If you want to establish a company in a digitized and tax-competitive country within the European Union, Latvia will be one of the prominent options by 2026. With low entry costs, online establishment processes completed in 1-3 days, and a favorable tax regime applied to undistributed profits, Latvia is becoming a strong hub, especially for entrepreneurs focused on technology, e-commerce, and service exports.
The 2026 Perspective of Company Formation in Latvia: Why You Should Consider It?
Latvia is an EU member country that ranks in the top 30 of the World Bank’s “Ease of Doing Business” index, standing out with its business environment and digital government applications. By 2026, with the EU digital reforms after 2025:
- Digital-focused company formation processes are becoming even shorter; you can complete many steps within 1-3 business days using e-signatures.
- The corporate tax rate is at 20%, but lower effective rates and exemptions apply to small businesses and companies below certain revenue thresholds.
- Full access to the EU Single Market makes it possible to sell products and services from Latvia to all of Europe.
- EU funds and grant programs focused on green transformation and digitalization provide additional advantages, especially for innovative and sustainable business models.
On the other hand, since the Latvian domestic market is relatively small, it is critical to structure your business model from the outset around export and sales across the EU. Additionally, visa, residency, and immigration processes for founders from outside the EU should be planned separately.
Suitable Company Types for Foreigners in Latvia
The most common and practical structure for foreign investors wishing to establish a company in Latvia in 2026 will be the Limited Liability Company (SIA). The main options are as follows:
1. Limited Liability Company (SIA)
- The most common and recommended structure; ideal for SMEs and start-ups.
- Minimum capital is 1 € (symbolic), but in practice, a higher capital amount provides assurance with banks and business partners.
- The number of partners must be at least one person; can be a natural person or a legal entity, no residency requirement.
- At least one director must be appointed; again, there is no residency requirement.
- The liability of the partners is limited to the capital they have committed.
2. Individual Merchant (Individuālais komersants)
- A simple structure for sole proprietorships.
- The establishment process is quick but carries unlimited personal liability.
- Generally risky for foreign investors; SIA is much safer in terms of asset protection.
3. Joint Stock Company (AS)
- Suitable for medium-large scale investments, going public, or corporate structures.
- Requires higher capital, and the management structure is more complex.
4. Branch or Subsidiary
- It is possible for an existing foreign company to open a branch or establish a subsidiary in Latvia.
- A branch does not create a legally separate legal entity from the parent company; a subsidiary can be a standalone SIA/AS.
In terms of flexibility for entering the EU market, tax optimization, and investor confidence, the SIA format will generally be the most rational choice in most cases.
Step by Step: Company Formation Process in Latvia in 2026
We can summarize the company formation in Latvia basically in 4 main stages: Preliminary preparation, registration application, tax registration, and banking & operational setup.
1. Preliminary Preparation: Defining the Basic Elements of the Company
This stage can typically be completed within 1-2 days and can largely be conducted remotely.
- Name selection: The company name must be unique and should not contain misleading or protected words (e.g., “bank”). The name for SIA includes the term “SIA”. You can check its availability in the online query system of the Latvian Commercial Register (Enterprise Register).
- Business activity and NACE codes: For example, 62.01 for IT services, etc. Most sectors are free; licenses may be required for areas such as finance, insurance, pharmaceuticals, and food.
- Legal address (registered office): A real address in Latvia is mandatory. You can rent a physical office or use virtual office services that provide a legal address (annual cost is approximately €100-500).
- Partners and management: Appoint at least one partner and one director. There is no residency requirement for partners and directors in Latvia or the EU.
- Articles of Association: Must be prepared in Latvian, including capital, share structure, management, and profit distribution rules. Obtaining professional legal support here prevents future disputes.
- Capital commitment: Minimum can be 1 €; typically, a capital blockage letter is obtained for the bank account or alternative procedures are applied.
For foreign founders, copies of passports and, in some cases, notarization and apostille may be required. For founders from outside the EU, appointing a local representative with a power of attorney significantly facilitates practical process management.
2. Registration Application to the Latvian Commercial Register
Registration procedures are carried out through the Uzņēmumu reģistrs (Enterprise Register). By 2026, most of the processes will be conducted online using e-signatures.
- Preparation of documents and notarization:
- Articles of Association and establishment decision
- Identification documents of the founders
- Document showing the right to use the legal address
- Bank letter or declaration confirming the capital has been paid
- Notary fees: Generally around €50-100; apostille and sworn translation may be required for foreign documents.
- State fee (registration fee): Approximately €30 for a standard SIA; it may be higher for expedited processing or special cases.
- Application language: The main language is Latvian. Although some attachments may be accepted in English, Latvian translation is often mandatory for critical documents.
- Processing time: If the documents are complete and accurate, registration is usually completed within 1-5 business days.
In 2026, under the EU digital single market legislation, advanced e-signature and blockchain-based verification solutions will be more widely used for identity and signature verification. This will particularly support fully remote establishment scenarios.
3. Tax and VAT Registration Processes
Once the company is registered, tax liability begins with the Latvian Tax Office (VID). Tax processes are managed through the Electronic Declaration System (EDS).
- Tax identification number: Your company receives a tax number upon registration.
- VAT registration:
- VAT registration becomes mandatory when your annual turnover exceeds a certain threshold (e.g., around €40,000).
- If you are engaged in intra-EU sales and purchases, e-commerce projects, or international business, optional VAT registration can provide strategic advantages without waiting for the threshold.
- Tax rates:
- The standard VAT rate is 21%.
- Reduced rates (e.g., 12%) may apply in certain sectors (e.g., some food products, publishing, etc.).
- Social security and payroll:
- Employer social security contribution is approximately 23.59% according to 2025 data; minor adjustments are expected in 2026.
- Employee registration and payroll notifications are done through VID’s e-systems.
If you are becoming VAT liable as a company from outside the EU, you may need to appoint a fiscal representative in Latvia. At this point, it is important to seek professional support for international tax and VAT compliance.
4. Opening a Bank Account and Operational Setup
After registration in the commercial register, you will complete the following steps to actually activate your company:
- Opening a bank account:
- You can work with local banks such as Swedbank, SEB, Citadele.
- Due to compliance (AML/KYC) checks, the identity information of the founders, the business activity plan, and the source of funds are examined in detail.
- Alternatively, fintech solutions like Wise Business can facilitate international payment traffic.
- Permits and licenses: You need to complete the licensing processes of relevant ministries and institutions in regulated sectors such as finance, insurance, food, education, health, etc. These processes can take between 2-30 days.
- Accounting infrastructure:
- Every company in Latvia is required to submit an annual financial statement.
- Generally, working with a local accounting office or outsourcing solution is the most practical way (monthly costs typically range from €100-300).
- Employment and contracts:
- Employment contracts with employees must comply with Latvian labor law.
- The minimum wage is around €700/month as of 2025; a 3-5% increase is expected in 2026.
Tax Regime and Company Formation Costs in Latvia (2026 Projections)
Corporate Tax and Other Basic Taxes
- Corporate Tax (CIT): The general rate is 20%. However, Latvia is known for its model that does not tax profits as long as they are not distributed. This means that profits reinvested within the company may be treated more favorably than distributed profits.
- Small business regimes: There are lower effective rates or simplified tax regimes for micro-scale businesses below a certain revenue threshold (e.g., €40,000).
- Double taxation treaties: Latvia has double taxation treaties with over 60 countries. This is an important planning tool for companies doing business with Turkey, the EU, and other countries.
Estimated Costs for Company Formation and the First Year
Based on 2025 data and assuming an inflation rate of 2-3%, the average cost ranges for 2026 are:
- State fees: Approximately €30-150
- Notary and legal document costs: €200-500
- Remote establishment packages (“turnkey” services for foreigners): €800-1,500
- Legal address / virtual office: €100-500/year
- Opening a bank account: Often free, some banks may charge a processing fee of up to €50.
- First-year accounting and consulting: €500-2,000 (varies based on business volume and transaction count)
In summary: You can generally establish a basic SIA company with a total initial budget of €1,000-3,000, even if you are remote (excluding licensed sectors and special cases).
Special Considerations for Non-EU Founders and Foreigners
Establishing a company as a non-EU/EEA citizen does not automatically grant residency or work permits. The main points to consider in 2026 are:
- Visas & residence permits: Being a company founder does not directly grant you the right to live in Latvia. You should additionally plan for business visas, start-up visas, D-type visas, or entrepreneur residence permits.
- Possibility of remote establishment: It is practically possible to manage the company formation stages 100% online with a combination of e-signatures, notarization, and power of attorney.
- Banking and compliance processes: Founders from high-risk countries may be required by banks to provide more detailed “source of funds” and business plan presentations.
- Employment and EOR/payroll solutions: If you want to employ staff without opening an office in Latvia, Employer of Record (EOR) and payroll services provide a strategic alternative.
Common Challenges and Tips When Establishing a Company in Latvia
- Language barrier: Since the official language is Latvian, you may encounter language barriers when communicating with the commercial register, tax office, and some licensing authorities. Working with a sworn translator and local consultant speeds up the process.
- Regulated sectors: Obtaining licenses in areas such as financial services, insurance, pharmaceuticals, crypto asset services, education, and health is a more intensive process in terms of both time and documentation.
- Continuous compliance: Regular responsibilities such as annual reports, VAT declarations, transfer pricing, and e-invoicing obligations require a professional accounting and tax team.
- Strategic planning: Consider Latvia not just for company formation but as part of your strategy for supply chain, tax optimization, and mobility within the EU.
How Corpenza Can Help? (Company Formation, Payroll, International Mobility in Latvia)
While establishing a company in Latvia may seem like a process that takes a few days on paper, the process can quickly become complex when international tax, payroll, labor law, and residence permits come into play. This risk grows, especially for companies operating simultaneously in multiple countries, sending personnel, or planning investments.
Corpenza integrates the services we offer on a European and global scale into your Latvian projects:
- Company formation and structuring: Establishing an SIA or branch in Latvia, drafting articles of association, optimizing the partnership structure for tax purposes.
- International accounting and tax planning: Group-level tax optimization considering double taxation treaties between Latvia-Turkey or Latvia-other countries.
- Payroll and EOR (Employer of Record) solutions: Payroll, social security, and posted worker (temporary personnel deployment abroad) models compliant with local labor law and tax regulations without having your own company in Latvia.
- Residence permits, golden visa, and investment citizenship strategies: Positioning your Latvian company in line with your residency and mobility plans in the EU.
- Regulation and licensing consultancy: End-to-end management of licensing requirements in areas such as financial services, fintech, e-money, crypto, health, and education.
This way, we help you turn your structure in Latvia into a strategic hub that supports all your European operations, not just a single-country company establishment move.
Conclusion: Establishing a Company in Latvia in 2026 is a Strategic Move in Europe
By 2026, Latvia will be:
- With digitized and fast company formation processes,
- A competitive corporate tax structure,
- Advantages of free movement within the EU,
- A developing innovation and start-up ecosystem
making it an extremely attractive country for companies looking for an efficient, flexible, and scalable base within the EU. However, like every country, Latvia has its own unique tax, labor law, and compliance rules. Therefore, it is critically important to evaluate your business model, target markets, and personnel structure in a holistic framework before establishing your company.
By receiving support from an experienced team on issues such as international company formation, payroll, posted workers, investment-based residency, and citizenship, you can both accelerate the establishment process and minimize your costs and risks in the long term.
Disclaimer
The information in this text is general information based on official sources and reputable international publications available as of the end of 2025. It does not constitute legal, financial, or tax advice. Tax rates, fees, threshold values, and regulations may change over time.
Before making decisions regarding company formation, tax planning, residence permits, work permits in Latvia or any other country, we strongly recommend checking the current regulations through the official websites of the institutions and obtaining personal advice from professionals specialized in your field.
