Registration with the state registry (Commercial Registry of Republic of Latvia) is mandatory for doing business in Latvia. The Company is considered a legal entity only after registration at the Commercial Registry. Afterwards, the company can legally enter into transactions and run the business.

Legal Form of the Company
Incorporation documents
Business start-up
1. Legal Form of the Company
Prior to establishing an enterprise it is essential to assess and choose the most appropriate type of an undertaking in terms of law and economics. This choice will affect not only the amount of necessary equity capital, but also the legal status of the enterprise and other business related issues.

Foreign entrepreneurs usually register the following types of undertakings:

limited liability company (SIA);
joint stock company (AS);
branch;
representative office of foreign merchant
Latvian company types
Limited Liability Company (LLC) Joint stock company (JSC) Representative office
Latvian name Sabiedrība ar ierobežotu atbildību (SIA) Akciju sabiedrība (AS) Pārstāvniecība
Corporate tax rate on annual net profits 0.2 0.2 Not available for trading
Minimum paid up share capital EUR 2,800 EUR 35,000 None
Read more on each of the types in Legal structures and Company types in Latvia page.

Baltic Legal will help to set up business in Latvia or open a branch or representative office. Our lawyers will assist you in preparation of incorporation documents and represent your interests in the competent state authorities.

2. Incorporation documents
At the very beginning it is necessary to adopt a Decision on foundation. The decision on foundation might be equitable to Memorandum of Association in Western Europe countries.
Secondly, Articles of Association should be drafted. According to Latvian Commercial Law, Articles of Association is most important document for company`s internal organization perspective which should be in line with the Decision on foundation and following records in the Commercial Register.
It is necessary to pay the equity capital. The minimum of equity capital is EUR 2850 and it is not required to pay the entire equity capital at the moment of registration; the remaining sum might be paid within one year. Usually the founders open a temporary bank account in order to pay the equity capital. At this stage, the banks frequently ask questions related to the business and expected money flow in the account. Usually it is not problematic for foreigners to open a bank account, though Baltic Legal has supported the clients at this stage if necessary.
3. Business start-up
Business start-up sometimes requires diving more deeply in the proposed business in order to understand the necessity for specific permits, licenses, or registration with competent state authorities.

According to the proposed business area, it might be required to apply at State tax authority (State Revenue Services) and to register as Value Added Tax payer. Baltic Legal suggests to register at Tax Authority at the moment of company establishment. In this case, the paperwork is minimized.

Baltic Legal may assist and draft other documentation necessary for running business in Latvia, for example, to obtain license, certificate or registration before the competent state authorities.

The process of company formation and registration is not considered complex. The registration takes only four business days from the moment all incorporation documents are drafted and submitted with Commercial Registry of Republic of Latvia. The registration time might be reduced up to two business days upon such a request. The registration with other institutions may take from few days up to one month.

Overview of the Latvian real estate market
According to the annual overview provided by the Latvian State Land Service (hereafter SLS), in the period from the second half of 2011 to the second half of 2012, 49% of the total real estate transaction turnover came from residential and commercial construction, making more than half ( 51%) of all sales are made with land.

As SLS mentioned in its report, today the biggest players in the real estate market in Latvia are commercial banks and their affiliates. The second position (by the volume of financial turnover with real estate) is occupied by foreign investors, many of whom aim to obtain a residence permit in Latvia on the basis of real estate purchase. The fact that Latvia's credit rating and GDP have risen significantly in recent years while the ratings of other European countries have fallen has been instrumental in stimulating the interest and confidence of foreign investors - particularly in the Latvian real estate market. Many studies and visible trends show that spending on real estate in Latvia will continue to increase for the foreseeable future. The pace of growth has been strong but steady, boosting confidence and reducing the risk of a housing bubble. According to statistics from the Office for Citizenship and Migration Affairs, 2,435 foreigners applied for a residence permit based on the purchase of real estate last year alone.

The SLS data shows that the role of the Riga real estate market has always been bigger than the rest of the Latvian market. This trend has intensified in recent years. The number of real estate transactions in Riga is twice as high as in the rest of Latvia, which makes the demand for real estate in Riga quite high.

According to the latest Economic Freedom of the World: 2011 Annual Report, published by the Fraser Institute in Canada, Latvia ranks 60th.

The Fraser Institute collected data from 2009 and compared to the previous year, Latvia fell five places in the Economic Freedom of the World survey.

In a year, Estonia has dropped three spots in the poll to rank 15, but Lithuania has climbed 9 spots to rank 24.

Result of Latvia
Latvia received a score of 6.92 out of 10 points.

Hong Kong remains in first place with a score of 9.01.

It is followed by Singapore (8.68 points), New Zealand (8.2), Switzerland (8.03), Australia (7.98), Canada (7.81), Chile (7.77), the United Kingdom ( 7.71), Mauritius (7.67) and the US (7.6).

In total, the Economic Freedom of the World study covers 141 countries. The bottom countries in the survey are Zimbabwe – 4.08, Myanmar – 4.16 and Venezuela – 4.28 (out of 10 points).

The Fraser Institute has been conducting research into the degree of economic freedom since 1996. The Global Index of Economic Freedom consists of sub-indices that describe the degree of freedom in five domains – size of government (spending, taxes and corporations), legal form and security of property rights, access to sound money, freedom of international trade and regulation of credit, work and Company.

The waterfall market entry strategy is a sequential business expansion into foreign markets. Its main feature is the use of clearly defined entry levels and the sequential use of experience: the knowledge acquired in one level is used to implement the next.
In this case, each tier is represented by a single foreign market. First, a company enters a foreign market, establishes itself, promotes the product and builds a customer base. When the company feels comfortable in that market and its position is stable, the business can be expanded to the next market with the insights gained previously. This is reminiscent of a multi-layered waterfall where water goes through each stage before reaching the final destination, hence the name of the market entry strategy.

Implementation
The waterfall market entry strategy works best for companies that manufacture products with a long lifecycle or whose products are in the maturity phase. Because waterfall entry means a longer time to build and build a customer base, a long life cycle ensures that the product is not withdrawn from the market before the business prospects are stable. A product in the maturity phase, on the other hand, ensures that the product is ready for sale by the time a company enters a foreign market. If it gains enough popularity, the product's life cycle will be extended across all markets.

Another point to consider in the waterfall market entry strategy is the choice of foreign market. First of all, it is advisable to choose a foreign market that is very similar to a company's home market. This minimizes a number of risks, such as B. The risk of the discrepancy in consumer buying culture and the risk created by different currencies. After a company has established itself in this foreign market, it can take the next step and integrate into another market, which can either be similar to the domestic one or the previous one. Such a phased approach ensures a smooth transition as the business environment of a new market will never be completely unfamiliar. Exotic foreign markets are much more understandable when approached through other markets, gradually transitioning from familiar to unfamiliar.

Advantages
The waterfall market entry strategy makes it possible to revitalize products in the maturity phase, extending their life cycle while maintaining a stable position in the market. Since only one market is entered at a time, all business expansion resources are concentrated there, minimizing risk. Because markets are chosen so that each next one resembles the previous one, the transition to more distant, exotic markets occurs more gradually without incurring additional risks associated with unfamiliar business environments.

The waterfall market entry strategy is also characterized by accumulating knowledge for business expansion. Business knowledge from the domestic market is used to integrate into the first foreign market. The additional knowledge gained there is used in the market and the process is repeated as often as foreign markets are entered. Such an accumulation of knowledge about business expansion allows to reduce the risks of each entry, which makes the waterfall strategy particularly beneficial in the long run, as it is suitable for companies planning to enter a significant number of markets.

Disadvantages
Because the waterfall market strategy involves entering only one foreign market at a time, it leaves little room for failure. If a company has to withdraw from a foreign market in the first entry phase, the losses are comparatively small. However, if the company has already invested significant resources in locating, the cost of withdrawal increases significantly, and at the same time the company has no alternatives in other foreign markets. This is somewhat compensated if a new foreign market is not the first and the company has a solid background in other foreign markets, but this only applies to highly internationalized companies.

Another disadvantage is that a company may lose its first mover advantage in other foreign markets simply by not entering them. Competitors may enter other markets faster than the company in question establishes itself in a given foreign market and is ready to expand elsewhere.

Getting a job and working in the EU is the main reason for many to obtain a residence permit in the respective country. It offers the opportunity to live and care for family in the country of your choice, can help with obtaining long-term residency and even pave the way to foreign citizenship. If you choose one of the countries of the European Union, the Schengen area or the EEA, you will also enjoy the following advantages:

Workers from third countries are treated on an equal footing with EU citizens
Access to professional training for you and your family members
Social security for you and your family members
Represented by the local unions
Social and tax benefits
free travel to other Schengen Area, EU and EEA member states
Ability to stay in the country even if you decide to stop working there