Country Trading Profiles Latvia

Setting up a company | FDI in figures | Why you should choose to invest | Procedures relative to foreign investment | Finding assistance for further information

Setting up a company

Types of companies and capital (max/min)	Number of partners/shareholders and liability
The sabiedriba ierobezotu atbildibu is a Private Limited Company. Minimum LVL 2,000. 50% of the capital must be released at the incorporation and the remainder within the year.	No minimum Liability is limited to the amount contributed.
The akciju sabiedriba is a Public Limited Company. Minimum LVL 25,000. 50% of the capital must be released at the constitution and the remainder within the year.	No minimum Liability is limited to the amount contributed.
Partnership No minimum	Minimum 2 Unlimited for all Partners
Limited Liability Partnership No minimum	No minimum Unlimited for General partner, limited for limited partner

Business setup procedures

Setting up a company	Latvia	Eastern Europe & Central Asia
Procedures (number)	5.0	6.3
Time (days)	16.0	16.3

Source: Doing Business.

For further information: Consult Doing Business Website, to know about procedures to start a Business in Latvia.
Lursoft, Data bases for enterprises.
The competent organization: Here is the link to the Register of Commerce in Latvia.

FDI in figures

Foreign Direct Investment	2008	2009	2010
FDI inward flow (millions USD)	1,261	94	349
FDI stock (millions USD)	11,537.4	11,602.0	10,837.8
Performance Index*, ranking on 141 economies	70	134	-
Potential Index**, ranking on 141 economies	57	-	-
Number of Greenfield investments***	51	28	-
FDI inwards (in % of GFCF****)	12.7	9.4	-
FDI stock (in % of GDP)	34.1	44.8	-

Source:

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk. *** Green field investments are a form of foreign direct investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up. **** Gross fixed capital formation (GFCF) measures the value of additions to fixed assets purchased by business, government and households less disposals of fixed assets sold off or scrapped.

Why you should choose to invest Latvia

Strong points: The country's main strong points are:
- A skilled and inexpensive workforce;
- Legislation that is harmonized with the European Union and favorable to investments;
- A simple and attractive taxation system;
- The presence of strategic transit and logistics centers;
- High productivity;
- Low taxes; and
- A strategic geographical location, which allow access to Russia and to the former Soviet repulics.
Weak points: The country's main weaknesses are:
- The limited size of its domestic market;
- The low numbers of foreign companies in the country;
- Economic instability and high market fluctuations. In this regard, the economic crisis, which Latvia is currently going through has shown the country's limitations, which remain subject to political and social instability and whose economy could deteriorate rapidly.
Government measures to motivate or restrict FDI: Following its independence, Latvia decided to launch itself in the market economy and to acquire the capital it was lacking. It therefore progressively opened itself up to direct foreign investments. In order to attract foreign companies, the Latvian government offers financial assistance. Its strategy is especially to promote the high technology industrial sector. The different fundings enable the quality of services to be improved. A loan and semi-loan plan has also been launched to promote SMEs.

Procedures relative to foreign investment

Freedom of establishment: Yes
Acquisition of holdings: A majority holding interest in the capital of a local company is legal.
Obligation to declare: The agency for the promotion of foreign investment in the country provides information about the authorizations necessary for setting up business.
Competent organization for the declaration: Investment Agency of Latvia

Finding assistance for further information

Investment aid agency: Investment Agency of Latvia
Development Agency of Latvia
Other useful resources: BALTCAP Management is a Baltic III investment fund, with investment by the BRED, which has about 80 M EUR at its disposal and which helps especially SMEs operating in one of the Baltic countries.
The Baltic Small Equity Fund supports SMEs which operate in a wide spectrum of industrial activities.