Latvia is often chosen as the starting point to reach the European market - and for many reasons.
It’s a member state of the European Union and the eurozone which means free mobility of goods and labor. In addition, Latvia boasts the largest air transportation hub in the Baltics - the Riga International Airport, which offers more than 100 direct flight destinations.
The Quality of Life index is also comparatively high with low cost of living and a high safety index. The locals are welcoming and so is the economic situation in Latvia.
The state has made it clear through its initiatives (such as the Welcome Pack), passed laws and state-sponsored programs that it intends to make itself open to innovation and startups from abroad. The only ‘missing part’ is - you!
This article will cover everything you’ll need to know to actually found a startup in Latvia:
- Residency: Startup Visa - how to become a resident of Latvia and the EU;
- Legal Business Entity Types - what differentiates the most common legal business types and which one is the most appropriate for your startup;
- Company Registration Process - everything you’ll need to know about registering a company in Latvia.
1. Residency: Startup Visa
As a non-EU citizen, you have the right to register and manage a company in Latvia without being a resident of the EU. However, becoming a resident is beneficial as it makes many processes smoother.
The most efficient way for a startup founder to become a resident of the EU is to get a temporary residence permit (TRP), more commonly referred to as the Startup Visa! You can submit the temporary residence permit at the Office of Citizenship and Migration Affairs in Latvia or at your nearest Embassy of Latvia.
The main bonuses of receiving a Startup Visa (TRP) are:
- Validity for up to 3 years (if all legal terms are met), with a requirement to extend the TRP annually;
- Can be obtained by up to 5 startup founders (board members) with the same business idea;
- Opportunity to move to Latvia with your immediate family (spouse and children);
- Easy, no-visa travel within the European Union;
- Opportunity to use an e-signature to sign documents, use online public services and governmental services remotely.
How to apply for a Startup Visa (TRP):
- Contact Magnetic Latvia Startup at the Investment and Development Agency of Latvia (LIAA) to check your eligibility for a Startup Visa. This is not a mandatory step, but it may help you to speed up the process and get valuable insights before submitting all documents. Use their contact info email: [email protected].
- Book an appointment at the Office of Citizenship and Migration Affairs (OCMA) in Latvia to apply for a Startup Visa (TRP), or outside of Latvian, trough the Latvian Embassy`s Consular Section by filling in the application form and preparing all the necessary documents (highlighted in the orange field).
- Receive an answer from the OCMA (it will arrive by email). If positive, continue to the next step.
- Visit the OCMA branch in Latvia to receive your TRP residency card.
- Renew your TRP status annually. Keep in mind that you’re able to renew it for up to 3 years. After the 3 years have passed, you’ll be able to use a regular residence permit.
Processing time: 30 business days
Regular procedure fee: 100.00 EUR
Here's a comprehensive guide on how to apply for a residence permit.
Mandatory actions to keep your Startup Visa:
- You mustn’t be employed or be a member of a board of another company - you have to fully focus on your startup;
- Within 3 months of receiving a TRP: you must register a company in Latvia or become a board member of a company registered no later than one year ago;
- Attract an investment (EUR 30,000 from VC fund or EUR 15,000 from an accelerator/business angel) within 12 months from qualified investors OR provide a report demonstrating continued product creation, manufacturing or development.
If your investor is not on the list of qualified investors, they can apply here (1st link) or you can submit an application on behalf of them (2nd link). For more information, contact [email protected].
If by any chance you don't meet some of the Startup Visa criteria - you can opt for another type of residence permit like the Share capital investor residence permit. This permit will require you to invest your own money into the company’s capital.
A full list of residence permit types can be found here . Otherwise, feel free to contact the OCMA for more information regarding visas.
2. Legal Business Entity Types
The first decision you’ll have to make before starting your business will be to choose the most appropriate form of business entity to establish. It’s an important step that will determine which income tax return form you’ll have to file.
The most common forms of business are individual merchants, joint-stock companies, partnerships, and limited liability companies. However, there are two forms of business that perfectly suit startups. These two forms are a limited liability company (LLC, which in Latvian is abbreviated as SIA), and a limited liability company with reduced equity.
Limited Liability Company (LLC) with reduced equity
The Limited Liability Company (LLC) with reduced equity business type is a common choice for startups due to its flexible first equity investment, which is from 1 EUR up to 2799 EUR. This business type is ideal for teams that have more than 1 founder because it allows for up to 5 co-founders/ board members. Note that only owners can be listed as board members and that an individual can only have one LLC with reduced equity.
The cost of application for an LLC with reduced equity is 34.23 EUR + 4.00 EUR, if applying in person.
If at any point you find that an LLC with reduced equity doesn’t fulfill your needs, you are free to change your type of business entity at any time.
To learn more about the process of founding an LLC with reduced equity and what documentation is needed, visit the Register of Enterprises of the Republic of Latvia.
Limited Liability Company
Another popular form of business entity many startups choose is the Limited Liability Company (LLC). The minimum equity for this business form is no less than 2800 EUR. And in comparison to the LLC with reduced equity - there are no limitations regarding the size of your team. This means that your LLC can have an unlimited amount of co-founders and board members.
The cost of application for an LLC is 177.03 EUR + 4.00 EUR, if applying in person.
To find out more about the application process and documents needed to apply for an LLC, visit the the Register of Enterprises of the Republic of Latvia.
3. Company Registration Process
After choosing the form of business entity for your startup you must properly register your business. You’ll need to submit your application and all the necessary documents, as well as a statement from your bank, to the Register of Enterprises (Uzņēmuma Reģistrs or UR in Latvian).
One of the requirements for registering a company in Latvia is that you have to be able to provide a legal address of the company.
The address must be within the territory of Latvia and you must also grant evidence that you're able to use the address for business needs. Because of that, the owner of the property has to provide a letter describing that they allow you to register your company at the mentioned address.
In cases where it’s not possible to provide a legal address for your startup, approach local co-working spaces. TechHub Riga is one of the many to name, who offer using their legal address for a small fee.
The procedure of registering a company in Latvia:
- Set up a temporary bank account to transfer equity funds;
- Present an application and documents (payment order/ bank reference on depositing equity capital) to the Register of Enterprises;
- Once your business is registered, return to your bank to form a full-fledged bank account;
- Register at the State Revenue Service and apply for VAT if needed.
You can register a company in person, on behalf of another person with their consent, online or by preparing and sending the documents by mail. If any of the above-mentioned ways to register a company are not preferable for you - there are various registry companies and legal firms available to help you with registering your startup in Latvia.
Step 1: Set up a temporary bank account & transfer equity funds
To get started you’ll have to open a temporary bank account in a bank based in Latvia. Some of the most well-known banks in Latvia to consider are:
The application process for setting up a temporary business bank account can be done:
- remotely, using an e-signature;
- in person, heading down to the bank;
- by a third person with your power of attorney.
After opening a temporary account, your next step will be to transfer the company equity to it. The amount of equity depends on the type of company you’ve intended to found:
- LLC with reduced equity - starting from 1 EUR to 2799 EUR;
- LLC - a minimum of 2800 EUR.
When the transfer is complete, you’ll have to obtain a payment order or a reference on payment of equity capital from the bank.
After receiving the payment order clearly stating the equity capital on your bank account, your next step is to submit documents at the Register of Enterprises.
Step 2: Register your business at the Register of Enterprises
To register your business, you'll have to apply to the Register of Enterprises and submit your documents.
Registering your startup at the Register of Enterprises can be done:
- In person at a bureau of the Register of Enterprises of Latvia (here are their locations). Keep in mind that some documents must be certified by a notary, however, it can be done on the spot.
- By email - separately sign all of the documents with a secure eID e-signature and send them via [email protected] to the Register of Enterprises of Latvia. In this case, notary certificates are not required.
- Online - visit the Latvija.lv platform and sign all documents with a secure eID e-signature. You can log into the platform if you have a Latvian e-signature and/or a Latvian bank account.
- On another person's behalf - use the help of a local partner who can submit the documents on your behalf. In this case, authorization from your attorney is not required. However, if the applications are sent via the post office, some documents may require a notary certification.
The Register of Enterprises of Latvia accepts documents e-signed using two extensions:
- .edoc - signed with a Latvian e-signature;
- .asice - the EU standard ASiC-E.
The Estonian e-ID e-signature is also accepted, but only as .asice not .bdoc.
While the online registration process (with a Latvian resident code) is currently only available in Latvian, English localization is already in progress.
Take note that all of the documents should be in the Latvian language or supported by a notary certified translation. Here are some useful templates for the industry-standard legal documents in English/Latvian languages prepared by Sorainen.
Find step by step instructions and information about costs and necessary documents to apply for the Register of Enterprises here:
After you've submitted your application to the Register of Enterprises, it will be processed within the next 3 business days. You'll receive a letter confirming your application to the legal address you provided in your application.
Step 3: Create a full-fledged bank account
After receiving your letter of acceptance from the Register of Enterprises, you can make your way back to the bank where you created your temporary bank account to change it to a full-fledged bank account.
Bring your new letter of acceptance along, as it will include your registration number which will be required by the bank. Take note that this can be done only in person.
Step 4: Register at the State Revenue Service and apply for VAT if needed
To register your startup at the State Revenue Service you’ll have to apply in person or online by using the Electronic Declaration System (EDS). EDS is a secure and convenient method of how a legal person and any individuals can submit all taxes, informative declarations and other applications to the State Revenue Service.
In addition to document submission, the EDS offers other online services, such as finding practical information about VAT and other taxes. To apply for VAT, fill in an application form (KR4) at the Register of Enterprises. After completion, the Register of Enterprises will forward your application to the State Revenue Service and you’ll be all set.
You’re ready to do business in Latvia!
Founding a startup in Latvia is fairly easy and once you’ve done that - there’s a whole new platform of new business entrepreneurs to help you along the way.
There are many associations and groups that support startups and even organizes multiple startup-related events. You’ll also have the opportunity to join the Latvian Startup Association Startin.LV and be a part of the community.
The Latvian government offers many benefits, such as the Startup tax, that provides special taxation for startups aimed to reduce their costs. In addition, there’s also the “Explore the Globe” travel grant program that offers financing for startups to attend global level conferences and arrange meetings with investors in any country.
Good luck on your journey! If at some point you run into any unclarities in regards to the provided Welcome Pack or startup TRP, contact the Magnetic Latvia Startup team via [email protected]
