Latvia

  • Posted By : Admin
  • February 06, 2018
  • Tax havens
  • 0 Comments

Latvia is a country located in northeastern Europe and shares a border with four countries: Russia, Lithuania, Estonia and Belarus. Thanks to the convenient geographic location, infrastructure, growth of the banking sector and open economy, Latvia has become one of the European countries that attracted the most amount of foreign investment in recent years. The Latvian government favors the development of small and medium companies and online businesses.

General information

Capital
Riga
Official language
Latvian
Area
64,689 km2
Form of government
Parliamentary Republic
Currency
Euro (EUR)
UTC time zone
UTC +2 /+3
Legal system
Constitutional Court Law


Taxes for non-residents in Latvia

Latvia maintains unique programs for foreign investment and European Union residence permits. Latvian authorities offer favorable tax regime for natural or legal persons with deposits in Latvian banks, provided that they do not carry out commercial activities with natural and legal persons in Latvia. Investors who decide to open an account in Latvia or register a company will see that the annual corporate tax rate is one of the lowest in the European Union, 15%, with Bulgaria being the country with the lowest corporate tax rate of 10%. The obligatory taxes that a company will have to assume will be the corporate tax and VAT, there are no taxes for the repatriation of dividends, inheritances, donations and neither will it support any type of tax withholdings for subsequent years. Latvia offers very simple solutions for tax savings as it has numerous tax treaties on double taxation.

Characteristics of Latvian Companies

Types of companies
Limited Company, SIA (the type of company most used by foreign investors), Joint Stock Company (AS), Representation office of a foreign company and Branch of a foreign company.
Share capital
SIA: EUR 2,850 in the form of assets or money / AS: EUR 35,210 in the form of money. Not paid up share capital.
Constitution time
14 days
Taxes
The corporate tax rate is 15%, one of the lowest in Europe.
Directors
1 director minimum. The director can be individuals or companies with residence in any country.
Shareholders
1 shareholder minimum. The shareholders can be individuals or companies with residence in any country.
Shares
Registered. Bearer shares are not allowed.
Legal address
Each Latvian company must have a registered office in the territory of Latvia.
Privacy
The Commercial registry is public, that is, information about the directors and shareholders of Latvian company is available to the public. However, usage of nominees will allow you to cover the identity of the final beneficiary.
Board meetings
Meetings of directors or shareholders are not mandatory and can be held anywhere in the world.
Accounting / annual audit
Latvian companies have to present the accounts annually, keep the VAT records every 3 months and depending on the turnover of the company audit will be mandatory or not.

Financial system in Latvia

Financial services
Banks in Latvia are specialized in e-commerce, stock exchange investments, currency exchange; also the customer may request any type of financial services: checking accounts, savings accounts, virtual pos, credit cards, foreign currency accounts, investment accounts in Stock market, credits and Mortgages.
Limitations of cash payment
There are no limitations on cash payments nor there is exchange control. Banks in Latvia can open accounts in numerous currencies Euros, US $, GBP, AUD, CAD, CNY, JPY.
Deposit guarantee
Latvian banks cover 100.000 EUR of client´s deposits.

Automatic information exchange in Latvia

Latvia has signed the automatic exchange of information treaty that has entered into force on January 1 of 2017 and it has also signed 53 bilateral agreements of automatic exchange of information.

The signatory countries of the agreement

Year 2017
Anguilla, Argentina, Barbados, Belgium, Bermuda, British Virgin Islands, Bulgaria, Cayman Islands, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Groelandia, Guernsey, Hungary , Iceland, India, Ireland, Isle of Man, Italy, Jersey, Korea, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Mexico, Montserrat, Holland, Niue, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa, Spain, Sweden, Turks and Caicos Islands, United Kingdom.
Year 2018
Andorra, Antigua and Barbuda, Aruba, Australia, Austria, Bahamas, Barein, Belize, Brazil, Brunei, Canada, Chile, China, Cook Islands, Costa Rica, Curaçao, Dominica, Ghana, Grenada, Hong Kong (China), Indonesia, Israel, Japan, Kuwait, Lebanon, Marshal Islands, Macao (China), Malaysia, Mauritius, Monaco, Nauru, New Zealand, Panama, Qatar, Russia, Saint Kitts and Nevis, Samoa, Saint Lucia, Saint Vincent and the Grenadines, Saudi Arabia, Singapore, San Maarten, Switzerland, Trinidad and Tobago, Turkey, United Arab Emirates, Uruguay and Vanuatu.


Automatic exchange of banking information agreement does not affect the fiscal status of the country, that is, Latvia has programs to encourage foreign investment and considers that natural persons and companies not resident in Latvia are not obliged to pay taxes or to submit any type of tax declaration. As we have mentioned before, the companies and the individuals residents in Latvia would be the ones obliged to pay the tax. The treaty of automatic exchange of information is causing many problems between countries since it is NOT a treaty in which automatic information will be reported to each other or all to all, that is, each country will have to sign a bilateral information agreement automatically with another country. What does this mean? If, for example, China is interested in exchanging information with Latvia but Latvia is not interested in reporting information to China, there will be NO information exchange and clients privacy will be protected. Currently, 06-02-2018 Latvia has signed 52 bilateral agreements on the automatic exchange of information, mainly with all European Union countries. You can see the updated list of countries that have signed bilateral agreements to exchange information automatically with each other.

The bilateral agreements with Latvia

Year 2017
Andorra, Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Colombia, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Faroe Islands, Finland, France, Germany, Gibraltar, Greece, Greenland, Guernsey, Hungary, Iceland, India, Ireland, Isle of Man, Italy, Japan, Jersey, Korea, Liechtenstein, Lithuania, Luxembourg, Malta, Mauritius, Mexico, Monaco, Holland, Norway, Poland, Portugal, Romania, San Marino, Seychelles, Slovakia, Slovenia, South Africa Spain, Sweden, Switzerland, United Kingdom, Uruguay.
Year 2018
No bilateral agreement has been signed for this year.


The countries most affected by the signature of the automatic exchange of information treaties are going to be the countries of high taxation and not the offshore jurisdictions. It is expected that high tax countries sign bilateral agreements with each other with the corresponding problem that these have: competition in investments, tax competition and abandonment of investments in other jurisdictions by countries with lower or no taxation allowing legal repatriation of them to the country of fiscal residence.

Advantages of Latvia

Latvia is one of the best offshore jurisdictions to invest for the following reasons: 

  • Low tax rate comparing to other EU countries and no tax obligations for non-residents.
  • Legal security guaranteed by law. 
  • There is no need to pay any kind of tax for non-resident natural persons and non-resident companies.
  • Little bureaucracy when it comes to obtaining commercial licenses, company formation and bank account opening.
  • No restriction by nationality. 
  • Excellent geographical location. 
  • Economically stable financial center.
  • Jurisdiction specialized in electronic commerce, investments in stock market, currencies and real estate investments.