Latvia Company Formation 2026 — SIA Registration, 0% Tax on Retained Profits & Full Fintech Setup Guide

Why Latvia — The Strategic Case in 2026

1. 0% Corporate Tax on Retained Profits

Latvia operates a deferred corporate income tax model — the Estonian model, adopted by Latvia in 2018. Corporate income tax of 20% applies only when profits are distributed as dividends. Until distribution, all retained earnings accumulate at 0% tax. This is the single most commercially important tax feature for growth companies:

• •Year 1–3 of operations: profits retained and reinvested into growth at 0% tax
• •Technology purchase, headcount expansion, office investment, product development: all funded from pre-tax profits
• •Tax liability deferred until the company distributes value to shareholders

For companies whose business model involves reinvestment rather than regular profit extraction — which covers most fintech, SaaS, and early-stage companies — the Latvian model provides a genuine structural tax advantage over Cyprus (15% CIT), Lithuania (17% CIT), Estonia (same model, slightly different mechanics), and most EU jurisdictions.

2. EU, Schengen, and Eurozone — Full Trifecta

Latvia provides all three EU infrastructure benefits simultaneously. EU membership: full single market access, EU regulatory passporting for licensed entities, EU contract law enforceability. Schengen Area: freedom of movement for executives, employees, and founders traveling between Latvia and 26 other Schengen countries without border controls. Eurozone: EUR as the domestic currency — no FX risk for EUR-denominated operations, direct EKS payment infrastructure access, and seamless integration with EU payment systems.

3. Single Regulator — Latvijas Banka for Everything

Since 1 January 2023, Latvijas Banka absorbed all supervisory functions of the former FKTK. Latvijas Banka is now the single financial supervisor for all Latvian entities — banks, EMIs, PIs, investment firms, and MiCA CASPs. For a fintech group needing both payment services authorization and crypto-asset authorization, a single Latvian SIA + a single regulatory relationship covers both. This integration is available in no other Baltic jurisdiction.

4. Digital-First Registration Infrastructure

Latvia's Enterprise Register (Uzņēmumu Reģistrs) accepts fully electronic submissions. Most foreign founders can complete the incorporation online using an EU-recognized e-signature (eIDAS compliant) or a notarized power of attorney. For founders with an Estonian e-Residency card, registration is entirely self-service online. No requirement to visit Latvia. Processing time: 1–5 business days for standard applications; 1 business day for expedited processing at an additional fee.

5. Strategic Baltic and Northern European Location

Latvia occupies the center of the Baltic corridor — bordering Estonia to the north, Lithuania to the south, and with sea connections across the Baltic to Sweden, Finland, and Germany. As a logistics, technology, and financial services hub it services the Baltic states, Scandinavia, Poland, and the broader CEE region. Riga — Latvia's capital and the largest city in the Baltic states — has an established fintech ecosystem, English-speaking business culture, and competitive office and staffing costs relative to Western Europe.

Company Types Available in Latvia

SIA (Sabiedrība ar ierobežotu atbildību) — Limited Liability Company

The standard corporate vehicle for international investors and fintech operators. Equivalent to a UK Ltd, German GmbH, or Dutch BV.

For international fintech operators, holding companies, and licensing vehicles: the standard SIA is always the correct choice. The micro-SIA's restrictions (individuals only, no corporate shareholders, founders-only directors) make it unsuitable for most international business structures.

AS (Akciju sabiedrība) — Joint Stock Company

For larger businesses requiring a broader shareholder base or planning future capital raises. Minimum share capital: EUR 35,000 (fully paid before registration). Required for banking license applicants and certain regulated financial entities. Latvijas Banka requires an AS structure for certain license categories — Zitadelle AG advises on the correct vehicle for each licensing pathway.

Branch Office

A branch of a foreign company registered in Latvia. No minimum capital requirement. The parent company remains fully liable for the branch's obligations. Used for: testing the Latvian market before full incorporation, establishing a Latvian presence for an existing regulated entity from another jurisdiction.

Representative Office

Promotional and market research only — cannot conduct commercial business activities or enter contracts. No capital requirement. Used for: initial market presence without full operational commitment.

Government Fees and Registration Costs

Latvia's company registration costs are among the lowest in the EU:

The EUR 30 government registration fee is the lowest in the EU for a full limited liability company incorporation. Formation can be completed entirely remotely for most founders using e-signatures, eliminating travel costs.

Registration Process — Step by Step

Step 1 — Company Name Check (1 day)

Search the Enterprise Register database to confirm the proposed company name is available and compliant with naming rules. The name must not duplicate any existing registered entity. Can be done online at ur.gov.lv.

Step 2 — Share Capital Deposit (1–3 days)

Deposit at least 50% of the share capital (EUR 1,400 for a standard SIA) into a temporary business bank account at a Latvian bank or Latvijas Banka-recognized fintech provider. The bank issues a deposit confirmation which is required for registration. This is the most common bottleneck for foreign founders — opening a temporary account requires basic KYC. Zitadelle AG pre-coordinates banking relationships to minimize delay.

Step 3 — Document Preparation

Prepare the incorporation package:

• •Memorandum of Association (Statūti) — articles of the company defining purpose, share capital, governance, and shareholder rights
• •Shareholders' decision to establish the company
• •Appointment of the board member(s)
• •Declaration of the legal address
• •UBO (Ultimate Beneficial Owner) disclosure for all shareholders holding 25%+
• •Founder identity documents — passport copies and proof of address for all shareholders and directors

For foreign founders without a Latvian e-signature: documents are prepared by Zitadelle AG and signed by the founder via notarized power of attorney in their home country, with certified Latvian translation where required.

Step 4 — Submission to Enterprise Register

Submit the complete incorporation package to the Uzņēmumu Reģistrs via the online portal. Processing: 3–5 business days (standard) or 1 business day (expedited). The Certificate of Registration (Reģistrācijas apliecība) is issued digitally.

Step 5 — Tax and VAT Registration

Tax Identification Number (TIN): issued automatically by the State Revenue Service (SRS) at registration — no separate application required. VAT registration: mandatory when annual turnover exceeds EUR 50,000. Optional below this threshold. Recommended from incorporation for B2B operations and EU intra-community transactions. Filing: online via the SRS EDS portal.

Step 6 — UBO Registry Filing

All beneficial owners (individuals holding 25%+ directly or indirectly) must be registered in the Latvian UBO register maintained by the Enterprise Register. Filing at incorporation. Annual confirmation required. The UBO register in Latvia is not publicly accessible — data is available only to competent authorities.

Step 7 — Post-Incorporation

Transfer share capital from temporary account to permanent corporate account once registration is confirmed. Appoint accountant. Register for social insurance if employees are to be hired. File quarterly VAT returns from the first taxable period.

Latvia Tax Framework 2026

The 0% CIT Mechanism in Practice

Latvia's CIT regime taxes the distribution event, not the profit-generation event. When a company distributes dividends, it pays 20% CIT on the gross distribution — which means to deliver EUR 100 net to a shareholder, the company must pay EUR 125 total (EUR 100 net + EUR 25 tax = 25% effective rate on net).

But until distribution: 0%. All profits can be retained, reinvested, used for expansion, or accumulated on the balance sheet without any CIT liability.

Key planning point: companies planning significant distributions should model this carefully. The 0% model favors reinvestment; frequent dividend distributions result in a higher effective rate than a flat 15–17% CIT jurisdiction with deductible expenses.

Latvia has double taxation agreements with 60+ countries — including all major EU states, UK, US, Canada, China, UAE, Singapore, and Russia (treaty status subject to political developments).

Banking for Latvian Companies

Banking is a critical step after SIA incorporation. Latvia's banking landscape in 2026:

Latvian domestic banks

Citadele Banka — Latvia's leading private bank, headquartered in Riga. Active in corporate banking for Latvian-registered entities. Online banking, EUR accounts, SEPA, SWIFT. KYC timeline: 2–4 weeks for standard corporate applications.

SEB Latvia — part of the Swedish SEB Group. Strong institutional credibility. Corporate accounts for well-documented entities. KYC-intensive for fintech and crypto-adjacent clients.

BluOr Bank — smaller but accessible, with appetite for digital business clients. Faster onboarding for straightforward corporate structures.

For regulated entities (EMI, PI, CASP)

Latvijas Banka-licensed entities (EMI, PI, CASP) have materially better banking access in Latvia than unlicensed entities. Banks actively serving the Latvian fintech ecosystem include those above plus international EMIs operating in Latvia (Paysera, ConnectPay).

Direct EKS access

Latvijas Banka's Electronic Clearing System (EKS) provides licensed non-bank payment service providers with direct SEPA access — reducing correspondent banking dependency. Available to EMI and PI licensees.

EU EMI accounts for immediate banking

For companies needing immediate EUR accounts before a Latvian bank account is established, EU-licensed EMIs (Wise Business, Paysera, Revolut Business) provide instant online account opening for Latvian-registered entities.

Zitadelle AG prepares complete KYC banking dossiers and provides banking introductions — for both standard corporate accounts and Latvijas Banka-licensed entity accounts — as standard for all Latvia formation clients.

Latvia as a Fintech and Licensing Gateway — The Unique Zitadelle Angle

Latvia company formation is the starting point for the most comprehensive regulated financial services structure available from a single Baltic jurisdiction. No other company formation advisor in Latvia offers what Zitadelle AG can: formation + licensing + staff + banking + ongoing compliance, all from one team.

From a Latvian SIA, you can access:

This is Zitadelle AG's unique positioning in Latvia: we handle the SIA formation as step one and the Latvijas Banka licensing engagement as step two — from the same team, with no handover and no gap in advisory continuity.

Latvia vs Estonia vs Lithuania — Baltic Company Formation Comparison

Accounting, Payroll and Ongoing Compliance

After incorporation, every Latvian SIA has ongoing compliance obligations:

Accounting

Annual financial statements must be prepared in accordance with Latvian GAAP (for smaller entities) or IFRS (for larger entities and regulated licensees). Annual report filing with the Enterprise Register is mandatory. Failure to file results in exclusion from the Enterprise Register.

Annual audit is mandatory for companies meeting at least two of: total assets > EUR 800,000; net turnover > EUR 1.6 million; average employees > 50. Regulated entities (EMI, PI, CASP) have mandatory annual audit regardless of size.

VAT

Quarterly VAT returns filed to SRS. Monthly filing for companies with VAT obligations exceeding EUR 15,000/month. EU Intrastat declarations required for intra-community transactions above thresholds.

Payroll

Employer social insurance: 23.59% of gross salary. Employee social insurance: 10.5%. Personal income tax: 20% (up to EUR 20,004 annual income) / 23% / 31% depending on income band. Monthly payroll remittance to SRS. Monthly reporting.

Annual filings

Annual company report to Enterprise Register. Annual CIT return to SRS (even at 0% if no distributions). UBO annual confirmation. For regulated entities: additional Latvijas Banka reporting (quarterly and annual depending on license type).

Zitadelle AG provides full Latvia accounting, bookkeeping, VAT compliance, payroll, and annual filing services — in English — as an integrated service alongside company formation and licensing engagements.

Zitadelle AG — Complete Latvia Company Formation Service

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