Tax and accounting regulations

Summary of Requirements for a Limited Liability Company (SIA):

General Information
Type of Company Limited Liability Company
Timescale to incorporate Approx. 14 working days
Taxation The rate of corporate income tax is 15%. Corporate income tax is imposed on the annual accounting profits
Double Tax Treaty Access Latvia has over 51 tax treaties
Directors
Minimum No. Required 1,Corporate Directors are not permitted
Local Director Required No
Publicly accessible information Yes, directors details are available on a public register
Location of Meetings Anywhere
Shareholders
Minimum No. Required 1, Corporate Shareholders are permitted
Publicly accessible information Yes
Location of Meetings  Anywhere
Company Secretary
Required No
Local Secretary Required No
Registered Office Required Yes
Share Capital
Standard Currency Euro
Minimum Authorised €3,090.00
Minimum Paid Up Capital Share Capital to be paid up during the incorporation of the company.
Accounting & Compliance
Requirements to prepare Accounts Yes
Requirement for Audit Audit is required if the following criteria are exceeded:

 

  1. Total Assets of at least 350,000 Euro
  2. Net sales of at least 720,000 Euro
  3. More than 25 employees
Local Auditor Required Yes
Requirement to File Accounts Yes
Requirement to file Annual Return
  • Yes
  • A limited company may submit its annual return up to 4 months from the end of the tax year
  • Tax must be paid within 15 days of the submission of the annual return
Additional Information
VAT The standard VAT rate is 21%
Bank Account Opening Eltoma Corporate Services can assist with bank account opening in the following banks; Rietumu Banka, Baltikums Banka, AB L.V.

Taxation:

Individual Tax Rate:
  • Resident individuals are taxed on annual income, non-residents are taxed only on income sourced in Latvia.
Corporate Income Tax Rate:
  • 20%.
  • Taxable income includes trading income, passive income and capital gains.
  • Dividends derived from local or EU entities are
  • Losses can be carried forward for 8 years
Taxation of Dividends
  • Dividends are exempt from tax if received from domestic subsidiaries or subsidiaries in EU countries
  • Dividends received from non-residents in third countries are exempt if the Latvian recipient holds more than 25% of the capital and the payer is not located in a black list country
  • Other dividends are taxed at 15% with a credit for foreign tax withheld.
Capital Gains Tax Rate:
  • Capital gains are taxed as general business income and taxed at the normal corporate rate
Withholding Tax: Dividends:

 

  • Dividends paid to a non-resident company are subjected to a 10% withholding tax unless the rate is reduced under a tax treaty or the recipient company is located in an EU member state in which case no tax is withheld.

Interest:

  • A 10% withholding tax is imposed on interest paid to non-resident related parties and 5% on interest paid by commercial banks to non-resident related parties.

Royalties:

  • The withholding tax on Royalties paid to non-residents is 5% on license fees, 15% on royalties paid for artistic works.
Losses:
  • Losses may be carried forward indefinitely
  • The carryback of losses is not permitted
Capital Gains:
  • Capital gains are taxed as taxed as general business income and taxed at the normal corporate rate.

 

 

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  Resources:

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