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Latvia, formally the Republic of Latvia, is a nation in Northern Europe's Baltic area. It is one of the Baltic nations, bordering to the north by Estonia, to the south by Lithuania, to the east by Russia, to the southeast by Belarus, and to the west by Sweden. Latvia has a population of 1.9 million people and an area of 64,589 km2 (24,938 sq mi). The nation has a seasonal climate that is mild. Riga is its capital and biggest city. Latvians are part of the Balt ethno-linguistic group and speak Latvian, one of the last two remaining Baltic languages. Russians are the country's biggest visible minority, accounting for over a quarter of the population.
After decades of German, Swedish, Polish-Lithuanian, and Russian dominance, which was mostly carried out by the Baltic German nobility, the Republic of Latvia was created on November 18, 1918, when it proclaimed independence from the German Empire in the wake of World War I. However, after the revolution in 1934 that established an authoritarian rule under Karlis Ulmanis, the nation became more despotic by the 1930s. The country's de facto independence was shattered with the start of World War II, starting with Latvia's compulsory admission into the Soviet Union, followed by Nazi Germany's invasion and occupation in 1941, and the Soviets' re-occupation in 1944 to create the Latvian SSR for the next 45 years. As a consequence of substantial immigration under the Soviet occupation, ethnic Russians became the country's biggest visible minority, accounting for about a quarter of the population. The nonviolent Singing Revolution began in 1987 and concluded on August 21, 1991, with the restoration of de facto independence. Latvia has been a democratic unitary parliamentary republic since then.
Latvia is a developed nation with a high-income advanced economy and a high Human Development Index score. It scores well on civil rights, press freedom, internet freedom, democratic government, living standards, and peacefulness measures. Latvia is a member of the European Union, the Eurozone, NATO, the Council of Europe, the United Nations, the Baltic Sea States Council, the International Monetary Fund, the Nordic-Baltic Eight, the Nordic Investment Bank, the Organization for Economic Cooperation and Development, the Organization for Security and Cooperation in Europe, and the World Trade Organization.
The annual leave period is 20 days (four calendar weeks).
There are 12 national holidays in Latvia.
Employers pay 75% for the first three days and 80% for days four to ten.
After ten days, the employee is paid by the Sick Leave program for up to 52 weeks.
56 days before and 56 days after a baby's birth, for a total of 112 days at 80 percent of the government's salary.
Fathers in Latvia are entitled to 10 days of paternity leave.
Termination must be for a legitimate reason. Employers must communicate the reason for termination to the employee in writing. Employees have one month to appeal a decision.
A minimum of one month's notice is required.
The probationary period in Latvia is usually 30 days.
Severance pay is calculated based on an employee's length of service with the company. If an employee has worked for the company for less than five years, the severance pay is equivalent to one month's salary. Severance pay is equivalent to two months' salary if the employee has worked for the company for five to ten years. If an employee has worked for the company for ten to twenty years, he or she is entitled to three months' pay. If an employee has worked for the company for more than twenty years, the severance pay is equal to four months' salary.
In Latvia, the standard workweek is eight hours per day, spread over five days. The workweek is limited to forty hours. In certain circumstances, the workweek may be extended to six days, but only after consultation with the relevant employees' union. If the workweek is six days long, the workday cannot exceed seven hours in length.
In general, employees over the age of 18 may work overtime if they have signed a written agreement authorizing them to do so. Employers may require overtime without the consent of employees in the event of an emergency or in certain circumstances involving an urgent business need. Generally, an employee who works overtime must be compensated at least double his or her regular hourly or daily rate. Overtime hours are limited to 48 per week.
Latvia also has special regulations governing night work, which is defined as any period of work lasting more than two hours that occurs between 10 p.m. and 6 a.m. between 6 a.m. and 6 a.m. Individuals under the age of 18, pregnant women, and mothers who have recently given birth are not permitted to work at night. Employees who work nights must be compensated at least 50% more than their regular hourly or daily rate.
Full-time employees in Latvia must make at least 430 EUR a month, while teenagers and employees who are subject to specific risks should make at least 2.03 EUR an hour. Latvia compensation laws define “special risk” as environmental risks that can impact the safety and health of an employee.
Contributions to National Social Insurance fund national healthcare. Emergency medical care, services provided by general practitioners and dentists, lab testing, inpatient care, and medications are all covered by state-funded healthcare.
Supplemental health insurance and a company car are common employee benefits.
Companies in Latvia are imposed a corporate tax rate of 20 percent on the distribution of profit
On all income, income taxes are imposed at a fixed rate of 23%. A wide variety of tax breaks are available, including a basic allowance of €900 per year and €1980 per year for each dependent.
The normal VAT rate is 21%; for medicines and heating costs, the rate is lowered to 12%. VAT is also not levied on some products and services, including as education, medical treatment, financial transactions, and rent.
Employers of foreign citizens in Latvia have a variety of alternatives under Latvian law. Latvia is a member of the European Union (EU) as well as the Schengen Zone. The requirements, processing dates, work eligibility, and perks for accompanying family members differ depending on the kind of visa.
Unless they are visa-exempt due to their nationality, business travellers to Latvia normally utilize a local version of the Schengen C Visa. The Schengen Area restricts stays to 90 days within a 180-day period.
The major types of work permission include the Residence Permit with Work Authorization, which is offered to many foreign national employees.
The EU Blue Card is intended for highly competent, locally employed personnel who earn a certain wage. For intracompany transfers of managers, experts, or trainees from outside the EU, the (EU) Intracompany Transferee (ICT) Permit is provided.
An in-country application with the Office of Migration and Citizenship Affairs is always required (OCMA). If the expected stay is less than 90 days, foreign people may also apply for a residence permit, allowing them to choose between a visa and a residence permit.
The starting date of the employment relationship and its duration if it is for a fixed time
The employee’s specific occupation
Probation period (if any)
Time required for giving notice of termination of the contract
The provisions of any collective agreement or working procedure regulations that apply to the employment relationship
If the employee is at least 18 years old, the employment contract may include a probationary term. The probationary term may not exceed three months and must be specified in the contract. A fixed-term contract cannot be more than five years long. If the contract expires but neither party requests that it be terminated, it will be regarded an indefinite-term contract.
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Before establishing a subsidiary in Latvia, you must first choose the right location and entity for your company. Separate localities, like as cities or regions, may be subject to different Latvia subsidiary laws. If you are unfamiliar with the regions of Latvia, we suggest dealing with a professional consultant who can assist you in locating the areas most conducive to incorporation.
The next step is to consider the various entities you may incorporate as. Latvia will enable you to incorporate as a limited liability company (LLC), a joint-stock company, a branch office, or a representative office. Each Latvia subsidiary arrangement has its own set of regulations, times, and constraints. Choosing the correct entity will affect what you can and cannot do as a business in Latvia.
The following actions are required to establish your Latvia subsidiary as an LLC:
1. Choosing a unique company name that contains only Latin or Latvian letters
2. Drafting Articles of Association and the Memorandum of Association
3. Depositing minimum capital into your company’s in-country bank account
4. Registering the subsidiary with the Commercial Register
5. Registering for VAT purposes depending on your company’s commercial activities
6. Obtaining any special permits and licenses that may apply to your industry
Many businesses form as an LLC because Latvian subsidiary rules are advantageous to international businesses. However, there are several rules that must be followed in order to remain compliant. For instance, you'll need at least one shareholder and one director, both of whom may be of any country. When you register your subsidiary, you must deposit at least 50% of the total minimum share capital of at least 2,800 EUR.
If you fulfill two of the three conditions listed below, your Latvia subsidiary will be subject to an audit:
1. Annual revenue of over 800,000 EUR
2. Assets totaling more than 400,000 EUR
3. Throughout the year, there were an average of 25 workers.