Why Choose Latvia for Your Company?
Latvia offers numerous tax advantages that appeal to entrepreneurs looking to lower their tax burden while staying within an EU legal framework. Corporate profits reinvested in the company are taxed at 0%, with a 20% rate applying only once profits are distributed as dividends. Latvia also applies a standard VAT rate of 21%, with reduced rates of 12% and 5% available for certain goods and services.
One of the major draws is that undistributed profits aren't subject to tax, offering valuable flexibility to reinvest in your business.
Good to know
Latvia has been linked to France by a double-tax treaty since 1997, and has similar treaties with more than 60 other countries, ensuring income isn't taxed twice.
On credibility and transparency, Latvia, as an EU member, complies with strict automatic information exchange standards, ensuring a safe, reliable business environment.
For more on tax optimisation, see our holding company guide.
Understanding the Difference: Offshore vs SIA
It's crucial to understand the difference between a classic offshore company and a SIA (Latvia's equivalent of a limited liability company). An offshore company is often seen as a vehicle set up purely for tax advantages in a distant jurisdiction. A SIA in Latvia, by contrast, is a resident company benefiting from the same tax advantages as any local business, under full EU transparency rules.
SIA companies offer several advantages, including strict accounting requirements that ensure transparency and credibility. This lets you operate confidently within the EU, with the ability to obtain an intra-EU VAT number. For more on dividend taxation, see our article on SIA dividends.
A Turnkey Process for International Founders
Forming a company in Latvia is a relatively simple process, especially with the right support. Here are the key steps:
- Choose your company's legal form and prepare the necessary documents.
- Register your company with the Latvian authorities, a process that can be completed online.
- Open a Latvian bank account for your company.
- Obtain a VAT number, if needed.
The initial cost of forming a company in Latvia is reasonable, with minimum capital of €2,800. The process can be finalised in a few weeks, offering a fast route to get your business started.
For detailed support, see our holding guide.
Legality and Compliance: What You Need to Know
A common question is whether forming a company in Latvia while living elsewhere is legal. It's important to distinguish personal tax residence from your company's registered office. You can absolutely live in one country and run your company in Latvia, provided you respect the applicable tax rules where you live.
Good to know
Double-tax treaties, such as the one between France and Latvia, protect against double taxation of income, a crucial point for staying tax compliant.
Practical Advice
Many consultants and e-commerce founders have already taken the step of forming their company in Latvia. Feedback consistently points to how straightforward the process is and the real tax benefits achieved. That said, professional support matters to avoid common mistakes, such as failing to meet accounting obligations from day one.
For more information on forming your company in Latvia, and to make the most of these tax advantages entirely legally, contact our team for tailored support.