What is Company establishment?

Maybe you have heard the term "company establishment" or you are wondering what It is. When doing business, you will have to know what this and many more terms mean and how they impact your business, so you know popular business terms and keep up going confident with what are you doing.

Company establishment is simply a process aimed to open a company and run the business under a firm or legal entity. It includes incorporation documents, drafting, opening a bank account, registration with state authorities and the appointment of officials.

Company establishment in Latvia
If during company establishment it is registered with the Registry of Enterprises of the Republic of Latvia, The Latvian Law recognizes the company.

Apart from setting up a company and drafting incorporation documents, it is mandatory to register your business activity. Also, depending on the commercial activity it might be required to apply for VAT status, obtaining licence, registration in other state activities.

The Register of Enterprises of Latvia represents an administrative institution that registers enterprises merchants, their representative offices, and subsidiaries within the territory of the Republic of Latvia, as well as all amendments to the basic documents of ­their activity and takes other actions envisaged by legislative acts. The RE also registers mass media, public organizations, commercial pledges, decisive influences, marriage contracts, public and private partnership agreements, religious organisations, political parties, trade unions, arbitrages and processes of insolvency.





What is Register of Enterprises in Latvia?
The Register of Enterprises is a direct administration institution operating under supervision of the Minister of Justice. The work of the Register of Enterprises is governed by the Law On the Register of Enterprises of the Republic of Latvia, bylaws of the Register of Enterprises approved by the Cabinet of Ministers and other laws and regulations.

The mission of the Register of Enterprises is to register entities referred to in the said Law in order to establish their legal status and ensure the authenticity and reliability of the information referred to in-laws and regulations, as well as to ensure the availability of this information which is done by notaries public of the Register of Enterprises.

Difference between Shell corporation and Shelf Company

 What is Shell corporation?

Shell corporation is a company or company that only exists on paper and has no office and employee, but can have a bank account or be a passive investment or registered asset owners, such as intellectual property or ship. Shell companies may be registered at the address of the company providing the service that establishes the corporate entities and may act as an agent for receiving legal correspondence. An entity can serve as a transaction for transactions without significant assets or activities.

A shell corporation is an enterprise without active business or substantial assets. These types of corporations are not always illegal, but sometimes they are used illegally, for example, to hide corporate ownership of law enforcement or the public. Shell corporation's corporate reasons include things like starting a business with a company to attract, fund, take, or publicize. As long as the owner has paid all required taxes, none of this is illegal.

Offshore shell company

It is not illegal to create a shell company in an offshore tax paradise. Many service providers can be found online by praising the benefits of a letter-box corporation.

Shelf Company

The names are almost the same, but the meaning is a little different.

A shelf company is a company that is already registered but has never traded or established business and has no assets or liabilities. Essentially, the company is registered to sit on the "shelf", waiting for someone to buy it. Purchasing a shelf company was previously the best way to quickly get business without using a time-consuming new registration procedure. However, company registration is now much faster and more cost-effective than making purchases and shelf changes. As a result, shelf companies are becoming a thing of the past.

Business support you can hope for in Latvia

Setting up business in foreign country or even in your home country is a huge challenge in your usual life. Especially, if you don’t have impressive experience before. Yes, it’s possible to get support and consultancy in Latvia.

Entrepreneurs can get support from agencies subordinated to Ministers.

The Central Finance and Contracting Agency (CFLA) is a direct management institution subordinated to the Minister of Finance. Agency can inform about possible funds supported by projects of EU.

Subordinated to the Minister for Economics of Latvia, Investment and Development Agency of Latvia (LIAA) aims at increasing export and competitiveness of Latvian companies, facilitating foreign investment and implementing tourism development and innovation policies.

In Latvia you can find financial support through programmes and from banks that provide loans and credit guarantees, offers insurance for business export deals and investment to venture capital funds.

Find support and ask for consultancy from company that is specialized in this issue and is located in Latvia. Professionals know what they are talking about based on experience. Baltic Legal is one of this company.

• It will help you solve complex issues and provide you with swift high-quality legal, accounting and business management services;
• It will provide an efficient service thus taking a large share of the workload off your shoulders;
• It will ensure high-quality professional company registration services and an individual approach to your needs, as well as loyalty, privacy and fast servicing;
• clients will need only one partner to incorporate and maintain a company in the Baltic region that will significantly facilitate communication, teamwork and optimize total costs.

When you know about possible support, it is more easier to raise capital for your business and make your dreams come true and realize plans.

E-services in Latvia

E-services make our life rested and give freedom of mobility. The variety and number of e-services is increasing every year. Latvia doesn't stay behind.

Latvia provides portal www.latvija.lv for quick and easy access to services provided by state and municipal institutions. It’s not only for entrepreneurs but also for individuals. In the section "E-services", all the e-services available on the portal are summarized. User also can register for entrepreneurship.

The most popular e-services in Latvia:

Submission of the declaration of the place of residence

Electronic application for studies within the framework of basic study programmes

“My data” in the Population Register

Registration with registers maintained by the Register of Enterprises

Register for place in preschool

Tax payments and other services that connected with finance.

Latvia has unified electronic information system for the health sector. Users can open, extend and close e-disability pages, get medical e-prescriptions. Many clinics administer e-registration for consultancy or visits to specialist through the electronic system.

Banks that located in Latvia also provides e-service from the basic e-services as online payments, automatic payments, to more advanced. Banks bring video consulting as a new banking service that allows a customer to get the same advice as a branch without leaving their computer.

If you want to use e-service you can log in through bank account, username and password for specific portal, e-signature or portal www.latvija.lv.

The Office of Citizenship and Migration Affairs offers the possibility to check or receive information from the Population Register using electronic services.

We mentioned only some possible e-services in Latvia. Such services will pamper you and make your life in Latvia relieved.  

About income from cryptocurrency in Latvia

Virtual currency is also known as cryptocurrency, and each of it has its own name such as Bitcoin, Ethereum, Litecoin, Zcash). Cryptocurrency is visible money on your device but It’s not possible to touch it.

The State Revenue Service (SRS) of Latvia has published a new informative material on personal income tax (PIT) on the income from the sale of virtual currency.

If a person gets a virtual currency within the framework of an economic activity or generates a virtual currency, such income is classified as income from economic activities and it’s necessary to pay personal income tax.

If the revenue from the sale of virtual currency would be classified as income from capital gains, the tax will be 20%. The value of the virtual currency is equal to the value for which the person purchased the virtual currency.

The price of a virtual currency is the same as the price person paid in cash or a natural value.

A resident of Latvia shall submit to the SRS a declaration of income from capital gains on the disposal of virtual currency.

A non-resident is not obliged to submit a SRS declaration of income from capital gains or annual income statements if the payer of the income was withheld tax during act of payment.

Government of Latvia try to keep finger on a pulse, because of fast changes in the digital world. Cryptocurrency isn't something undefined anymore.

Benefits Of Shelf Company

There are a lot of business types, but one of them is Shelf company. Some of the businessmen like to make their own company, but some like ready-made company better. What are the benefits of a Shelf Company and why you should consider to check It out?




What is a Shelf Company?
A shelf company is a company that is already registered but has never traded or established business and has no assets or liabilities. Essentially, the company is registered to sit on the "shelf", waiting for someone to buy it. Purchasing a shelf company was previously the best way to quickly get business without using a time-consuming new registration procedure. However, company registration is now much faster and more cost-effective than making purchases and shelf changes. As a result, shelf companies are becoming a thing of the past.

Benefits Of Shelf Company

Some of the company types need a lot of waiting until it's application form is fully accepted. If you need a company now, Shelf Company is the best choice for you! It can be a good time-saving.
The existence of a company image and business history may be important to you - the longer a company has been, the better experience it has.
Easier access to bank relationships and credit lines.

The age of your business can affect the business you want to do. The number of years a company has been in can affect the trust of potential business, such as a buyer, creditor, or supplier.

White list of Advanced Cooperation Program

Have you heard about “In-depth Cooperation Programme” in Latvia? It isn’t about classifying enterprises but about collaboration between State Revenue Service (SRS) and taxpayers.

SRS informed that selection criterias had changed and program was developed by including small and medium enterprises from January 1st, 2019. The benefits could be used by a wider range of merchants.

According to “In-depth Cooperation Programme”, taxpayers will be grouped at three levels in accordance with activity. These levels are Bronze, Silver and Gold. New program participants will be selected once a year (in January 1st) based on available to SRS information automatic selection and evaluation.

The “In-depth Cooperation Programme” has proven to be an important tool for cooperation between taxpayers and public authorities. It currently bringing together 75 taxpayers. Only large companies have been able to become members of the program so far because of given selection criteria for the program. Approximately 2,500 taxpayers are expected to meet the criteria of the new model of the “In-depth Cooperation Programme” now.

Program participants are assessed quarterly and removed from the list if discrepancies are found.If participant want to get to higher level, he must spend at least 1 year on the bronze level, 2 years for silver level.

Participants at each level will get benefit from the SRS, the Central Finance and Contract Agency, the Ministry of Economics and the Ministry of Education and Science.

Would you like to get into this white lists?

Electronic signature for business

E-Signature technology is just two decade old, but it gives us so many benefits. E-signature, devices and internet connection are making possible to manage business from any place.  

Effective July 1st 2016 the EU Regulation 2014/910, also known as eIDA defines Electronic Signature as defined as data in electronic form which are attached to or logically associated with other electronic data and which are used by the signatory to sign.

Documents signed with e-signature have the same legal effect as hard copies of documents signed by hand and  is the only tool that ensures signing documents in digital environment.

Benefits of e-signature:

• Freedom of movement. You don’t need to run to the office for signing important contract or cancel your trip because of necessity to sign document this week.
• Additional security. It’s more secure than traditional signature and also contain information on who signed the document, when and where they signed it.
• If you care about environmental protection or you are adherent of zero-waste lifestyle, e-signature is must-have for you. Tool reduce costs for paper, ink. However, paperwork accrues up costs – in purchasing, printing, copying, scanning, delivering to other person and storing of paper.
• Save your time and allow to do business processes faster.

The signed document is also legally valid – enforceable by legislations passed in various countries. 

How to start using e-signature?

You should contact company in your country that provide such service.

For example, in Latvia it is one of the leading electronic communication service provider LVRTC. In Estonia and Lithuania it is local DocuSign.

It is not free service but it does not pay a lot. You will get much more with e-signature.

Cash is becoming a think of the past

Physical money has been with us for so many years  even when electronic money came to the force. Now there is a tendency to use bank cards,contactless payment and banks try to make this process more easier and faster for people. The government of Latvia also want to limit use of cash.

In January the Cabinet of Ministers discussed amendments to the Act on Taxes and Fees.

The project of The Act provides the following changes:

1. to prohibit the use of cash in real estate alienation transactions;
2. reduce the maximum use limit of cash from 7 200 to 3 000 euros;
3. to impose a cash restriction on the sale of motor vehicles of categories M1 (including M1G) and N1 (including N1G) - motor vehicle alienation transactions may be made in cash up to EUR 1500.

At the moment, according to the Act of Taxes and Duties, taxpayers, including natural persons who do not engage in economic activity, have a ban on cash transactions that are more than for EUR 7 200.

Why Latvia need it? The State Revenue Service often finds that taxpayers are looking for ways to reduce the true amount of the transaction so that they can make mutual settlements in cash. The organization “MoneyVal” made an assessment and found that the use of cash increase risks of money laundering and financing of terrorist.

The amendments probably will come into force this year - 1st May, 2019.

Maybe it is not so bad to use cash less because companies and accounters can concentrate attention to bank accounts, e-system, other more important tasks and not to count money from the cash register.

Reference:

https://ifinanses.lv

What is VAT?

What is VAT?

A value-added tax applies the equivalent of a sales tax to every operation that creates value.

The VAT is usually administered by requiring the company to complete a VAT return indicating the VAT it has collected (as input tax) and the VAT it has collected from others (hereinafter referred to as "output tax"). The difference between the output tax and the input tax must be paid by the local tax authority.

Many tax authorities have introduced automated VAT, which has increased accountability and audibility through computer systems, thus also providing cybercrime offices.

Latvian merchant's branch

Latvian merchant's branch is an organizationally independent part of a company that is territorially or otherwise separated from the main enterprise and whose place of business is systematically carried out on behalf of the respective merchant.

Branches may be established by a merchant (limited liability company, joint-stock company, individual merchant, general partnership, limited partnership).

The branch of the Latvian merchant must be registered in the Enterprise Register in order to start a business and it usually takes up to 3 business days, costs around 45,5 Eur - 112,5 Eur and you can register it on the internet.

Documents to be submitted:

• Application Form KR7
• The consent of the owner of the real estate for registering the legal address of the merchant (not to be provided if the owner is one of the signatories of the application)
• A voucher or a copy of it, or an internet bank payment, or information about payment of the state fee
• Quotation or a copy of it, or an Internet bank payment, or information on the publication in the "Latvijas Vēstnesis"

Conditions for registering a business address:

• The legal address must coincide with the address entered in the National Address Book. Checking the free address at the State Address Register Information System www.kadastrs.lv
• The address can only be registered in a building or a group of premises (in an apartment), it can not be registered in a property consisting solely of land
• If the real estate consists of several groups of premises, it is necessary to specify the exact room number of the group where the registered office
• If the immovable property does not belong to the person signing the application, it is necessary to submit the consent given by the owner of the real estate (building or apartment property) to the registration of the company's registered office in the relevant building or apartment ownership. The number of the real estate cadastre (if the land and the building have different cadastral numbers, the cadastral number of the building must be indicated), the name, surname and personal code of the owner or the company name (company) and registration number shall be indicated with the consent.
• If the real estate belongs to several co-owners, consent of all co-owners is required, or a document must be submitted confirming the separate right of use of the co-owner to the specific part of the property in which the legal address will be located.

If you have any questions about this topic, feel free to contact us!

Limited partnership in Latvia

What is a Limited partnership?

A limited partnership is a partnership, the purpose of which is the pursuit of a business through a joint venture, in which two or more persons are merged on the basis of a public contract.

The liability of at least one member of the company (teamed) for the company's creditors is limited by the amount of his investment, but the (other) liability of the other person liable members of the company is not limited. The amount of the spin-off contribution is not limited to a specific amount.

A limited partnership may be founded:

• For an indefinite time
• For a specific deadline
• To reach a specific goal

A limited partnership may be a natural or legal person, as well as a legal partnership.

The limited partnership must be registered in the Register of Enterprises for commercial activities. It takes up to 3 business days, costs 162,03 Eur - 481,03 Eur and you can register it on the internet.

Documents to be submitted:

• Application Form KR3 (to be certified by signatures)
• The consent of the owner of the real estate for registering the legal address of the merchant (not to be provided if the owner is one of the signatories of the application)
• A voucher or a copy of it, or an internet bank payment, or information about payment of the state fee
• Quotation or a copy of it, or an Internet bank payment, or information on the publication in the "Latvijas Vēstnesis"

If you need any help with company registration, feel free to contact us!

Wholly owned partnership in Latvia

What does it mean?
A wholly owned partnership is a partnership whose purpose is to conduct a business through a joint venture, in which two or more persons (members) are united on the basis of a public contract. The members of the full partnership are personally liable for the obligations of the general partnership. A member of the general partnership may be a natural or legal person, as well as a legal partnership.

A wholly owned partnership can be founded:

• For an indefinite time
• For a specific deadline
• To reach a specific goal

The partnership must be registered in the Register of Enterprises in order to carry out business activities.
It takes up to 3 business days, costs 162,03 Eur to 481,03 Eur and you can register it electronically.

Documents to be submitted:

• Application form KR3 (must be signed)
• The consent of the owner of the real estate for registering the legal address of the merchant (not to be provided if the owner is one of the signatories of the application)
• A voucher or a copy of it, or an internet bank payment, or information about payment of the state fee
• Quotation or a copy of it, or an Internet bank payment, or information on the publication in the "Latvijas Vēstnesis"

If you need any information about this type of company, contact us and we will help you to reach your goals!

What is Cooperative society?

What is Cooperative society?
A cooperative society is a voluntary association of natural and legal persons whose purpose is to provide services to increase the efficiency of its members' economic activities.
A cooperative company is a legal entity.

Rules:

• The cooperative company has the status of a merchant, with the exception of agricultural services, forestry services, apartment owners, car garage owners, boat garage owners and horticultural cooperatives;
• The minimum number of founders of a cooperative society is three, but in the agricultural services and forestry service companies - five
• The founders and members can be both natural and legal persons.

Cooperative companies must be registered in the Register of Enterprises in order to start their activities, and it takes up to 3 working of Consideration, it costs from 162,03 Eur to 481,03 Eur and you can register it through the internet.

Documents to be submitted:

• Application Form 1
• The Treaty establishing the
• Statute
• Meeting minutes of the meeting
• Signature of signature of each signatory (must be signed)
• Bank's statement on the payment of share capital (if the share capital is paid in cash)
• Document proving the value of a property investment (if a property contribution is made)
• A voucher or a copy of it, or an internet bank payment, or information about payment of the state fee
• Quotation or a copy of it, or an Internet bank payment, or information on the publication in the "Latvijas Vēstnesis"

If you need more information about company registration, contact us!

Farmers' and fishermen's economy in Latvia

What is Farmers' economy?
Farmer's farm is an individual company that produces agricultural products using the main means of products specifically for this purpose, the land. Land must be owned or used by the owner of the holding.

What is fishermen's economy?
A fishermen's economy is an individual company that operates with the use of fish resources allocated for this purpose. The fisherman can also manage the land.

Registering Farmers' or fishermen's economy.
A farmer or fisherman's holding acquires the rights of a legal person from the moment it is registered in the Register of Enterprises. The rights of the holder are signed by the owner and appointed by the manager.

• The process takes around 1- 3 working days;
• The cost is around 45,50 to 112,50 EUR;
• Can be settled electronically.

What documents do you need?

• Application Form 4;
• Statutes governing the basic principles of the company's operation (if any);
• Decree of the Municipality Council (Council) or the Land Commission on the granting of a land plot for use or a notarized copy of the Land Register Act regarding the ownership of a plot if a farm is established;
• Municipality's decision to allocate a fish limit if a fisherman's farm is established;
• Sample signature for each signatory if documents are submitted in paper format (must be signed);
• A voucher or a copy of it, or an internet bank payment, or information about payment of the state fee;
• Quotation or a copy of it, or an Internet bank payment, or information on the publication in the "Latvijas Vēstnesis".

If you need any help with registering a company in the Baltic states, feel free to contact us!