A tax relocation can sound complicated, especially if you want to keep living in your home country. Latvia offers an attractive, fully legal solution for entrepreneurs worldwide. Find out how a Latvian SIA can help you optimise your tax position while staying within a legal European framework.
Understanding Tax Relocation
Good to know
Tax relocation is a process that lets someone base part of their affairs abroad to benefit from a more favourable tax framework. It's essential to understand the difference between your personal tax residence, which determines where you're taxed as an individual, and your company's registered office, which can be established elsewhere in Europe.
Staying Tax Resident in Your Home Country: Is It Legal?
It's entirely legal to remain tax resident in your home country while setting up a company in Latvia. Here's how it works:
- Your personal tax residence determines how your worldwide income is taxed if you remain tax resident there.
- Your company's registered office can be established in Latvia, where your SIA will be subject to Latvian tax law.
- Double-tax treaties between most countries and Latvia prevent double taxation, letting you manage your tax obligations with confidence.
To find out more, see our detailed guide to Latvian company taxation.
Tax Advantages of a Latvian SIA
Choosing an SIA-type company in Latvia offers several tax advantages compared with many other jurisdictions. To make the comparison concrete, here's how it stacks up against France, a country with one of the higher corporate tax burdens in Europe:
| Criterion | France | Latvia |
|---|---|---|
| Corporate tax on reinvested profits | 15% up to €42,500, then 25% | 0% |
| Corporate tax on distributed profits | 15%/25% (same rate, due every year) | 20% (on a gross-up base ÷0.8), only on distribution |
| Reinvestment flexibility | Limited, tax due every year regardless | Full flexibility as long as funds stay in the company |
For more on tax optimisation, read our article on optimising your taxes with a Latvian SIA.
Worked Example: Savings With a Latvian SIA
Take a consultant whose company generates €100,000 in annual profit, fully reinvested. If that company were French, it would pay around €20,750 in corporate tax on that amount (15% up to €42,500, then 25% above), whether or not the profit is distributed. A Latvian SIA in the same situation would pay no corporate tax at all as long as the profits stay in the company. See our detailed simulation on €100,000 in profits for the different distribution scenarios.
How to Set Up a Latvian SIA
Setting up an SIA in Latvia is a structured, multi-step process:
- Preparing the necessary documents.
- Registering with the Latvian authorities.
- Opening a business bank account.
- Registering for tax with the relevant authorities.
For full support, see our complete guide to setting up an SIA in Latvia.
Frequently Asked Questions About Tax Relocation
Our team is on hand to support you in setting up your SIA in Latvia.