For most owner-managed businesses in Latvia, a standard limited liability company (SIA) is the most practical starting point. It is a separate legal entity, can have local or foreign owners, and has minimum equity capital of 2 800 €. Other options may fit a solo low-risk activity, a small eligible founder group, a larger investment structure or a foreign company that wants to operate through a Latvian branch.
The right form depends on who will own and manage the business, how much liability the owners can accept, the available capital, tax and accounting needs, and plans for investment or growth. This guide compares the main options and explains what to consider before registering.
At a glance: Choose an SIA when you want a separate company with limited liability and flexible ownership. Consider a reduced-capital SIA only if all owners and board members meet its eligibility rules. An AS is designed for larger or more complex investment structures. An individual merchant or partnership involves greater personal liability. A branch keeps the Latvian operation within the foreign parent company.
Compare business structures in Latvia
This is a high-level comparison, not a determination of tax treatment or personal liability for a particular case. Check current registration requirements and tax treatment with the Register of Enterprises and State Revenue Service before choosing.
What is an SIA in Latvia?
An SIA (sabiedrība ar ierobežotu atbildību) is a Latvian limited liability company and a separate legal person once entered in the Commercial Register. It can have one or more shareholders, including foreign individuals and companies. The standard minimum equity capital is 2 800 €. Its main decision-making bodies are the shareholders’ meeting and management board; a supervisory board is optional.
For many privately held businesses, an SIA balances liability separation, ownership flexibility and manageable governance. It is often suitable when you will sign significant contracts, hire staff, work with co-founders, retain profits for growth or establish a Latvian subsidiary. Limited liability is not a substitute for responsible management: board members remain accountable for their own legal duties and conduct.
Before registration, agree who owns which shares, who will be on the management board, how the company can be represented and how key decisions are made. Where there is more than one owner, a shareholders’ agreement can address funding, share transfers, deadlocks and exits. BBCRiga provides company registration and corporate services in Latvia, including support with company structure and subsequent company changes.
Is a reduced-capital SIA right for you?
A reduced-capital SIA can be established with less than 2 800 € in equity capital, but eligibility is restricted. Under Section 185.1 of the Commercial Law, it may have no more than five shareholders, all of whom must be natural persons. Every management board member must be a shareholder, and each shareholder may hold shares in only one company under this regime.
The company must allocate at least 25% of annual profit to a mandatory reserve until that reserve reaches the statutory threshold. If the company stops meeting applicable conditions, it may need to increase its equity capital to the standard minimum. The law also provides for potential additional shareholder exposure in specified insolvency circumstances. Review the current law and your circumstances before choosing this route.
This form may suit a small, founder-led business that needs less initial capital and expects to keep an eligible ownership and management structure. It may be a poor fit if you expect a corporate shareholder, outside investment, rapid ownership changes or a board member who is not a shareholder. Compare the initial capital saving with the restrictions and potential cost of changing structure later.
When should you choose an AS?
An AS (akciju sabiedrība) is a joint-stock company with a minimum equity capital of 25 000 €. Its shares may be publicly traded, and it is designed for more formal governance and investment arrangements than a typical owner-managed SIA.
Consider an AS when the company’s ownership scale, financing plan, share structure or regulated activity calls for that framework. For many privately held businesses, an SIA can accommodate multiple owners and investment arrangements with less administrative complexity. The Register of Enterprises’ AS guidance explains the official registration route.
Should you register as an individual merchant or self-employed person?
A natural person can register economic activity with the State Revenue Service. An individual merchant (IK) is a distinct status registered in the Commercial Register. Neither creates the same separation between personal and business assets as an SIA: an individual merchant is liable for business obligations with all personal property.
The Register of Enterprises lists circumstances in which individual merchant registration is required, including annual commercial turnover above 284 600 €, certain commercial-agent or broker activities, or turnover above 28 500 € together with more than five employees. Rules and thresholds can change, so confirm your situation with the State Revenue Service or a qualified adviser.
A natural-person route can be practical for a genuinely small, low-risk solo activity. Consider an SIA if you will take on substantial contracts, borrowing, employees, valuable assets or other risks that make personal exposure important. Registration form and tax regime are related decisions, but they are not the same decision.
How do Latvian partnerships work?
A general partnership (PS) is formed by two or more persons carrying on commercial activity under a joint name. Its partners have broad personal liability for partnership obligations. A limited partnership (KS) has at least one general partner with broad liability and one or more limited partners, whose liability is generally tied to their contribution once paid. Limited partners do not represent the partnership in dealings with third parties in the same way as general partners.
Partnerships can fit arrangements where participants intentionally want partnership economics and understand the allocation of authority and risk. They should not be selected simply because two founders are going into business together. An SIA usually provides a clearer legal boundary between an operating business and its owners.
Should a foreign company open a Latvian branch or an SIA subsidiary?
A branch is part of the foreign company, not a separate Latvian legal person. The foreign merchant conducts business in Latvia through that branch, so the parent remains connected to obligations arising from the operation. A Latvian SIA subsidiary is a separate legal entity and can provide clearer separation for local operations, contracts, investment or a future sale.
A branch may suit a foreign company that wants to operate directly in Latvia under the parent’s ownership and governance. A subsidiary may suit a company that wants a separate Latvian entity. The choice can affect contracting, accounting, tax and risk allocation; assess the full cross-border arrangement with professional advice. See the Register of Enterprises’ branch information.
A representative office is different from a branch. The Register of Enterprises states that a foreign representative office has no legal-person status and may not conduct commercial or other economic activity. It is not a substitute for an entity that will trade in Latvia.
How do you choose the right business form in Latvia?
Answer these questions before filing registration documents:
- Who will own the business? A company shareholder can be a natural or legal person in a standard SIA or AS. A reduced-capital SIA is restricted to natural-person owners.
- How much personal liability can you accept? An SIA or AS generally separates company obligations from shareholders’ personal assets. An individual merchant and general partners have wider personal exposure.
- What capital can you commit? A standard SIA has 2 800 € minimum equity capital, a reduced-capital SIA has less than 2 800 € subject to restrictions, and an AS has 25 000 € minimum equity capital.
- Who will manage and represent the business? Check whether the proposed board and signing rights fit the chosen legal form, especially under the reduced-capital SIA rules.
- Will you seek investment or change ownership? Think through share transfers, new shareholders, voting, funding and exits before incorporation.
- Where will profits go? Consider whether profits will be distributed or retained, and how current tax and accounting rules apply to your specific situation.
- Does the activity need a permit or licence? Some sectors have additional authorisation requirements regardless of legal form.
- Is the business already established abroad? Compare a Latvian branch with a separately incorporated SIA subsidiary.
The Register of Enterprises’ business form comparison covers ownership, capital, liability and profit distribution. It recommends consulting an accountant or the State Revenue Service about the appropriate tax regime.
What else is needed after choosing a legal form?
Choosing a structure is only one part of starting a business. Depending on the case, founders may also need to prepare incorporation documents, identify beneficial owners, register with the State Revenue Service, consider VAT registration, arrange accounting, obtain sector licences and confirm who can sign for the company. Foreign founders may also need advice on document formalities, cross-border ownership and immigration matters; company ownership alone does not determine residence or work rights.
BBCRiga works with Latvian residents and non-residents on company registration in Latvia and related corporate services. We also provide accounting and legal support. Contact BBCRiga with your planned activity, owners’ countries of residence, intended management structure and approximate start date to discuss the steps and a tailored proposal. Registration costs depend on factors such as legal form, capital, number of founders and directors, and where documents are signed.
Frequently asked questions about companies in Latvia
What is the most common company type in Latvia?
The SIA is a common choice for privately owned businesses because it is a separate legal person, allows one or more shareholders and generally limits shareholder liability. Its standard minimum equity capital is 2 800 €. A reduced-capital SIA is also available to founders who meet specific eligibility conditions.
Can a foreigner own a Latvian company?
Yes. Non-residents may own shares in a Latvian SIA or AS, and the Register of Enterprises also lists non-residents among permitted owners of a reduced-capital SIA. The reduced-capital SIA has additional rules, including a limit of five natural-person shareholders. Ownership, board appointment, signing and residence or work rights are separate issues that should be checked for the individual case.
What is the minimum capital for an SIA in Latvia?
A standard SIA has minimum equity capital of 2 800 €. A reduced-capital SIA may have equity below 2 800 €, but it is subject to statutory ownership, management, reserve and other conditions. An AS has minimum equity capital of 25 000 €.
Is an SIA better than registering as self-employed?
It depends on risk, ownership and operations. An SIA is a separate legal entity and generally provides a liability boundary between the company and its shareholders. A natural person conducting economic activity has simpler individual ownership but personal exposure to business obligations. Tax, accounting, turnover and activity should also be considered before deciding.
Is a Latvian branch a separate company?
- A branch is an organisational part of the foreign company and is not a separate legal person. A Latvian SIA subsidiary is a separate entity. The choice affects how the Latvian operation relates to the foreign parent, so obtain advice on liability, contracts, tax and accounting before registration.
Do I need a local partner to register a company in Latvia?
The Register of Enterprises allows non-residents to own an SIA, and its comparison lists non-residents as eligible owners of a reduced-capital SIA. This does not resolve every practical issue: document signing, identity checks, beneficial ownership disclosures, banking and management arrangements may depend on the case. Confirm current requirements before filing.
How much does it cost to register a company in Latvia?
The total cost depends on the legal form, state fee, share capital, number of founders and directors, document preparation and where documents are signed. Professional support and any translation, notarisation or licensing needs may add to the total. Ask for a case-specific estimate rather than relying on a single headline price.
Choose a structure that fits the business you plan to build
For many private operating businesses, a standard SIA is a practical starting point because it combines separate legal personality, flexible ownership and manageable governance. A reduced-capital SIA, AS, individual merchant, partnership or branch may be more appropriate when the ownership, funding or operating model calls for it.
At BBCRiga, we help Latvian and foreign founders choose a suitable structure and set up a company in Latvia. Contact us to discuss your ownership structure and business plans.
