to set up a standard SIA in Latvia is set at €2,800. This amount remains relatively low compared with other European countries, which helps make Latvia attractive to entrepreneurs looking to keep start-up costs down. Contrary to a common misconception, you don't need to pay in the full capital before registration: at least 50% must be paid up at that stage, with the balance payable within the following 12 months.
Why Does Share Capital Matter?
Share capital represents shareholders' contributions to the company and acts as a safeguard for creditors. It's also an indicator of your company's financial stability. Adequate share capital can influence the confidence of business partners and potential investors.
Micro-SIA: Reduced Capital From €1
For individuals setting up a small structure alone or with others, Latvia offers a reduced-capital option: the micro-SIA (mazkapitāla SIA). Under certain conditions, share capital can be set between €1 and €2,799, instead of €2,800 for a standard SIA. This option requires meeting specific criteria.
Micro-SIA Eligibility Requirements
- Shareholders must be individuals (legal entities are not eligible).
- The number of shareholders is capped at 5.
- Shareholders cannot be shareholders in any other SIA benefiting from this reduced capital.
- The company must set aside 25% of its profits each year until the capital reaches €2,800, the standard capital threshold.
This option lets you start with a limited financial commitment, provided you plan for this set-aside requirement once the business becomes profitable.
Steps to Register an SIA in Latvia
Setting up an SIA involves several key steps. Here's a simplified guide to help you navigate the process:
- Choose a name for your company and check its availability.
- Draft the company's articles of association.
- Open a bank account to deposit the share capital.
- Register the company with Latvia's Enterprise Register.
- Get a tax identification number.
Once these steps are complete, your SIA will be officially formed, and you can start operating legally.
Good to know
It's recommended to work with a legal or tax adviser when setting up your SIA, to make sure all the formalities are correctly completed.
The Advantages of an SIA in Latvia
Choosing an SIA in Latvia offers entrepreneurs plenty of advantages:
- A competitive tax framework: 0% corporate tax as long as profits are reinvested in the company, and 20% (around 25% once the gross-up factor is applied) only on profits distributed as dividends.
- A pro-business environment with streamlined administrative processes.
- The possibility of benefiting from EU grants and support for economic development.
"Latvia combines accessible starting capital, taxation that favours reinvestment, and direct access to the European single market: three concrete assets for a structure that starts small but aims for growth." – Société Lettonie
Frequently Asked Questions About SIA Share Capital
Does the Share Capital Stay Locked After Registration?
No. Once the SIA is registered, the capital becomes a company asset and can be used to fund its activity (purchases, operating costs, salaries, etc.). It isn't a frozen deposit like a security bond.
Does the Capital Have to Be Paid In All at Once?
No. For a standard SIA, at least 50% of the capital (€1,400) must be paid up before applying for registration with Latvia's business register (Uzņēmumu reģistrs). The balance must be paid within 12 months of registration. Contributions in kind are also allowed: if their value exceeds €5,700 or represents more than 50% of the capital, a certified valuation by a registry-approved expert is mandatory.
Can a Foreign Company Benefit From the Micro-SIA's Reduced Capital?
No, the micro-SIA is reserved for individual shareholders. If a shareholder is a legal entity (a company), the standard SIA with €2,800 in capital is mandatory.
Setting up an SIA in Latvia can be a strategic step in growing your business. For personalised advice or any questions about the share capital best suited to your situation, feel free to contact us. Our experts support you at every step of your process in Latvia.