The payment of taxes and the preparation and submission of the relevant documents is a major burden for any business. Therefore, before establishing a company, it is advisable to specify, what taxes you will have to pay. The most accurate information will be provided by your accountant. If your company does not have one yet, we will be happy to cooperate!
The number, amount and other details of the taxes depend on the company specifics and size. The most common taxes and their rates:
– social tax and mandatory state social insurance contributions – 35.09%;
– personal income tax – 23%;
– corporate income tax – 15%;
– micro-enterprise tax – 9%;
– payments from income on capital – 10-15%;
– value added tax – 21% or 12% (if a reduced rate is applicable);
– excise duty;
– immovable property tax.
As it is known, there is a total of 14 types of taxes in force in Latvia, some of which are applicable to natural persons and some to legal persons. Companies of some sectors are also subject to specific taxes, such as taxes on natural resources, subsidised electricity or gambling tax.
It is worth knowing that the maximum amount of share capital is unlimited, as well as that the share capital can be paid both in cash and in kind. In order to pay in cash, a temporary account must be opened with the bank, in which the share capital is paid. In most cases, with a share capital of EUR 2800 or more a Limited Liability Company (SIA) is established, if there is no right to establish a small-scale Limited Liability Company or if there are other reasons, such as the need to obtain a commercial freight licence.
When establishing a Limited Liability Company (SIA), a decision must be made regarding the choice of tax regime. Currently it is possible to choose to pay micro-enterprise tax, which is 15% of the turnover or the total revenue, or to pay taxes in a general order, which means that the company pays the taxes of the employees and corporate income tax.
Limited Liability Company (SIA) can also be established with a share capital of 1 euro, therefore such companies are commonly referred to as a one euro SIA. This has significantly increased the number of newly established Limited Liability Companies in Latvia. Any natural person, who has the right to do so, may become the founder of such a Limited Liability Company. One founder is enough, but there must be no more than five in total. The one euro share capital of such Limited Liability Company can be paid in cash only. The registration procedure is almost identical to the above mentioned. In general, the responsibility of the Board is identical to that of Limited Liability Company with a larger share capital, and the accounting and tax conditions are also the same.
How do you register a Limited Liability Company (SIA)?
Limited Liability Company (SIA) must be registered at the Register of Enterprises. To do this, a set of documents must be submitted: registration application, decision or agreement on founding, articles of association, consent of the Board Member to hold the position, register of participants, documents approving the share capital, statement of the registered office, consent of the real estate owner to register the registered office, as well as documents approving payment of the state fee and publication.