Establishing a branch office in the country is less demanding as branch offices are not considered legal entities. They rely on the parent company which is liable for the liability of the branch. A branch may not conduct business within the territory unless they have registered with the Companies Registrar. After registering with the Trade Register in the country, the branch must register with the tax authorities too.
If you are considering setting up one here or thinking of expanding into Europe, this article provides information on the benefits of such an establishment within the territory.
Six benefits of branch office
Setting up a branch is a form of expanding one’s business. It is preferable due to the low cost of registration compared to establishing a new entity. Below are six benefits of setting up a branch office in this European country.
Strategic location
As a member of the EU, every company within the territory enjoys the benefits of an EU company, with easy access to European markets. With its friendly legislation, the nation offers more opportunities for business and a simple company formation procedure, which is faster and less expensive than in other EU member states. It offers the branch office free access to the EU markets with millions of customers.
Tax system
The Latvian tax system favors foreign investors looking to do business here. The rate for corporate income tax paid by companies is only 15 percent. 0% VAT applied to purchase and sale transactions between Latvian companies and other taxpayers. It also applies to various services carried out by resident companies to European companies and people in other countries. The dividends received by a company are not subjected to tax provided the company was founded by a legal resident of an EU country or EEA.
A simple company registration process
Registering a business in the Register of Enterprises can take two to four working days as the process is quite simple. The minimum equity capital required is 2000 LVL and before submission of an application, one must pay at least half of the amount. The capital may be paid with money and/or owned properties. When only one business owner exists, registration is a day after the application is filed and capital duly paid. It can take up to five days if there is more than one owner of the branch.
Foreign ownership
Any foreigner can establish a company here without restrictions against shareholders. You can set up, buy, or manage a company here as a non-resident. Existing companies and residents can also own a Latvian company. For a branch office owned by a foreigner, the founder of the parent company does not have to reside here or be a resident.
Physical presence is not required
One advantage of establishing a company here is that the foreign investor does not need to be physically present during the registration process. The entire procedure including the preparation and submission of all required documents can be carried out by fiscal representatives hired by you based on the power of attorney. These agents will manage all affairs from the setting up to the managing of the branch office.
Residency permit
Being a part of the Schengen Agreement, an expat who is a board member of a Latvian company gets a permit to reside here for a period of one to five years. This permit grants investors access into the country unlimitedly provided the residence permit remains valid. One can also visit other countries of the Schengen Agreement for pleasure or to make newer business connections.
