ABOUT LATVIA

Amongst all the countries in Europe, Latvia, officially the Republic of Latvia, is a country located in Northern Europe, one of the three Baltic states, bordering the Baltic Sea. It is known for its vast forests, long coastline, charming medieval towns, and a unique blend of Nordic, Russian, and Central European influences. Latvia is also recognized for its rapidly developing digital economy and a strategic position as a bridge between East and West. The capital of Latvia is Riga, which is its largest and most populous city, serving as the country’s primary economic, cultural, and political hub, and a UNESCO World Heritage site. According to the World Bank, Latvia is classified as a High-Income Economy, having achieved significant economic growth and reforms since regaining independence, with a strong commitment to further European integration. The currency of Latvia is the Euro (EUR), which it adopted in 2014. As of today’s exchange rates (June 2025), 1 Euro is approximately 89.85 Indian Rupees. The population of Latvia is estimated to be around 1.86 million in 2024. Its neighbouring countries are Estonia to the north, Lithuania to the south, Russia to the east, and Belarus to the southeast. The official language of the country is Latvian, with Russian widely spoken by a significant portion of the population, and English also commonly used in business and urban areas, especially among the younger generation. The majority of the Latvian population identifies as non-religious, with significant communities of Lutheran and Orthodox Christians. Currently, Latvia has one major international airport, Riga International Airport (RIX), which is the largest airport in the Baltic states and serves as a significant regional hub. As Latvia borders the Baltic Sea, it has several key commercial seaports, including Riga, Ventspils, and Liepāja, which are vital for facilitating international trade, particularly transit cargo between East and West.

The corporate income tax rate in Latvia is 20%. However, Latvia operates a unique system similar to Estonia, where corporate income tax is only applied to distributed profits (e.g., dividends, deemed profit distributions) at a rate of 20/80 (which is an effective rate of 20% on the gross amount of distributed profits). Profits that are reinvested or retained within the company are not subject to corporate income tax. This “zero corporate tax on reinvested profits” system provides a strong incentive for businesses to grow and develop. Additionally, Latvia offers various investment incentives, including state aid for large investment projects, R&D tax relief, and support for job creation, particularly in regional development areas or specific priority sectors. Opesh Group of companies will be helping you in completing the Due Diligence process which includes financial planning, registration process, business options, and if required, even helping you find a rental property for your office.

Establishing a business in Latvia is relatively straightforward, supported by its efficient digital services and EU-harmonized legal framework. The Investment and Development Agency of Latvia (LIAA) is the primary government body promoting and assisting foreign investors. A foreign investor who is planning to start his business in Latvia can form various company types, with the most common being a Limited Liability Company (SIA – Sabiedrība ar Ierobežotu Atbildību) or a Joint Stock Company (AS – Akciju sabiedrība). A Limited Liability Company (SIA) is the most popular choice due to its flexibility, allowing 100% foreign ownership and requiring a minimum share capital of EUR 2,800 (or a reduced capital option for micro-enterprises). Latvia’s digital infrastructure allows for efficient online registration processes.

In case an investor is planning to establish an SIA in Latvia or a corporate business setup, Opesh Group will be helping you in taking the right decision for setting up your business in Latvia and we will also guide you about how to follow the procedure while formulating your company in Latvia.

Types of Business which can be started in Latvia:

• Logistics & Transport: Leveraging its strategic location as a transit corridor between the EU, CIS, and Nordic countries, and its ice-free ports, opportunities are significant in multimodal logistics, warehousing, freight forwarding, and specialized transportation services.
• Information & Communication Technologies (ICT) & Business Process Outsourcing (BPO): Latvia has a growing tech sector with a skilled and multilingual workforce. Opportunities exist in software development, cybersecurity, FinTech, data analytics, IT outsourcing, and shared service centers.
• Wood Processing & Forestry: With abundant forest resources, this is a traditional and strong sector. Opportunities lie in sustainable forestry, wood processing (lumber, panels, furniture, pellets), and value-added wood products.
• Manufacturing: Opportunities in light manufacturing, machinery production, metalworking, and electronics, often leveraging competitive labor costs and a skilled workforce for export-oriented production.
• Green Technologies & Sustainable Solutions: Growing interest in renewable energy (biomass, wind), energy efficiency, waste management, and sustainable building materials. Opportunities for R&D and implementation of green solutions.
• Tourism & Hospitality: Latvia offers a rich cultural heritage, historical cities (Riga), beautiful coastline, and natural parks. Opportunities exist in developing hotels, guesthouses, specialized tourism (e.g., eco-tourism, cultural tours), and related services.
• Life Sciences & Pharmaceuticals: A developing sector with potential in niche biotechnology, medical devices, and pharmaceutical manufacturing or distribution.

Advantages of Starting Business in Latvia:

• Strategic Geographic Location: Acts as a bridge between the EU, CIS, and Nordic markets, with well-developed transport infrastructure.
• Competitive Tax Regime: Zero corporate tax on reinvested profits provides a strong incentive for business growth.
• EU & Eurozone Membership: Provides seamless access to the vast EU single market and eliminates currency risks.
• Competitive Operating Costs: Lower labor and operational costs compared to Western European countries.
• Skilled & Multilingual Workforce: A well-educated talent pool, particularly in IT and engineering, with good Russian and English language skills.
• Stable & Transparent Business Environment: A democratic, stable country with ongoing efforts to improve ease of doing business and reduce bureaucracy.
• Access to EU Funds: Eligibility for EU structural and investment funds for various projects.

Business Opportunities for Indians in Latvia:

There are excellent business opportunities in Latvia for new investors who are planning to start their business abroad. Latvia’s strategic location, competitive cost structure, and investor-friendly tax regime make it an attractive emerging market within the EU. Indian investors with strengths in IT services (especially outsourcing and software development), logistics and supply chain management, pharmaceuticals (manufacturing or distribution), and potentially in wood processing or specialized light manufacturing, can find avenues for investment and market entry into the broader European and Eurasian markets.

Imports & Exports:

Many goods are imported and exported from Latvia. Imports and exports business is an ever-growing business in any country; however, you need to do proper R&D before investing in that product which you can import or export. You need to check whether that product is suitable for your target market and how much revenue you will be able to generate from that market.

Major items which are exported from Latvia to India:

• Wood and articles of wood (e.g., timber, wood pellets)
• Machinery and mechanical appliances
• Electrical machinery and equipment
• Chemical products
• Mineral fuels, oils, distillation products
• Optical, photographic, cinematographic, measuring instruments

Major items which are imported in Latvia from India:

• Pharmaceutical products
• Organic chemicals
• Textile yarns and fabrics, articles of apparel
• Machinery and mechanical appliances
• Iron and steel products
• Cereals (e.g., rice)
• Vehicles and parts

Manufacturing:

Opportunities in manufacturing are growing, particularly in wood processing, metalworking, machinery production, and light manufacturing (e.g., plastics, electronics components). Latvia’s competitive labor costs and strategic location, combined with the zero-tax on reinvested profits, make it an attractive location for export-oriented production facilities.

Mining:

The mining sector in Latvia is very limited. It primarily involves the extraction of aggregates (sand, gravel) and peat for construction and energy purposes. There are no significant deposits of metallic minerals or fossil fuels (beyond peat) that would attract large-scale foreign mining investments. The focus is on utilizing existing resources sustainably.

Major Indian companies which are currently working in Latvia:

While large-scale manufacturing or direct investment by major Indian conglomerates is not yet widespread, Indian businesses are present through trade, distribution, and increasingly in IT/software services.

• Pharmaceutical Companies: Indian pharmaceutical companies have a market presence through distribution networks in Latvia.

• IT/Software Services: Smaller and medium-sized Indian IT firms or individual professionals might be providing services or engaging in partnerships.

• Trade: Various Indian companies are active in bilateral trade, facilitating the import of Latvian wood products and machinery and the export of Indian pharmaceuticals and textiles.

• Education: There’s a growing presence of Indian students in Latvian universities, leading to some related service providers.

• GDP = $47.0 billion (2024 est.)

• GDP Growth = 2.0% (2024 est.), 3.0% (2025 est.)

• Ease of doing business rank = Not directly ranked by the World Bank’s ‘Doing Business’ report (discontinued), but generally recognized for its high ease of doing business, particularly in business registration and taxation efficiency.

• GDP per Capita = $25,270 (2024 est.)

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