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Latvia

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About

Latvia

Capital
Official languages
Population 
Currency

ISO 4217

Riga

Latvian

1,917,996 (as of July 2020)

Latvian Lats

LVL

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Economy

"Latvia has seen a steady improvement in its economy over the past few years. According to the World Bank, Latvia's GDP grew by 3.2% in 2019, and is projected to grow by 3.3% in 2020. The country's unemployment rate has also decreased from 8.2% in 2018 to 6.7% in 2019. Inflation has remained relatively low, with an average rate of 2.2% in 2019.

The country has also seen an increase in foreign direct investment (FDI). In 2019, FDI inflows to Latvia totaled $1.3 billion, a 5.3% increase from 2018. This was largely driven by investments in the manufacturing and services sectors.

Overall, Latvia's economy has seen positive growth in recent years, and is expected to continue to grow in the coming years."

Taxation

In Latvia, both individuals and corporations are subject to various taxes, including income tax, value-added tax (VAT), and social security contributions. Here is an overview of the tax system in Latvia:


Corporate taxation:

- Corporate income tax is levied on the profits of companies at a standard rate of 20%, with a reduced rate of 0% for certain types of income.

- Dividend payments made by Latvian companies to shareholders are generally exempt from corporate income tax, but may be subject to personal income tax for the recipient.

- Other taxes and duties that companies may be subject to include VAT, excise tax, real estate tax, and social security contributions.


Personal taxation:

- Individuals in Latvia are subject to personal income tax on their worldwide income at progressive rates ranging from 20% to 31.4%, depending on their income level.

- Social security contributions are also deducted from employees' gross salaries under the social security system.

- Other taxes that individuals may be subject to include property tax and vehicle tax.


Tax payment process and calendar:

- Latvian taxpayers are required to file their tax returns annually by May 1st of the year following the tax year.

- The tax year in Latvia is from January 1st to December 31st of the same year.

- Companies are required to pay corporate income tax in monthly or quarterly instalments, depending on their annual turnover, with the first instalment due by the end of the first month of the tax year, and subsequent instalments due by the end of each subsequent month or quarter.

- Individuals may be required to make advance payments of personal income tax if their tax liability for the year exceeds a certain amount. Advance payments are made in monthly instalments throughout the year, with the first instalment due by February 15th, and subsequent instalments due by the 15th of each subsequent month.

- Late tax payments are subject to penalties and interest charges.


It should be noted that Latvia has been making efforts to improve its tax system in recent years, including reducing tax rates to promote business development and attract foreign investment. However, compliance with the tax laws and regulations in Latvia remains important for both individuals and corporations.

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