International European Investment Licence

Latvia has been a member country of the EU since May 1, 2004, with its geographic size of 64,573 km², and population number of 1,986,096, as per 2015. The Latvians comprise 0.4% of the total EU population. Its capital is Riga and the official language in Latvia is Latvian. The Gross Domestic Product (GDP) is €24.378 billion, as per 2015. Latvia's currency is the Euro (€) since it became a member of the Eurozone on January 1, 2014. The political system is a parliamentary republic. Latvia holds 8 seats in the European Parliament and held the revolving presidency of the Council of the EU once in 2015. Latvia is a member country of the Schengen Area since December 21, 2007.

Section 17.2 — Invest in Latvia Framework & Sovereign Market Profile

Latvia, officially known as the Republic of Latvia is a country located in the historically significant Baltic region on the Northern part of Europe. The country is a landlocked country, it is bordered by Estonia in the north and on the southeast Latvia shares its border with Slovakia, on the east lies the Russian Federation and on the west it shares its border with Sweden along the coast of Baltic Sea. Latvia being located on the eastern sides of the European plain it has a very pleasant climate and also boasts of fertile soil which is suitable for growing a large variety of crops. Latvia also has a big forest cover that is home to some of the most exotic plants an animal species.

Facts: The country is one of the key players in the European Union. Latvia, in the recent years have become a hot spot for investment, increasing number of global players are looking to invest in the country and are benefitting from its favorable investment policies.

Section 17.3 — Strategic Advantages for Foreign Enterprises

Foreign companies investing capital across the Latvian jurisdiction are legally entitled to leverage several high-value operational parameters:

Section 17.4 — Macroeconomic Growth Trends & Crisis Management

Trends: During the past 5 years, Latvia has experienced significant growth in its economy and it has developed into one of the best economies in the European Union. Most of the industrial sectors in the country have grown drastically and have contributed towards the country's GDP (Gross Domestic Product).

Like most countries in the world, the Latvian economy took a major jolt during the economic crisis that threatened the world economies during the third and fourth quarters of 2008, which continued during the early half of 2009. The GDP slumped to a considerable extent during this period.

However, the federal government of Latvia was determined to not let the global economic crisis affect the inward flow of foreign investment in the country. To cope with the crisis, the government of Latvia set up several programs to attract FDI (foreign Direct Investment) in the country and give a major boost to the national economy and pave way for growth and development of the country and be at par with other industrially developed and technologically advanced countries of the European Union.

Section 17.5 — Market Size & Structural Recovery Metrics

Market Size: From the economic view point, Latvia is a key player in the European Union. The country has one of the fastest growing markets in the European Union. Over the past few years, Latvia has consistently recorded the highest GDP (Gross Domestic Product) growth rates in Europe. The prime reason for the significant growth is the rich consumption by the locals.

However, during the recession that severely hit the global economy during the later part of the 2008 and the early 2009, the Latvian economy slumped and its GDP fell down drastically at about 18%. The Latvian economy received a huge support from the IMF (International Monetary Fund) and EU, both rescued the economy with their funds and helped the fiscal deficit by 5% of the GDP. With the decline of recession, the economy recovered well and it registered a significant growth in 2010 and promises to grow further over the next few years.

According to 2009 reports released by the Latvia government, Latvia's GDP (purchasing power parity) was about $32.4 billion. The major contributing factor to the GDP were the industrial sector, it contributed to 24% of the national GDP.

Section 17.6 — Service Sector Dominance & FDI Policy Framework

The service sector was the most important contributing factor to the GDP, it represented 72.4% of the GDP. The GDP per capita for the year 2009 was about $14,500.

FDI / Investment Policy: The Latvia federal government has formulated special foreign investment friendly policies to encourage maximum investment from foreign companies. The government provides several financial grants to foreign investors investing in the country. The grants are mainly in terms of tax exemptions and loans at very cheap interest rates.

Section 17.7 — Special Incentives & Structural Development Aid

Special Incentives: The government of Latvia provides the following special incentives to foreign investors investing in large projects:

Section 17.8 — Key Investment Sectors & Privatization Inflows

Latvia has a huge industrial sector and its economy is noted for its large manufacturing wing, providing plenty of scope for foreign investors to invest in various segments:

Since Latvia is located in close proximity to the Baltic Sea, foreign investors can greatly benefit from it, since it provides a perfect gateway for transportation of goods.

To attract foreign investment in the country's manufacturing industry, the Latvian government is keen to privatize the sector keeping in mind its contribution to GDP. Since the government of Latvia has privatized the manufacturing sector barring a few sensitive industries, the inflow of FDI was about $11.46 billion in 2009. Latvia is truly a world class destination to invest, it has all the elements to become an industrial hub in the future. Foreign companies investing in the country are sure to earn valuable returns on their investments.

Section 17.9 — Latvia Immigrant Investor Program (Golden Visa)

DESCRIPTION: Latvia offers golden visa to foreign investors against investments in business or real estate in Latvia. The golden visa scheme is very popular among Russian, Chinese and Asian investors. The Latvia Immigrant Investor program offers economic residence permit for foreign investors who invest more than 50,000 euros in the economy. Family members also qualify for residence permits in Latvia. The investor visa scheme was started in 2010.

Primary Institutional Benefits of the Latvia Golden Visa:

Section 17.10 — Business Capital Investment Matrix

Latvia joined as EU member country since 1 May 2004, became Euro area member since 1 January 2014, and became Schengen area member since 21 December 2007. Below are the golden visa investment options for residence permits to foreign investors under golden visa law:

1. Business Capital Investment Track

If the foreigner has invested in the equity capital of a capital company by increasing it, or has invested in the equity capital of the capital company, founding a new capital company, and requesting for the first temporary residence permit has paid EUR 10 000 into the State budget, as well as the investment made is at least:

Section 17.11 — Subordinated Bank Deposits & Government Bond Allocations

The statutory golden visa legislation of the Republic of Latvia regulates the remaining institutional capital allocation options for securing a long-term residency status:

Section 17.12 — Intracommunity Pievienotās Vērtības Nodoklis Identification Registry

For compliant corporate operations, B2B sales routing, and product logistics within the European Economic Area, commercial entities require a fully verified, valid intra-community Value Added Tax identifier string (Pievienotās Vērtības Nodoklis / PVN-numurs).

If an incorrect or unmapped tax number is provided, transaction channels will halt under the official State Revenue Service notice: "PIEVIENOTĀS VĒRTĪBAS NODOKLIS - Jūsu uzrādītais PVN reģistrācijas numurs nav derīgs. Tirdzniecībai Kopienas ietvaros, mums ir nepieciešams derīgs Jūsu PVN reģistrācijas numurs. Šis numurs sastāv no valsts koda „LV” un 11 cipariem. Lūdzam Jūs to pārbaudīt un ierakstīt derīgo PVN reģistrācijas numuru zemāk norādītajā ailē, un atsūtīt to mums cik vien ātri iespējams. Paldies." Immediate internal review and formal digital correction are required to maintain compliant cross-border commercial pipelines within the European Community parameters.

Section 17.13 — Alphanumeric Sequence Rules of the Latvian PVN

The State Revenue Service (VID) strictly regulates the sequence formatting and configuration rules of business tax identifiers:

Sovereign Fee & National Fiscal Tariff Matrix

Section 17.16 — Corporate Income Tax System & Expense Deductibility

Corporate tax rates in Latvia 20%. The tax rate is 20%.

Corporate income tax (Uzņēmumu ienākuma nodoklis) in Latvia is 15% (2016) one of the lowest in Europe. It is imposed on the annual profits, taking into consideration all the adjustments that the tax laws prescribes. Business expenses are deductible for the purposes of the corporate income tax.

Section 17.17 — Value Added Tax (PVN) Classifications

Latvia VAT rates: The statutory tax codes of the Republic of Latvia separate consumer commodities, domestic services, and cross-border trades across four distinct core rate percentage tiers: