Commercial companies law in Latvia is governed by the following acts:

• The Latvian “Commercial Law”, entered into force on January 1, 2002,
• The Latvian “Law on the Enterprise Register”, entered into force on,
• The Latvian “Law on Annual Accounts”.

The most popular type of company formed in Latvia is Latvian Limited Liability Company - Sabiedriba ar ierobezotu atbildibu (SIA).

SIA have a simple structure, to form it you need only one shareholder, who may be a physical or a legal person, and one director (only a physical person) – they may be the same person. There are no limitations or restrictions on appointing non-residents to perform the functions of shareholders or directors. Optionally, a company may have a supervisory board, but this is not mandatory. A supervisory board has to consist of at least 3 people and they cannot be the same people who are appointed as board members.

From 2017, every company is required to employ at least one person, this may be the director. The person has to receive stable remuneration.

The minimum share capital amount is 2800 EUR, 50%of which should be paid prior to the registration process. A bank account is needed for this purpose.

Every company has to have an address in the territory of Latvia and a name different from the names of already existing entities. There is no obligation to have a registration agent, however, it is customary to use services of business consulting companies in this respect.

In the case a company has annual income exceeding 50 000 EUR or will sell its products in the territory of the EU, VAT registration is mandatory. VAT tax returns may be filed on a monthly, quarterly or six-month basis.

The most important managing body of a SIA is shareholders’ meeting, which has to be convened at least once a year to approve of annual financial statements, decide on distribution of profits and choose an auditor. Other competencies of a shareholders’ meeting are: changing Articles of Association, electing management and supervisory board members (if they are to be appointed), increasing or decreasing share capital.

All company documents have to be in Latvian, they may also have a bilingual, Latvian-English, version.

SIA may perform almost any type of business activity. Special licences are required only for performing activity of banks, insurance companies, brokerage companies and bonded warehouses.

Latvia is one of the countries with the lowest tax rates in Europe. Corporate income tax is 15% and for microenterprises (annual turnover below 100 000 EUR, and up to 5 employees with remuneration up to 720 EUR a month) it is 9%.

Personal income tax is 24%, VAT is 21%.

Tax on dividends paid out to a private person is 10%. Incomes on transfer of share or stock ownership are also exempt from taxation.

In Latvia, companies are under obligation to keep accounting books in accordance with the Latvian accountancy act. SIAs have to file audited annual financial statements.

Latvia is considered a developed country with one of the fastest-growing economies in Europe. Its GDP per capita is 12 326 EUR.

It is an industrial and agrarian country. An important element of the industry is the energy sector, with vast significance of water power plants (62%), woodworking, food industry, metalwork industry and mineral product processing. Economy is also based on trade, both wholesale and retail, transport and logistics, real estate trading.

Due to low inflation and stable situation on the labour market, society’s purchasing power is high.

In 1994, Latvia concluded a free trade agreement with Lithuania and Estonia, the countries are, alongside Germany and Russia, the main trade partners of Latvia.

Latvia is a parliamentary republic with a democratic system. On 27 January 1994, the constitution of 1922 (with amendments) was fully reinstated, and has been in force ever since.

The legislative power is exercised by a one-chamber parliament, elected for 4-year terms. The Saeima elects the president, who represents the country on the international arena, is the highest commander of the armed forces and also appoints and dismisses ambassadors.

The executive power is exercised by the Cabinet of Ministers chaired by the prime minister appointed by the president.

Latvia is a member of the European Union, NATO, World Trade Organisation and belongs to the Schengen Area.

Latvia has a well-developed banking system, meeting all European standards, and the assets deposited in accounts are safe.

Both local commercial banks (ABLV Bank, Rietumu Banka, Citadele Banka, Baltic International Bank, BlueOrange, Latvijas Pasta Banka, Expobank, Rigensis Bank, Bank M2M Europe, Meridian Trade Bank, Reģionāla investīciju banka) and foreign banks (Norvik Banka, DNB Banka, Swedbank, SEB banka, Privatbank, Svenska Handelsbanken, Danske Bank, Bigbank, OP Corporate Bank, Scania Finans Aktiebolag, Aktsiaselts Eesti Krediidipank, Nordea Bank) operate here.