If you want to set up a sole trader in Latvia, we invite you to read this article and get an idea of this business structure. Being self-employed in Latvia is not complicated, but we recommend that you seek specialized help and, respectively, collaborate with our Latvian lawyers in all legal matters.
| Quick Facts | |
|---|---|
| Who can establish a sole proprietorship in Latvia? | Foreign and local entrepreneurs interested in commercial activities in Latvia. |
|
Choosing a name for a sole proprietorship in Latvia |
Must comprise “individuālais komersants” or “IK” |
|
Registration authority |
Commercial Register in Latvia |
| Requirements for sole traders to be registered in Latvia | Only if it has at least EUR 284,600 as annual turnover or minimum EUR 28,500 + more than 5 employees. |
| Documents |
– application form KR2 when registering a sole trader in Latvia, – ID, – registration fee payment, etc. |
| Tax registration required (YES/NO) |
YES |
| Bank account required (YES/NO) |
YES |
| Licenses and permits |
Required for future activities as a sole trader (import-export, broker, real estate, insurance, etc.) |
| Registration fee |
Around EUR 30, paid with the service portal of the Enterprise Register |
| Is a sole proprietorship in Latvia a legal entity? | Sole proprietorships in Latvia are not separate legal entities from the business owners. |
| Can hire staff (YES/NO) |
YES |
| Who signs the contracts/documents of a sole trader? |
The business owner |
| Other requirements for sole traders in Latvia |
– must have a business address, – certify the signature, – register for social contribution payment |
| Personal tax advisor |
We suggest you collaborate with our Latvian accountants when starting the activities as a sole trader in Latvia. |
| Working with our Latvian agents |
We assist entrepreneurs in all procedures and formalities of registering a sole proprietorship in Latvia. Complete services and budget-friendly costs. |
How is a sole trader set up in Latvia?
In Latvia, individuals can register themselves as sole or individual traders. These individuals must register with the Latvian Commercial Register for the economic activity they will undertake, if his or her annual turnover exceeds EUR 28,500. Here are other conditions to pay attention to when registering a sole proprietorship in Latvia:
- a sole trader must also register with the Trade Register if he or she has more than five employees;
- the Latvian sole trader’s liability will extend to his or her property, but the individual trader will also benefit from all profits the business brings;
- Latvian sole traders must register with the Commercial Register in the city they carry out their business.
- Traders must also register with the relevant local administration of the Enterprise Register.
- Once these steps are concluded, the sole trader must also register with the tax authorities for the payment of compulsory social security services.
The self-employed person in Latvia
Apart from the sole trader, an individual may register as self-employed if carrying an economic activity. In the category of economic activities, a Latvian self-employed individual can provide services, property management, and agricultural activities carried out on one’s personal land plot. The economic activity of a self-employed person is usually independently carried out and also comprises professional services rendered without being employed by a Latvian company.
Tax regime for sole traders in Latvia
If you want to operate as a self-employed individual in Latvia, it is good to know from the very beginning which tax system is best suited to this business structure. Here are two that apply:
- the general tax regime – the personal income tax (INN) and the social security contributions are calculated at the end of the year. Expenses can be deducted.
- the micro-enterprise tax (MUN) regime – sole traders in Latvia pay only one tax that covers the social security contributions and the personal income tax. However, this option is not suitable for VAT payers.
In the case of choosing the general tax regime, sole traders in Latvia must pay around 31.07% for a monthly income of EUR 700. 10% is paid as pension insurance only for lower monthly income. As for the MUN regime, a single tax of a 25% rate calculated on annual turnover is paid. Quarterly payments are also accepted for sole proprietorships in Latvia under this tax regime.
The tax matters might seem complicated without legal support and guidance, especially if you are for the first time doing business in Latvia as a self-employed person. For this reason, we suggest you collaborate with our tax lawyers in Latvia and understand better the tax regime that suits you most.
Parental leave as self-employers in Latvia
Self-employed individuals on parental leave mean they are not performing economic activities and receive parental allowance, according to the applicable laws. It is good to know that sole traders in Latvia can earn revenue and receive parental allowance; however, the allowance in question is limited. You can discuss parental leave as a sole trader with our attorneys in Latvia, so that you can understand what rights you have in this situation.
About the number of sole traders in Latvia
Here is some official data on the number of self-employed in Latvia:
- There are around 11,300 sole traders registered in Latvia, according to the latest data.
- More than 11,00 individual merchants (IK) are active in Latvia. This is a similar business structure to sole proprietorships in Latvia.
With this information in mind, we invite you to discover our legal services if you want to open a sole proprietorship in Latvia. Also, foreigners interested in immigrating to Latvia to open a business can contact our law firm in Latvia.