It is crucial to evaluate and select the best type of activity in terms of law and economics before starting a business. This decision will have an impact on the amount of equity capital required, as well as the enterprise’s legal status and other business-related difficulties.

Foreigners are permitted to conduct business in Latvia through a limited liability company (SIA), a stock company (AS), or a European company (SE). Working for oneself is also an option.

Limited liability company (LLC/SIA)

The vast majority of enterprises in Latvia are founded as SIAs. This type of entrepreneurial activity is also typically preferred by foreigners who are considering establishing a business in Latvia. There are no limitations on foreign ownership of Latvian businesses.

The minimum equity capital required to create an SIA is EUR 2820. Both property contributions and cash contributions are acceptable forms of equity capital contribution.

In addition to the SIA, micro-capital SIA is also permitted with a lower share capital requirement starting at EUR 1.

If all of the following conditions are satisfied, such a company may be incorporated:

• No more than five shareholders (who may be nonresidents) who are all natural people
• The only people who can be appointed as Board members are the company’s founders
• No shareholder may vote or hold office in a company with less equity capital

The registration and creation of a corporation are not regarded as complex processes. Once all incorporation documents have been prepared and submitted to the Commercial Registry of the Republic of Latvia, registration only requires a few business days. The registration period may be shortened by up to two working days upon request.

Joint-stock company (JSC/AS) 

As with SIA, a Joint Stock Company is considered to be a legal entity in its own right. Every single piece of property owned by the firm could end up being liable for the debts owed by the company. 

The primary distinction between an SIA and a joint stock company is that after the initial public offering (IPO) phase of a joint stock company, the business’s shares are eligible to be freely traded and exchanged on stock exchanges. There are many different share classes, each of which confers its holders with a unique set of rights about the activities of the corporation, dividend payments, and the amount of liquidation quota.

The primary requirements for establishing a JSC are

• Any number of founders, without regard to nationality; share capital of at least EUR 35.000
• Share capital may be paid up through monetary or in-kind investments
• If the JSC’s stock is publicly listed, at least three directors are required

European company (SE)

Being a legal entity, such a business model enables changing the jurisdiction within the European Union’s borders without pausing activities, dissolving the firm, or founding a new one. An SE may be transferred to Iceland, Norway, or Liechtenstein in addition to the EU Member States.

Reorganizing as a joint stock company is one way to incorporate a European Company.

A Societas Europaea must have a minimum equity capital of 120 000 EUR.

Self-employed person

Entrepreneurs have the option of conducting business in Latvia as natural persons subject to liability. These are the sole proprietors and independent contractors. These corporate entities have the least stringent reporting requirements and are exempt from registration until their annual turnover surpasses a specific threshold.

This choice is appropriate for natural persons willing to engage in limited individual economic activities on Latvian soil. The person must register as an individual merchant if their annual revenue reaches 284 600 EUR, or if it surpasses 28 500 EUR and they have five or more employees.

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