Doing Business in Latvia: 2026 Overview for Foreign Companies

Doing business in Latvia in 2026 means operating from an EU, eurozone, and NATO member state where corporate income tax on reinvested profit is 0%, a limited liability company (SIA) registers in 1-3 business days for a EUR 150 state fee, and average gross salaries in Riga run EUR 1,800-2,200 per month — the lowest labor costs in the Baltics.

The other core numbers: CIT on distributed profit is 20/80 (effectively 25% of the gross amount), with a new optional 2026 regime of 15% CIT plus 6% dividend PIT. VAT is 21% standard, mandatory at EUR 50,000 domestic turnover. Social contributions (VSAOI) total 34.09%, and the 2026 minimum wage is EUR 780 per month. This overview covers the decision points in sequence, with links to our detailed guides on each topic.

Quick Summary

Latvia is an EU, eurozone, and NATO member offering foreign companies 0% corporate income tax on reinvested profit (20/80 on distributions), 21% standard VAT, and the lowest labor costs in the Baltics at EUR 1,800-2,200 average gross monthly salary in Riga. A SIA (limited liability company) registers in 1-3 business days for EUR 150 with share capital from EUR 1; remote incorporation via power of attorney is routine. Total social contributions are 34.09%, the 2026 minimum wage is EUR 780, and four Special Economic Zones offer up to 80% CIT rebates under a framework running to 2050. Banking takes 2-4 weeks due to strict AML checks.

Why Latvia: The Executive Case

Latvia combines EU-grade institutional stability with the lowest cost base in the Baltics. As a member of the EU, eurozone, Schengen, and NATO, a Latvian company invoices all 27 EU member states from day one, transacts in euros, and benefits from 80+ double tax treaties. The tax model rewards growth: retained profit is taxed at 0%. E-governance is mature — registration, tax filings, and most state interaction run online through VID's Electronic Declaration System (EDS).

Against its neighbors, Latvia's edge is arithmetic: Riga salaries run 15-25% below Tallinn for equivalent roles, and the holding regime (0% on incoming dividends and qualifying share-sale gains) is arguably the strongest of the three. See the detailed comparison in Latvia vs Estonia vs Lithuania and the full playbook in our guide to doing business in Latvia as a foreigner.

Legal Forms: SIA, Branch, or IK

For roughly 90% of foreign-owned businesses, the answer is a SIA (limited liability company). It shields personal assets, accepts shareholders and board members of any nationality, and carries the credibility banks and B2B clients expect.

Form	Liability	Setup cost	Best for
SIA	Limited to share capital	EUR 150-250 fee + EUR 1-2,800 capital	Almost all foreign businesses
Branch of foreign company	Parent fully liable	Registration via Register of Enterprises	Existing companies testing Latvia
IK (individual merchant)	Unlimited personal	~EUR 20	Local solo traders, rarely foreigners

A branch is taxed only on Latvian-source income but gets a cooler reception from banks; an IK offers no liability firewall. The full decision framework, including self-employed status for freelancers, is in our guide to starting a business in Latvia.

Incorporation: Cost and Timeline

A prepared founder can go from documents to registration number in under a week. The Register of Enterprises processes a SIA in 1-3 business days for a EUR 150 state fee (EUR 250 express). Standard share capital is EUR 2,800; the EUR 1 micro-capital option restricts dividends until capital reaches EUR 2,800 and raises eyebrows at banks. Every SIA needs a Latvian legal address (virtual addresses run EUR 30-100 per month).

Foreign founders do not need to visit Latvia: registration works through a notarized and apostilled power of attorney, with full-service remote incorporation typically costing EUR 1,500-3,000. See the step-by-step procedure in SIA registration steps and the remote route in registering a Latvian company remotely.

The Latvian Tax System at a Glance

Latvia taxes corporate profit only when it leaves the company — the single most important feature for planning. The five taxes every foreign operator should model for 2026:

Tax	2026 rate	Key details
CIT (UIN)	0% retained / 20/80 distributed	Effective 25% of gross-up on dividends; optional annual election: 15% CIT + 6% dividend PIT
PIT (IIN)	25.5% / 33%	33% above EUR 105,300/yr; capital income and capital gains 25.5% flat
VAT (PVN)	21% standard	12% reduced (food from 1 July 2026), 5% super-reduced; registration threshold EUR 50,000
Social contributions (VSAOI)	34.09% total	Employer 23.59% + employee 10.50%; self-employed 31.07%
Micro-enterprise tax (MUN)	25% of turnover	Turnover limit EUR 40,000/yr; replaces PIT and VSAOI for the owner

Dividends to EU parent companies flow at 0% withholding under the Parent-Subsidiary Directive, and the treaty network reduces rates elsewhere. Note that deemed distributions — expenses without a business purpose — trigger CIT even without a formal dividend. Withholding and transfer pricing rules for foreign owners are detailed in the foreign business guide.

Labor Market and Payroll Costs

Budget roughly 1.24 times gross salary as your total employment cost. The employer adds 23.59% VSAOI on top of gross pay, so a minimum-wage employee (EUR 780 gross) costs about EUR 964 per month, and a typical Riga office employee at EUR 1,800-2,200 gross costs EUR 2,225-2,719. The employee side — 10.50% VSAOI plus IIN at 25.5%, softened by a non-taxable minimum of up to EUR 550 per month — is withheld by the employer. Contracts must be written and in Latvian (bilingual versions are permitted), probation runs up to three months, and non-EU hires require work permits.

Banking and Payments

Plan 2-4 weeks for a business bank account — the slowest step in the entire setup. Since Latvia's 2018 AML reforms, banks apply enhanced due diligence to non-resident owners: expect to present a real business plan, source-of-wealth documentation, and a coherent reason for choosing Latvia. Rejections happen; an introduction from a local accounting firm materially improves approval odds. Fintech alternatives cover day-to-day operations with lighter onboarding. Preparation tactics are in the banking section of our foreign business guide.

Reporting Obligations: The Compliance Calendar

Latvian compliance is monthly by default, and missed deadlines carry penalties from EUR 150 upward. Every SIA must keep proper books from day one.

Frequency	Obligation
Monthly	Employer report: VSAOI and withheld IIN on salaries (by the 17th of the following month)
Monthly	VAT return via EDS (if VAT-registered)
Per event	CIT return for months with distributions or deemed distributions
Annually	Financial statements — within 4 months of year end (30 April for calendar-year companies)
Annually	Beneficial owner confirmation; transfer pricing file if related-party deals exceed EUR 250,000

For foreign owners without Latvian staff, outsourced accounting is the practical norm — filings run through Latvian-language state systems. See the post-incorporation checklist in our starting a business guide.

Sector Opportunities and Special Economic Zones

Latvia's strongest plays are logistics, manufacturing, IT services, and holding structures. The ports of Riga, Ventspils, and Liepaja anchor a transit and warehousing corridor; woodworking, metalworking, and food processing dominate manufacturing; Riga's cost-competitive talent supports growing IT and shared-service centers. For international groups, the holding regime makes Latvia a low-cost alternative to Luxembourg or Cyprus.

Manufacturers and logistics operators should evaluate the four Special Economic Zones (Riga Freeport, Ventspils Freeport, Liepaja SEZ, Rezekne SEZ), which grant up to 80% rebates on CIT and real estate tax against qualifying fixed-asset investment, under a framework extended to 2050. Rebate tiers and the application process are in our Special Economic Zones guide.

FAQ

How much does it cost to start doing business in Latvia?

A locally managed SIA launch costs roughly EUR 3,400-4,150 with standard EUR 2,800 share capital, or EUR 600-1,350 with micro-capital, including the EUR 150-250 state fee, legal address, and accounting setup. Foreign founders registering remotely through a power of attorney should budget EUR 1,500-3,000 in professional and state fees plus capital. A realistic first-year administrative budget — registration, address, accounting, annual reporting — runs EUR 8,000-15,000 before salaries and rent.

What taxes will a foreign-owned company pay in Latvia in 2026?

CIT is 0% on retained profit and 20/80 on distributions (effectively 25% of the gross amount); from 2026 you may instead elect 15% CIT on annual profit plus 6% PIT on dividends. VAT is 21% standard, mandatory at EUR 50,000 domestic turnover. Employing staff adds 23.59% employer VSAOI on top of gross salary; employees pay 10.50% VSAOI and IIN at 25.5% (33% above EUR 105,300 per year). Dividends to EU parents generally flow without withholding tax.

Can I register a Latvian company without visiting Latvia?

Yes. Remote registration through a notarized, apostilled power of attorney is legal and routine: a Latvian representative files the founding documents, and the Register of Enterprises processes the SIA in 1-3 business days. The full remote package — legal fees, state fee, legal address — typically costs EUR 1,500-3,000. The caveat is banking: accounts can be opened remotely, but an in-person meeting often improves approval odds, and KYC review takes 2-4 weeks regardless.

Do I need a residence permit to run a Latvian company?

No — company ownership and board membership carry no nationality or residency requirement, and many foreign owners manage their SIA entirely from abroad. EU/EEA citizens simply register their stay beyond 90 days. Non-EU owners who want to live in Latvia can apply for a temporary residence permit, most commonly via the business route (EUR 50,000 invested plus EUR 40,000 in annual taxes paid, or five full-time local jobs), granting up to five years of renewable residence with Schengen mobility.

Is Latvia better than Estonia or Lithuania for a foreign company?

It depends on your model. Latvia and Estonia both offer 0% CIT on reinvested profit, but Latvia adds 15-25% lower salaries than Tallinn, the strongest Baltic holding regime, and SEZ rebates up to 80%. Estonia wins for fully remote management through e-residency; Lithuania suits fintech licensing and companies preferring a flat 15% CIT. If you reinvest profits, employ people, or build a holding structure, Latvia usually models out cheapest.

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