Latvia

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Business Environment

Business Practices

General information: Worldbiz, Worldwide Business, choose Latvia
Opening hours and days: Offices: open from 9 am to 6 pm (Monday to Friday). They close on Saturday and Sunday.
Shops: open from 10 am to 7 pm (Monday to Friday). On Saturday, shops open from 10 am to 5 pm. Shops sometimes also open on Sunday.
Banks: open from 10 am to 2 pm and from 3 pm to 5 pm (Monday to Friday). They close on Saturday and Sunday.
Administrations: open from 10 am to 5 pm (Monday to Friday). They close on Saturday and Sunday.
Supermarkets: open from 8 am to 10 pm (or even midnight) all week.
Some groceries and pharmacies stay open 24/24.

Public holidays

New Year's Day	1 January
Good Friday	Friday before Easter Sunday
Easter Monday	Easter Monday
Labor Day	1 May
The Republic of Latvia joined the European Union	4 May
LIGO holiday (summer solstice)	23 June
Feast of St John (JANI)	24 June
Proclamation of the Republic, national day	18 November
Christmas Day	25 December
St Sylvester	31 December

Periods when companies usually close

Christmas and New Year's Day

A week before New Year's Day.

Accounting Rules

Tax year: The fiscal year begins on 1 January and ends on 31 December of the same year.
Accounting standards: Since 1 January 2005, all consolidated accounts must be drawn up in conformity with European accounting standards IAS/IFRS.
Accounting regulation bodies: Ministry of Finance
Accounting reports: A company's accounts must clearly reflect its operations and its financial results and give a precise and faithful picture of its financial situation.

Amounts are given in Latvian currency. The documents are in Latvian. If a member of a company is not a natural person or a legal entitiy of the country (registered company), it is possible, with the agreement of the parties concerned, to use a second language, that the auditors deem to be acceptable. The accounting documents and the supporting documents that accompany them must remain on Latvian territory. Any accounting entry must be supported by an appropriate document.
The accounting year spreads over 12 months. It corresponds to the civil year, but the shareholders can choose other dates. Companies that form a group must have identical accounting years. This year can be modified, but the modification must be justified and explained in the notes attached to the annual report.
A company's financial statements must include a balance sheet, a profit and loss account, notes to the accounts and an annual report.
Publication requirements: Companies must send their financial report to the fiscal administration and to the company registration office. Annual reports are available at the company registration office.

The parent company establishes a common annual report when, posting the accounts of two consecutive years for itself and for its subsidiaries, at least two of the following indicators go over the levels indicated below:
- total capital: 1 million Latvian lats (1.7 million euros)
- the net turnover: 2.4 million Latvian lats (4 million euros)
- average number of workers during an accounting year: 250
Moreover, the European Directive of 19 July 2002 obliges all European companies listed on the Stock Exchange to establish their consolidated annual accounts on the basis of IAS standards from the 2005 accounting year on, . Concretely, the boards of German listed companies and subsidiaries consolidated by German listed companies or by listed companies from another Member State are thus, from the accounting year starting on 1 January 2005 or after this date, i.e. from 2006, systematically confronted with consolidated accounts drawn up according to IAS/IFRS standards and therefore different in form and content to those which were addressed to them previously.
Professional accountancy bodies: LACA - Latvian Association of Certified Auditors
Certification and auditing: If two of the indicators below go over the indicated amounts, the annual report must be examined by an auditor or by an officially designated accounting audit body, chosen by the shareholders;
- total capital: 100 000 Latvian lats (170 000 euros)
- net turnover: 200 000 Latvian lats (340 000 euros)
- average number of workers during the accounting year: 25.

The company sends a copy of the annual report and the potential auditor's report to the fiscal administration and the company registration office within one month after the certification of the annual report and within four months following the end of the accounting year concerned. The period is extended from four to seven months under certain conditions.
Accounting news: LACA News

Tax Rates

Consumption taxes

Nature of the tax: Value added tax - PVN - Pievienotas Vertibas Nodokli (in Latvian).
Tax rate: 21% charged on assets and services provided in Latvia as well as on imports into Latvia. Exports from Latvia are not subject to value added tax.
Reduced tax rate: Latvia apply a reduced VAT rate of 10% on certain categories of goods and services, including foodstuffs, water supplies, medical products, medical equipment for disabled persons, books, newspapers, hotel accommodation….
Educational services, medical services, cultural services, lotteries and gambling, financial services provided by banks and insurance companies, gifts and donations for humanitarian aims are exempt from VAT.
Other consumption taxes: To get further information on VAT rates according to the type of product, please check the list of VAT rates applied within the European Union

More detailed information on excise duties in the EU is available concerning Part 1 - alcoholic beverages, Part 2 - energy products and electricity, Part 3 - tobacco products, (PDF format)

Corporate taxes

Company tax: 15%
Capital gains taxation: Capital gains are taxable as ordinary income.
Main allowable deductions and tax credit: Deductions for company tax are the following: dividends - the usual deduction is 10%; interest - for a partnership - withholding tax - 10%; fees - withholding tax of 5% - 15%; payments to company directors and managers - 10% withholding tax; revenue from sale of real estate in Latvia - 2% withholding tax; rental of real estate - 5% etc. For further information about tax deductions in Latvia, please visit VID.
Other corporate taxes: For further information about other company taxes, consult VID.

Individual taxes

Tax rate

Personal income tax

2 Flat rates : 23% for employment income and 15% for economic activities income.

Allowable deductions and tax credit: Are exempt:
- income from investments in private pension funds and insurance indemnities,
- gain on the sale of personal property.
Special expatriate tax regime: No, expats are responsible for tax in Latvia according to their residence for tax purposes.

Double taxation treaties

Countries with whom a double taxation treaty have been signed: See the list of the conventions signed
Whithholding taxes: Dividends: 0/10%, Interest: 5%/10%, Royalties: 5%/15%

Sources of fiscal information

Tax Authorities: State Revenue Service of Latvia
Other domestic resources: Company tax

Intellectual Property

National organizations: The application for the grant or registration of a patent can be done in the language of the country, in English, in Russian or in German. These applications have to be addressed to the patents office in Latvia, either directly or through the intermediary of a legal representative. The related law of patents was voted in 1993 and as for trademarks, the law was passed in the same year.
Latvian law is very similar to French Law but the protection of intellectual property rights will be consolidated in the near future.
Regional organizations: In Latvia there are several non-governmental organizations which defend intellectual property, such as, for example, the association LIVA .

National regulation and international agreements

Type of property and law	Validity	International agreements signed
Patent Patent Law 30 March 1995	20 years, renewable for a period not exceeding 5 years
Trademark Law on trademarks and indications of geographical origin 16 June 1999	10 years, renewable for a consecutive period of 10 years	Trademark law treaty Nice agreement Protocol relating to the Madrid Agreement
Design Law on the protection of Designs and Industrial Models 4 May 1993	5 years, renewable for two consecutive 5-year periods
Copyright Law on copyright 6 April 2000	Came into force on 11 May 2000. The text of the law
Industrial Models Law on the protection of Designs and Industrial Models 4 May 1993	Text of the law

Legal Framework

Independence of justice: The Constitution of the country provides for an independent judiciary and the government generally respects this freedom. But judicial reforms are slow and prone to corruption.
Equal treatment of nationals and foreigners: Foreign nationals can expect an impartial trial from the country’s judicial system.
The language of justice: The judicial language in the country is Latvian.
Recourse to an interpreter: Having an interpreter is possible.
Sources of the law and legal similarities: The main source of the law in the country is the constitution of 1922 (amended in 1998); the legal system is based on a civil law system. Latvia being a member of the European Union (it joined the EU in May 2004), the national law in the country has to comply with the conditions of the Community legislation.
Checking national laws online: Latvian laws on line (website in Latvian)

Standards

National standards organizations: Latvian Standardization Organization
Integration in the international standards network: You are advised to write the product labels in the official language : the country of origin must be mentioned along with the ingredients of the product and any additives.
Product marking is obligatory, especially for alcohol and tobacco.
Anything concerning standards is under the responsibility of the Department of Trade Policy in the Ministry of the Economy.
Classification of standards: To get further information about terminology and standards in Latvia, you can visit the LVS Latvian Standards website where you can buy documents with the Latvian terminology (Catalogue of Latvian standards: ICS subgroups).
Online consultation of standards: Latvian National Organization for Standardization - Catalog of Latvian Standards
Certification organizations: The Latvian National Accreditation Bureau (LATAK)

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