{"id":3993,"date":"2026-02-20T09:00:00","date_gmt":"2026-02-20T09:00:00","guid":{"rendered":"https:\/\/new.leinonen.eu\/lva\/?p=3993"},"modified":"2026-02-20T13:47:41","modified_gmt":"2026-02-20T13:47:41","slug":"business-in-latvia","status":"publish","type":"post","link":"https:\/\/leinonen.eu\/lva\/news\/business-in-latvia\/","title":{"rendered":"BUSINESS IN LATVIA"},"content":{"rendered":"\n

Latvia has a rather small population of less than 2 million, which is mostly situated in the capital Riga, and around it. One of the key advantages of Latvia lies in its location and easy access to the neighbouring countries. The country is situated at the east coast of the Baltic Sea, in the crossroads of Northern and Eastern Europe. The central location on the coast of the Baltic Sea connects Latvia to more than 300 million people of the neighbouring Scandinavian and other Baltic countries and Eastern European. <\/p>\n\n\n\n

Infrastructure is a strong business advantage but Latvia is also known for its skilled and multilingual labour force, invaluable natural resources, stable economic situation and great business potential to foreign and domestic companies. Latvia has the capacity to provide a solid business environment for companies of different sizes. This is demonstrated by the presence of wide range of well known international companies in Latvia. <\/p>\n\n\n\n

Business operations in Latvia benefit from EU membership, which enables the free movement of goods, services, capital and labour. Latvia is also part of the euro zone and the Schengen Agreement. <\/p>\n\n\n\n

In this article, Leinonen introduces the key aspects you need to know for success as a foreign-owned business in Latvia.<\/p>\n\n\n\n

COMPANY ESTABLISHMENT IN LATVIA<\/h2>\n\n\n\n

The commercial activities are mainly regulated by the Latvian Commercial Law. The most common\u202fforms of business<\/a>\u202fpresence when entering the Latvian market are an employer\u2019s registration, permanent establishment, a branch of a foreign company, or a limited liability company. All of them have advantages and disadvantages in reporting, audit, taxation, etc. We recommenda brief consultation with us before deciding which form of presence is to be chosen. <\/p>\n\n\n\n

There are no restrictions regarding citizenship of business entity representatives. <\/p>\n\n\n\n

Registration with the state registry (Commercial Registry of the Republic of Latvia for a limited liability company and branch of a foreign company, for permanent establishment and employer\u2019s registration, it can also be the State Revenue Service \u2013 Latvian national tax authority) is mandatory for doing business in Latvia. The company is considered a legal entity only after registration at the Commercial Registry.<\/p>\n\n\n\n

TAXATION IN LATVIA<\/h2>\n\n\n\n

Since 2018 in Latvia\u202f, taxation\u202fof corporate profits has been postponed until those profits are distributed as dividends or deemed to be distributed. Corporate income tax at the rate of 20% will only have to be paid from the profit share which will be distributed or disbursed as dividends or used for purposes not directly related to business. It should be noted that tax base should be divided by 0,8 and then 20% corporate income tax applied. Thereby, the effective tax rate will actually be 25%. <\/p>\n\n\n\n

An alternative regime came into effect in 2026 for the cases where the shareholders of a company are only natural persons \u2013 15 % company income tax (before application, the tax base shall be divided by a coefficient of 0,85) + 6 % personal income tax can be paid. <\/p>\n\n\n\n

Latvia has adopted a progressive personal income tax system. Progressive personal income tax rates:  <\/p>\n\n\n\n