Latvia. The best holding regime in EU
As of January 1st 2013 amendments to the Corporate Income Tax Law of Latvia came to power. The new Holding Regime has already triggered large number of foreign companies to set-up their holding enterprises in Latvia.
Since its 2004 enrollment to the European Union, Latvia was always a popular destination for trading companies, due to low corporate income tax (15%), liberal banking sector and low administrative costs.
As of 2013 Holding regime introduction and 2014 Euro-Zone enrollment, Latvia has taken leading EU location for international investors.
The uniqueness of Latvian holding regime lies in its unparalleled simplicity. No complex tax planning is required to take advantages of the holding regime:
- No corporate income tax applies to income from foreign subsidiaries dividends
- No withholding tax applies to dividends paid out to foreign parent companies
The usual participation exemption rules used for holding companies in other EU jurisdictions (including popular holding destinations as The Netherlands, UK, Malta, Luxemburg and even Cyprus) are not occurred in the holding regime of Latvia. Latvia has decided to keep it simple:
- No minimum holding period (in order to un-tax dividends it is not required to hold shares for a defined period of time)
- No asset test (it doesn’t matter whether the subsidiaries are trading or investment companies)
- No tax test (there is no requirement for a minimum rate of corporate income tax of the subsidiary companies)
- No controlled foreign corporation (CFC), thin capitalization or anti-haven rules
Latvian company can obtain Tax Residency certificate practically at once after incorporation -even with foreign directors and foreign shareholders. Latvia has concluded over 50 Double Tax Treaties and has access to all main EU Directives.
How Darwin Tax will help?
- Advice on structure and taxation – free of charge
- Holding structure set-up, preparation of all required documents
- Bank account set-up remotely
- Accounting services, preparation of annual report, legal address