Latvia at a glance
Default split
Proportional to capital
Startup entity
Sabiedrība ar ierobežotu atbildību (SIA)
Minimum capital
€2,800
Community property
Yes
Formation cost
€150–€400
Key legislation
Komerclikums (Commercial Law), Civillikums (Civil Law)
Latvia has a unique corporate tax system similar to Estonia: companies pay 20% tax only on distributed profits. Retained and reinvested earnings are not taxed. This makes Latvia attractive for reinvesting startups. The minimum capital for a SIA is €2,800. Latvia adopted the euro in 2014. Riga has a growing fintech and startup ecosystem.
Default partnership rules in Latvia
In a Latvian pilnsabiedrība (general partnership), profits are distributed proportionally to each partner's contribution by default (Commercial Law §88). Partners are jointly and severally liable for partnership debts. The partnership must be registered in the Latvian Enterprise Register. A partnership agreement is required for registration.
In Latvia, profits are split proportionally to capital contributions by default. This means a partner who invested 80% of the capital would receive 80% of the profits. While this may seem more intuitive than the equal-split default in some countries, it still fails to account for non-cash contributions like time, expertise, and relationships. A written partnership agreement should address all types of contributions.
Sabiedrība ar ierobežotu atbildību (SIA) in Latvia
The SIA (Sabiedrība ar ierobežotu atbildību) is the standard entity for Latvian startups. Minimum share capital is €2,800. Formation costs €150–€400 and takes about 1–3 business days. No notary is required. Share transfers require written form and registration. The articles of association (statūti) govern the company. Latvia's distributed-profit-only taxation is a significant advantage for reinvesting startups.
Without a shareholders' agreement, the relationship between founders is governed by the country's default rules, which rarely account for the realities of a startup — where contributions change over time and early effort often goes uncompensated. An operating agreement or shareholders' agreement is essential. Use our equity calculator to determine a fair split based on actual contributions.
What happens when a partner leaves in Latvia
In a pilnsabiedrība, a partner can withdraw with six months' notice. For SIA companies, share transfers follow the restrictions in the articles. Existing shareholders have pre-emption rights unless the articles provide otherwise. Minority shareholders holding at least 5% of capital can request a special audit.
A written agreement should address departure terms specifically, including how the buyout value is calculated, the payment timeline, vesting schedules, and any non-compete provisions. Understanding the concept of dead equity is important for managing these situations. Learn more about how dead equity affects businesses.
Marriage and business equity in Latvia
Latvia uses laulāto kopīpašums (marital joint property) by default. Assets acquired during marriage are community property. Each spouse manages their own separate property. A marriage contract (laulības līgums) can establish separate property. Business interests acquired during the marriage are community property unless excluded by a marriage contract.
Important for Latvia business owners: Latvia uses laulāto kopīpašums (marital joint property). Assets acquired during marriage are community property. Business owners should consider a pre-nuptial or post-nuptial agreement to protect their equity interests.
Formation and cost details
| Main startup entity | Sabiedrība ar ierobežotu atbildību (SIA) |
| Minimum capital | €2,800 |
| Formation cost | €150–€400 |
| Default equity split | Proportional to share capital contributions |
| Default partnership split | Proportional to capital contribution |
| Community property | Yes |
| Key legislation | Komerclikums (Commercial Law), Civillikums (Civil Law) |
Frequently asked questions
How does Latvia's corporate tax work?
Like Estonia, Latvia taxes only distributed profits at 20%. Retained and reinvested earnings are not taxed. This makes Latvia especially attractive for startups that plan to reinvest profits rather than distribute dividends.
What is the minimum capital for a Latvian SIA?
The minimum share capital for a SIA is €2,800. Formation costs €150–€400 and no notary is required. Latvia's distributed-profit-only taxation adds to the attractiveness of forming here.
How are partnership profits split in Latvia?
In a pilnsabiedrība (general partnership), profits are split proportionally to each partner's contribution by default. Partners are jointly and severally liable for debts.
How does Latvian community property affect businesses?
Business interests acquired during marriage are community property by default. A marriage contract (laulības līgums) can establish separate property to protect business equity.
Related resources
- Equity calculator: find a fair split for your business
- Does your small business need an equity agreement?
- Equity for small businesses: the complete guide
- Dead equity calculator: how much is yours costing you?
- Slicing Pie calculator
- What is an operating agreement?
- All 32 European countries: partnership and formation laws
- US state directory: partnership and LLC default rules
Partnership laws in neighboring countries
Disclaimer: This page provides general information about Latvia partnership and business formation laws and is not legal advice. Laws change, and the information here may not reflect the most recent amendments. The formation costs and capital requirements listed are approximate and may vary. Consult a qualified attorney licensed in Latvia for advice specific to your situation. Equity Matrix is a software tool for tracking contributions and calculating equity; it does not provide legal services.
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