Latvia attempts to encourage investments from foreign residents. The following are among the reasons that foreign investors are attracted to Latvia:
- Political and economic stability.
- Membership of important bodies such as the EU, from 1.5.2004 and the IMF.
- Significantly lower labor costs than the European norm. The average gross monthly salary in 2010 was LVL 445
- Excellent location on the Baltic Sea in the heart of one of the fastest developing areas in Europe that has a potential target population of 600 million purchasers.
- The transport infrastructure is well developed both on land and with three seaports, of which 2 are ice-free throughout the year.
- Thirty-six agreements with various countries to promote and protect foreign investments.
- Low rate of corporation tax, and special benefits for investors.
The total accumulated FDI in 2010 was EUR 8.25 billion.
Restrictions on Foreign Ownership in Latvia
In general, there is no discrimination in Latvia between foreign and local investors. Nevertheless, there are restrictions in specific matters.
An individual who is a foreign resident may not purchase real estate. The only possibility available to a foreign resident to purchase real estate is by means of a Latvian company.
There are restrictions in regard to companies that obtain control of air transport, security services and the operation of lotteries and gambling (there is no restriction in regard to lottery and gambling companies if the foreign residents are residents of the EU).
Foreign companies that invest in radio and television broadcasting may purchase a maximum of 49% of control.
Benefits for Foreign Investors in Latvia
Foreign investors in Latvia are eligible for various benefits.
Benefits for an Investment in a Development Area
A rebate of interest on loans to companies that create employment in economical deprived areas.
A 70% grant on the cost of hiring new employees.
Purchase of real estate from government bodies at preferential prices.
Latvia Tax Benefits
Tax reductions of up to 40% of the investment for companies that invest in large projects that are supported by the State.
Tax reductions of up to 30% of the investment in hi-tech firms (a deduction of 20% in other sectors).
Special Economic Zones (SEZ) in Latvia
Foreign investors in Latvia are eligible for various benefits.
Benefits for an Investment in a Development Area
There are 2 free ports and 2 special economic zones in Latvia.
The free ports are in the Riga area and in the area of Ventspils. The special economic zones are in the Liepaja and Rezekne regions, to the east of Latvia near the border with Russia and Belarus.
The 2 special economic zones were founded for 20 years, until 2017 with an option to extend the period of benefits.
Direct and indirect tax benefits are granted in the 4 areas on condition that the sales of a company in the SEZ within Latvia do not exceed 20% of total sales.
The main benefits are:
- Exemption from VAT.
- Exemption from customs duty on imports and exports.
- An 80% - 100% exemption from real estate tax.
- A rebate of 80% on corporation tax.
- The option to offset losses 10 years forward.
- Increased rates of depreciation.
- Political and economic stability.
- Membership of important bodies such as the EU, from 1.5.2004 and the IMF.
- Significantly lower labor costs than the European norm. The average gross monthly salary in 2010 was LVL 445
- Excellent location on the Baltic Sea in the heart of one of the fastest developing areas in Europe that has a potential target population of 600 million purchasers.
- The transport infrastructure is well developed both on land and with three seaports, of which 2 are ice-free throughout the year.
- Thirty-six agreements with various countries to promote and protect foreign investments.
- Low rate of corporation tax, and special benefits for investors.
The total accumulated FDI in 2010 was EUR 8.25 billion.
Restrictions on Foreign Ownership in Latvia
In general, there is no discrimination in Latvia between foreign and local investors. Nevertheless, there are restrictions in specific matters.
An individual who is a foreign resident may not purchase real estate. The only possibility available to a foreign resident to purchase real estate is by means of a Latvian company.
There are restrictions in regard to companies that obtain control of air transport, security services and the operation of lotteries and gambling (there is no restriction in regard to lottery and gambling companies if the foreign residents are residents of the EU).
Foreign companies that invest in radio and television broadcasting may purchase a maximum of 49% of control.
Benefits for Foreign Investors in Latvia
Foreign investors in Latvia are eligible for various benefits.
Benefits for an Investment in a Development Area
A rebate of interest on loans to companies that create employment in economical deprived areas.
A 70% grant on the cost of hiring new employees.
Purchase of real estate from government bodies at preferential prices.
Latvia Tax Benefits
Tax reductions of up to 40% of the investment for companies that invest in large projects that are supported by the State.
Tax reductions of up to 30% of the investment in hi-tech firms (a deduction of 20% in other sectors).
Special Economic Zones (SEZ) in Latvia
Foreign investors in Latvia are eligible for various benefits.
Benefits for an Investment in a Development Area
There are 2 free ports and 2 special economic zones in Latvia.
The free ports are in the Riga area and in the area of Ventspils. The special economic zones are in the Liepaja and Rezekne regions, to the east of Latvia near the border with Russia and Belarus.
The 2 special economic zones were founded for 20 years, until 2017 with an option to extend the period of benefits.
Direct and indirect tax benefits are granted in the 4 areas on condition that the sales of a company in the SEZ within Latvia do not exceed 20% of total sales.
The main benefits are:
- Exemption from VAT.
- Exemption from customs duty on imports and exports.
- An 80% - 100% exemption from real estate tax.
- A rebate of 80% on corporation tax.
- The option to offset losses 10 years forward.
- Increased rates of depreciation.
