Relocating Your Business to Latvia: Step-by-Step Guide

When a German SaaS company moved its headquarters from Munich to Riga in 2024, the founder estimated it would take three months. It took seven. Not because Latvia was slow -- the Latvian side processed everything in five weeks -- but because untangling the German entity, transferring employee contracts, and renegotiating bank relationships consumed far more time than anyone anticipated.

Business relocation across borders is fundamentally different from starting fresh. You are not just registering a new company. You are migrating contracts, clients, employees, IP, regulatory approvals, and tax positions from one jurisdiction to another, while keeping the business running throughout the transition. The upside -- Latvia's 0% CIT on reinvested profits, lower operating costs, EU market access from a more competitive cost base -- is genuine. But the path requires careful sequencing.

Here is how companies actually relocate to Latvia in 2026.

Three Relocation Models

There is no single "move a company" procedure. The right approach depends on your current jurisdiction, entity type, and what you need to preserve.

Model 1: Register New + Wind Down Old

The simplest approach. Register a new Latvian SIA, migrate operations gradually, then liquidate or mothball the original entity.

Best for: Small companies, solo founders, businesses without complex contracts or regulatory licenses. Companies relocating from non-EU countries where cross-border mergers are not available.

Sequence:

1. Register the Latvian SIA (1-3 weeks including banking)
2. Transfer client contracts to the new entity (timeline varies -- some clients need board approval)
3. Transfer employees (new contracts under Latvian law)
4. Migrate IP and assets through sale, assignment, or contribution
5. Wind down the original entity per its home jurisdiction rules

Tax implications: The transfer of assets and IP may trigger exit taxes in your origin country. Germany, France, and the Netherlands all have exit tax provisions that can apply when a company moves its tax residence or transfers significant assets abroad. Professional advice in both jurisdictions is essential.

Model 2: Cross-Border Merger (EU to EU)

If your current entity is in another EU member state, EU Directive 2005/56/EC allows a cross-border merger. Your existing company merges with a newly formed (or existing) Latvian SIA, with the Latvian entity surviving as the successor.

Best for: EU-based companies that want to preserve contracts, licenses, and legal relationships without individually reassigning everything.

Sequence:

1. Prepare a common merger plan, approved by both entities' boards
2. Publish the plan in official gazettes of both countries (minimum 1 month before the shareholder vote)
3. Obtain shareholder approval in both entities
4. Get a pre-merger certificate from the origin country's competent authority
5. Register the merger with the Latvian Register of Enterprises
6. The origin entity ceases to exist; the Latvian SIA assumes all rights and obligations

Timeline: 4-8 months, driven largely by the origin country's procedures. Latvia's portion typically takes 4-6 weeks.

Key advantage: Universal succession -- all contracts, permits, and obligations transfer by operation of law. You do not need individual client consent (though informing key clients is obviously good practice).

Model 3: Re-Domiciliation

Some jurisdictions allow a company to change its registered seat without merging or liquidating. The company remains the same legal entity but becomes governed by Latvian law.

Availability: Limited. Latvia accepts incoming re-domiciliations from certain jurisdictions (notably some offshore centers and specific EU countries with re-domiciliation frameworks). The process is case-specific and requires individual assessment.

Best for: Companies in jurisdictions that permit outbound re-domiciliation and want to maintain their corporate history (registration number, age, track record).

Tax Considerations When Relocating

Relocation triggers several tax questions that must be addressed before you move:

Exit taxation. Many EU countries tax unrealized gains when a company moves its tax residence. This can apply to appreciated assets, IP, goodwill, and even deferred revenue. Under EU law (ATAD), exit taxes must allow deferred payment over 5 years for moves within the EU, but the tax itself is real.

Transfer pricing on asset moves. If you transfer IP, equipment, or client contracts from the old entity to the new Latvian SIA, these transfers must be at arm's length prices. Undervaluing assets to minimize exit taxes invites audit attention in both jurisdictions.

VAT on asset transfers. Depending on the transfer structure, VAT may apply. Within the EU, the transfer of a going concern (TOGC) is generally VAT-exempt, but the conditions must be carefully met.

Latvian CIT on retained profits: still 0%. Once your operations are in Latvia, the 0% retention regime applies to profits earned going forward. Historical profits from the origin country are not subject to Latvian CIT (they were earned outside the Latvian entity).

Double tax treaties. Latvia's 80+ treaties can reduce or eliminate withholding taxes on cross-border payments during the transition period when both entities may exist simultaneously.

Relocating Employees

Moving staff from another country to Latvia involves employment law in both jurisdictions:

Termination in origin country. If employees do not relocate, you need to terminate their contracts under local employment law, which may involve notice periods, severance payments, and works council consultations.

New contracts in Latvia. Employees who relocate need Latvian employment contracts complying with Latvian labor law. Minimum wage, social contributions (VSAOI at approximately 34%), holiday entitlements (4 weeks minimum), and probation rules all apply.

Work permits for non-EU staff. Non-EU employees moving to Latvia need work permits from PMLP. The process takes 30-60 days and requires demonstrating that the position cannot be filled locally.

Social security coordination. Within the EU, social security coordination regulations (EC 883/2004) govern which country's system applies during and after the move. An A1 certificate from the origin country may be needed for a transitional period.

The Practical Checklist

A condensed timeline for a typical relocation (new entity + wind-down model):

| Week | Action | |---|---| | 1-3 | Register Latvian SIA, secure legal address | | 2-6 | Open bank account (parallel with registration) | | 3-8 | Transfer first contracts and client relationships | | 4-10 | Hire or relocate key staff | | 4-12 | Transfer IP and assets (with transfer pricing documentation) | | 8-16 | Begin winding down origin entity | | 12-24 | Complete liquidation of origin entity |

Cross-border mergers add 2-4 months to the timeline due to publication requirements and regulatory approvals.

What Goes Wrong

Clients refuse to novate contracts. Large enterprise clients sometimes have policies against contract assignment. Solution: run dual entities temporarily and let contracts expire naturally, replacing them with new contracts from the Latvian entity.

Banks reject the new entity. Latvian banks may view a newly registered company with a foreign owner and immediate high-value transactions suspiciously. Solution: prepare a detailed business plan explaining the relocation, provide documentation from the origin entity showing business history, and consider bank introductions through a Latvian professional firm.

Origin-country tax authorities challenge exit. If you rush the exit or undervalue transferred assets, tax authorities in your origin country may adjust. Solution: get professional valuations, maintain documentation, and consider ruling requests where available.

Underestimating the timeline. Every relocation takes longer than expected. Budget 6-12 months for a complete transition, even if each individual step looks manageable.

SIA "CORVUS ACCOUNTING & TAX" (Russell Bedford network) has guided businesses through cross-border relocations from Germany, the UK, the Nordics, CIS countries, and beyond. For an initial assessment of your relocation options, schedule a consultation.