What is a SIA in Latvia?
The SIA (Latvian: Sabiedrība ar ierobežotu atbildību) is the most common legal form in Latvia. It corresponds exactly to a limited liability company in most jurisdictions (an LLC, a Ltd, or a GmbH-type structure): a company whose shareholders are liable only up to their contribution, offering full protection of personal assets.
Since the 2018 tax reform, the Latvian SIA has benefited from a tax regime unique in Europe: undistributed profits are taxed at 0%. The 20% tax only applies once dividends are actually distributed. This mechanism makes it the structure of choice for entrepreneurs who reinvest their profits.
"A Latvian SIA is a limited liability company that pays no corporate tax as long as you don't pay yourself dividends. For growing businesses, that's a considerable advantage."
Key advantages of the Latvian SIA
Here's why a growing number of international entrepreneurs choose the SIA as their structure of choice:
- 0% tax on reinvested profits, as long as profits stay in the company, no corporate tax is due
- 20% only on distributions, the tax is only paid when you pay yourself dividends
- Minimum share capital of €1, no need to tie up funds to get started
- 100% remote formation, no travel to Latvia required, everything is done via a notarised power of attorney
- Formation time: 3 to 5 business days, one of the fastest company formations in Europe
- EU and Eurozone member since 2004 and 2014 respectively
- Double-tax treaties with dozens of countries to avoid double taxation
- No social security contributions for non-resident, non-employed shareholders
SIA taxation: 0% or 20%?
That's the question everyone asks. The answer is simple: both, depending on what you decide to do with your profits.
| Situation | Latvia | Typical elsewhere |
|---|---|---|
| Profits kept / reinvested | 0% | Often 15-25% |
| Dividend distribution | 20% (gross basis) | Often taxed twice (corporate + dividend tax) |
| Director's salary | Deductible | Usually deductible |
In practice, an entrepreneur reinvesting €100,000 of profits in their Latvian SIA keeps the full €100,000 available to grow the business. In many other jurisdictions, the same entrepreneur would only keep around €75,000-85,000 after corporate tax.
The core principle
Latvian corporate tax is a tax on distribution, not on profit. As long as the money stays in the SIA and funds its growth, it isn't taxed. That's a fundamentally different model from most other countries.
SIA vs a typical LLC/Ltd elsewhere
Whatever your home country's limited liability company is called, here's how a Latvian SIA typically compares:
You reinvest your profits
Every euro of profit stays fully available to fund your growth, with no annual tax drag.
You run an international business
Invoicing European clients, working with foreign partners: the SIA is perfectly suited to cross-border activity.
You're a freelancer or consultant
Developer, consultant, e-commerce founder, content creator: the SIA is an ideal structure for digital, location-independent activity.
You want to build up capital
Accumulating capital in a company without paying corporate tax on annual profits: a decisive long-term advantage.
You want to protect your assets
Like any limited liability company, the SIA limits your personal liability to your contribution: your personal assets stay protected.
You want to move fast
In 3 to 5 business days from anywhere, with no travel: the SIA is one of the fastest company formations in Europe.
How to form a SIA in Latvia
The formation process is entirely digital. It happens in 4 simple steps, all doable remotely:
Drafting the articles of association
The articles (in Latvian) set out the company's purpose, capital, governance and share allocation. Société Lettonie handles this step and provides you with a bilingual version.
Notarised power of attorney
You sign a power of attorney with a notary in your home country (apostille required). This document authorises our Latvian firm to act on your behalf when filing with the register.
Filing with the Latvian register
The file is submitted to the Uzņēmumu reģistrs (UR), Latvia's official companies register. Registration takes 1 to 3 business days.
Registration number + bank account
You receive your registration number. You can then open a bank account (Wise, Paysera, Revolut Business, or a traditional Latvian bank).
Total timeframe: 10 to 15 business days end to end, with no travel required.
Legal requirements and obligations
For a SIA to be valid and enjoy Latvia's tax advantages, several conditions must be met:
- Hold a registered address in Latvia (a mandatory registered office, a virtual address in Riga is sufficient)
- Appoint at least one shareholder (an individual or a legal entity, resident or not)
- Appoint a director (valdnieks), who can be the shareholder themselves or a local director
- Keep accounts compliant with Latvian standards and file any distributions monthly
- File an annual report with the register
- Declare beneficial owners (UBO) in line with EU anti-money-laundering directives
Economic substance
To fully benefit from the tax regime and applicable tax treaties, the SIA should have real economic substance in Latvia. A virtual address alone isn't enough if the company carries out no real activity. A local director and documented activity are strongly recommended.
SIA for non-residents: is it possible?
Absolutely. As an EU member, Latvia upholds the principle of freedom of establishment: any EU national can form and own a SIA with no residency requirement. Non-EU nationals can also form a SIA subject to standard identity checks.
The vast majority of our clients have never set foot in Latvia and run their SIA from home, wherever that is. That said, effective management needs to be structured properly to avoid tax residency risk in your home country. We recommend consulting a tax advisor familiar with your local rules.
Frequently asked questions about the Latvian SIA
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