Starting a Business in Latvia: Complete Guide (2026)

Latvia processed over 12,000 new business registrations in 2025 — a record for a country of fewer than two million people. The combination of 0% tax on reinvested profits, EU single-market access, and a startup ecosystem centered in Riga has made this small Baltic state one of the more interesting places to launch a company. But navigating the actual process, from choosing an entity type to opening a bank account, trips up even experienced entrepreneurs.

This guide covers everything you need to start a business in Latvia in 2026: entity types, registration procedures, costs, timelines, and the critical first steps after your company exists on paper.

Three Paths: SIA, IK, or Self-Employed

Latvia offers three main structures for new businesses. Each comes with different liability protections, tax implications, and administrative burdens.

SIA (Sabiedrība ar ierobežotu atbildību) — the limited liability company — is by far the most popular. It shields your personal assets, allows multiple shareholders, and carries the credibility that banks and larger clients expect. The standard share capital is EUR 2,800, though a micro-capital option starting at just EUR 1 exists (with restrictions we'll cover shortly).

IK (Individuālais komersants) — the individual merchant — suits solo operators who want formal business registration without the overhead of a corporate structure. Registration costs roughly EUR 20. The catch: you're personally liable for all business debts. No firewall between your company's obligations and your savings account.

Self-employed (Pašnodarbinātā persona) — the lightest option. No state fee, no registration at the Commercial Register. You register directly with the State Revenue Service (VID) through their electronic declaration system (EDS). Ideal for freelancers, consultants, and anyone testing a business idea before committing to a formal entity.

Side-by-Side Comparison

| Feature | SIA | IK | Self-Employed | |---|---|---|---| | Liability | Limited to share capital | Unlimited personal | Unlimited personal | | State registration fee | EUR 150–250 | ~EUR 20 | Free | | Registration time | 1–3 business days | 1–3 business days | Same day (via EDS) | | Share capital required | EUR 2,800 (or EUR 1 micro) | None | None | | Credibility with banks | High | Medium | Lower | | Administrative burden | Higher | Medium | Lowest | | Suitable for | Teams, investors, scaling | Solo trade, crafts | Freelance, consulting |

In our experience, roughly 80% of clients who initially consider an IK end up registering a SIA anyway — usually within the first year, once they realize that limited liability and easier bank access matter more than they expected.

Why Latvia? The Business Case

Before diving into mechanics, a quick overview of what makes Latvia attractive in 2026.

Tax on reinvested profits: 0%. Latvia's corporate income tax (CIT) applies only to distributed profits at an effective rate of 20/80 (25% gross). As long as you reinvest earnings into the business, you pay no corporate tax. This is rare in Europe and genuinely useful for growth-stage companies.

EU market access. A Latvian SIA can sell goods and services across all 27 EU member states. For non-EU entrepreneurs, a Latvian company is often the fastest path into the European market.

Digital infrastructure. E-government is well-developed. Tax filings, social contribution reports, and much of the registration process happen online through VID EDS. Annual reports go through the Commercial Register's portal.

Cost of doing business. Office rents in Riga run EUR 10–18 per square meter, compared to EUR 25–40 in Berlin or Amsterdam. Qualified accountants and developers are available at competitive rates (though the talent gap is narrowing).

Russell Bedford network advantage. As a member of Russell Bedford International, firms like Corvus Accounting & Tax can support cross-border structures, transfer pricing, and multi-jurisdiction compliance — relevant if Latvia is one piece of a larger puzzle.

The SIA Registration Process: What Actually Happens

Registering a SIA involves several concrete steps. Here's the sequence most founders follow.

Step 1: Choose a company name. Check availability at the Commercial Register (Uzņēmumu reģistrs). The name must be unique and not misleading. Avoid names that imply government affiliation or protected terms.

Step 2: Prepare founding documents. You'll need articles of association (statūti), a founders' decision (or protocol if multiple founders), and an application form. For a single-shareholder SIA, templates are available at the Commercial Register — straightforward enough that many founders handle this themselves.

Step 3: Secure a legal address. Every SIA needs a registered legal address in Latvia. This can be your own premises, a rented office, or a virtual office service. The address appears in public records and must be a real location where mail can be received.

Step 4: Deposit share capital. For a standard SIA, deposit EUR 2,800 into a temporary bank account opened for the company-in-formation. For a micro-capital SIA (starting at EUR 1), the process is simpler but comes with profit distribution restrictions until the capital reaches EUR 2,800.

Step 5: Submit to the Commercial Register. File your documents at the Register of Enterprises. Standard processing takes 1–3 business days and costs EUR 150. Express processing (same or next day) is available for EUR 250.

Step 6: Receive your registration. Once approved, you get a unified registration number that serves as your company ID for all government interactions.

The entire process, from name check to registration certificate, typically takes 5–7 working days if everything is in order. We've seen it done in as few as two days when founders come prepared with all documents.

IK and Self-Employed: The Lighter Alternatives

IK Registration

The IK path is simpler. You submit an application to the Commercial Register with your personal details, chosen business name, and intended activities. The state fee is approximately EUR 20, and registration takes 1–3 business days.

The critical difference: an IK doesn't create a separate legal entity. You and your business are legally the same person. If the business owes EUR 50,000 to a supplier, that's your personal debt.

IK works well for sole traders in low-risk fields — a carpenter, a translator, a small-scale retailer. It becomes risky the moment you take on significant contracts, hire employees, or deal with liability-heavy services.

Self-Employed Registration

Self-employed status is the fastest to set up. Log into VID EDS (the State Revenue Service's electronic system), fill out the registration form, and you're done. No state fee. No notary. No waiting period.

You'll need to choose your economic activity codes (NACE) and decide on a tax approach. Self-employed individuals pay social contributions (VSAOI) and personal income tax (IIN). A patent fee option exists for those with annual income under EUR 15,000 in qualifying activities.

The limitation: self-employed status carries less weight with banks, larger clients, and government tenders. If you plan to grow beyond solo freelancing, you'll likely need to upgrade to an IK or SIA.

Costs: What You'll Actually Spend

Registration fees are just the beginning. Here's a realistic budget for launching each entity type in 2026.

SIA Total Launch Cost

| Item | Cost | |---|---| | State registration fee | EUR 150–250 | | Notary (if needed) | EUR 50–150 | | Legal address (virtual office, annual) | EUR 300–600 | | Share capital deposit | EUR 2,800 (or EUR 1 micro) | | Bank account opening | EUR 0–50 | | Accounting setup | EUR 100–300 | | Total (standard capital) | EUR 3,400–4,150 | | Total (micro capital) | EUR 600–1,350 |

IK Total Launch Cost

| Item | Cost | |---|---| | State registration fee | ~EUR 20 | | Accounting setup | EUR 50–150 | | Total | EUR 70–170 |

Self-Employed Total Launch Cost

| Item | Cost | |---|---| | Registration | Free | | Accounting setup (optional) | EUR 0–100 | | Total | EUR 0–100 |

These numbers don't include industry-specific licenses (food handling, financial services, construction, etc.), which vary widely. Budget an additional EUR 100–500 for license-related costs if your industry requires them.

Post-Registration: The First 30 Days

Getting registered is half the battle. The next 30 days determine whether your business starts smoothly or stumbles through bureaucratic delays.

Open a bank account. This has become the most frustrating step for many founders. Latvian banks have tightened compliance requirements significantly since 2018. Expect to provide a detailed business plan, proof of your identity, source of funds documentation, and — for non-residents — additional KYC paperwork. Plan for 2–4 weeks from application to active account. Some founders are rejected by their first-choice bank and need to apply elsewhere. (We cover this in detail in our bank account guide.)

Register with VID. Within 30 days of incorporation, register your SIA with the State Revenue Service for tax purposes. This is done through VID EDS. You'll choose your tax regime — standard CIT, or micro-enterprise tax if you qualify.

Set up accounting. Latvian law requires every SIA to maintain proper bookkeeping from day one. This isn't optional, and the penalties for non-compliance start at EUR 150 and go up quickly. Hire an accountant or engage a firm before you issue your first invoice.

Obtain necessary licenses. Depending on your industry, you may need permits from specific regulators. Food businesses register with the Food and Veterinary Service. Financial services require FKTK (now Latvijas Banka supervision) licensing. Construction companies need certificates from the Building Board.

Register employees. If you're hiring, register with VID as an employer before the first employee starts. Late registration carries fines, and retroactive social contribution payments add up fast.

Register for VAT (if applicable). VAT registration is mandatory once your taxable turnover exceeds EUR 50,000 in a 12-month period. Voluntary registration is possible earlier — and sometimes beneficial if your clients are VAT-registered businesses who can reclaim the input VAT.

Common Mistakes That Cost Time and Money

Having helped hundreds of businesses through registration in Latvia, we see the same errors repeatedly.

Choosing micro-capital SIA without understanding the restrictions. The EUR 1 minimum sounds appealing, but micro-capital SIAs can't distribute profits freely until the share capital reaches EUR 2,800. At least 25% of annual profits must be retained. For founders planning to pay themselves through dividends, this creates an unexpected squeeze.

Underestimating bank account timelines. "I'll open an account on Monday" is a fantasy in 2026. Start the bank application process during registration, not after. In our experience, the bank account is the single biggest source of delays for new SIAs.

Skipping the legal address. Using a residential address is possible in some cases but can create problems with the Commercial Register, especially if the property owner hasn't consented. A proper virtual office costs EUR 25–50 per month and avoids headaches.

Not choosing a tax regime. If you don't actively select a tax regime, you default to the standard CIT approach. That might be fine — but if you qualified for the micro-enterprise tax and didn't apply, you've potentially missed out on a simpler (if not always cheaper) option.

Ignoring accounting from day one. Some founders don't engage an accountant until their first tax filing is due. By then, they've lost receipts, mixed personal and business expenses, and created a mess that costs far more to untangle than ongoing bookkeeping would have cost from the start.

Making the Decision: Which Entity Type Fits?

The choice between SIA, IK, and self-employed status comes down to five factors.

If you want limited liability — SIA is your only option. Full stop.

If you're a solo freelancer earning under EUR 40,000 — self-employed status is the fastest start. You can always upgrade to a SIA later.

If you need bank financing or plan to take on investors — SIA. Banks rarely lend to IKs, and investors can't take equity in a self-employed person.

If you're testing a business idea with minimal risk — start as self-employed, validate the concept, then register a SIA when revenue justifies the overhead.

If your industry requires a specific legal form — check first. Some regulated activities (financial services, insurance, security) require a SIA or even a specific subtype.

The good news: Latvia doesn't lock you into your initial choice. Converting from self-employed to SIA, or from IK to SIA, is common and procedurally straightforward. The key is matching your entity type to your current stage — not your five-year plan.

Ready to Register Your Business in Latvia?

Choosing the right entity type and navigating registration correctly saves weeks of delays and avoids costly mistakes. Our team at Corvus Accounting & Tax handles the entire process — from entity selection and document preparation to bank account opening and tax registration.

Schedule a free consultation →