Questions and Answers: Everything You Wanted to Know About an SIA but Were Afraid to Ask
After consultations with new entrepreneurs, we've noticed a pattern: people ask the same questions, over and over. Not because they aren't informed about law, but because Latvia's legislation is scattered across dozens of portals, and simple answers are hard to find. In this article we've collected the questions real clients have actually asked us — from registration to liquidation. Every answer has been checked against current legislation.
Key takeaways
SIA registration and liquidation state fees vary by share capital size (mazkapitāla vs. standard SIA) and processing speed — not by filing method (electronic vs. paper)
A mazkapitāla SIA does not face a full dividend ban — while share capital is below €2,800, at least 25% of profit must go to reserve, but the remaining ~75% can already be distributed
The €50,000 VAT registration threshold has been calculated by calendar year, not a rolling 12-month period, since 2025, and the registration deadline is tiered
A board member can serve without pay (under a mandate contract) — the minimum-wage requirement applies only to an actual employment relationship
Accounting document retention periods aren't uniform — 5 years, 10 years, or indefinitely, depending on the document type
Registration questions
How long does SIA registration take?
The standard processing time is 3 business days. If you want expedited registration (within 1 business day), the fee is higher for SIAs with several founders: standard SIA (share capital of €2,800 or more) — €225; mazkapitāla SIA (share capital €1–€2,799) — €60. A single-founder SIA pays the same base fee for expedited processing (€75 / €20).
Can I register an SIA remotely?
Yes. Using an electronic signature (eID, Smart-ID, or eParaksts), the whole process can be done online through the Register of Enterprises (UR) portal. Without an e-signature, a notarially certified power of attorney is required instead.
Can a foreign national be the sole owner of an SIA?
Yes. Latvian law allows 100% foreign ownership, with no requirement for a local partner or a Latvia-resident director.
What is a mazkapitāla SIA (low-capital SIA)?
A mazkapitāla SIA (formerly called a "micro SIA") is an SIA with share capital between €1 and €2,799. It's simpler and cheaper to set up, but comes with a few restrictions: while share capital is below €2,800, at least 25% of annual net profit must go into a mandatory reserve — the remaining ~75% can already be distributed as dividends (this is not a full dividend ban, as is often mistakenly assumed). It's also capped at 5 members, all of whom must be natural persons, and each person can be a member of only one mazkapitāla SIA at a time.
What's the difference between a mazkapitāla SIA and a standard SIA?
The main difference is the share capital amount (up to €2,799 vs. €2,800+). A standard SIA can freely distribute dividends from its first profit, while a mazkapitāla SIA must direct at least 25% of annual net profit to a mandatory reserve while share capital is below €2,800 — the remaining ~75% can still be paid out as dividends during that period.
What documents do I need to register an SIA?
An application form, the founding resolution (or agreement, if there are multiple founders), the articles of association, an extract of the register of members, the board member's consent to serve, and a notice of the legal address. All documents can be signed with an electronic signature.
How much does SIA registration cost?
The state fee depends on the share capital amount and processing speed, not on the filing method (the fee is the same electronically or on paper): mazkapitāla SIA — €20 (3 business days) or €60 (1 business day, several founders); standard SIA — €75 (3 business days) or €225 (1 business day, several founders); a single-founder SIA pays only the base fee for 1-business-day processing. On top of that, budget for possible notary costs (roughly €0–150, depending on the number of documents), a legal address (roughly €300–600/year if you use a virtual office), and accounting setup (roughly €100–300).
Do I need a legal address, or can I use my own apartment?
You can use your apartment's address if you own it, or with the owner's written consent. An alternative is a virtual office (from €10–30/month).
How much does changing the legal address cost?
The state fee for changing the legal address is €20 — regardless of the filing method. Documents must be submitted to UR within 14 days of the decision.
Can I change my SIA's name?
Yes. You need to file an amendment with UR. The state fee is €20 for a single change, or €40 for two or more changes at once. UR processing takes 1–3 business days.
How many NACE codes am I allowed to list?
There's no strict limit, but it's advisable to list all codes matching your planned and potential activities. Changes to activity codes (NACE codes) are made through the UR registration application and VID's EDS system — this is not an amendment to the articles of association, so adding codes later is simple and relatively quick.
Do I need to be physically present at UR to file documents?
No. Documents can be filed electronically through the UR portal with an e-signature. If you don't have an e-signature, documents can also be submitted by post with notarially certified signatures — that route doesn't require a physical visit to UR either.
Tax and accounting questions
What's the VAT registration threshold?
€50,000 within a calendar year (since January 1, 2025, the threshold has been calculated by calendar year, not a rolling 12-month period, as it was before). The registration deadline is tiered: if the threshold is exceeded by no more than €5,000 (i.e. turnover up to €55,000), registration may be deferred to the end of the year, but the application must be filed by November 30; if it is exceeded by more, by the 15th of the following month; if the threshold is crossed after November 30 under the deferral, by December 31 (VAT Law, Section 59). Check your turnover with our VAT calculator.
Can I register for VAT voluntarily?
Yes, any business can register voluntarily regardless of turnover. This is worthwhile if you have large upfront investments and want to recover input VAT.
What happens if I miss the VAT registration deadline?
VID can assess VAT retroactively from the date registration should have taken place. Every invoice issued in the meantime becomes subject to 21% VAT, which you'll have to cover yourself, plus an administrative fine may apply, with the amount depending on how long the delay was and how much VAT went unreported.
What's the corporate income tax (UIN) rate?
Under the standard regime — 20% of distributed profit (calculated using the 20/80 gross-up formula). Under the alternative regime — 15% UIN + 6% personal income tax (IIN) on dividends (available only to companies whose members are all natural persons — see the next question). While profit isn't distributed, UIN is 0%.
Do I need to pay UIN if I don't distribute dividends?
No, under the standard regime UIN arises only when profit is distributed. However, watch out for deemed profit distribution — expenses unrelated to business activity, exceeding the representation-expense limit, and bad debts can all trigger UIN liability even without an actual dividend payout.
What is the alternative UIN regime?
As of January 1, 2026, companies whose every member is a natural person during the taxation period in which dividends are calculated can choose to pay 15% UIN on distributed profit, plus 6% IIN on dividends. The choice between regimes is made separately for each taxation period (month) — dividends calculated within a given month can only be taxed at one rate, not a mix. The regime is generally more advantageous if you plan to distribute a large share of profit (above 75–80%). Compare both regimes with our dividend calculator.
What are the key tax deadlines to remember?
Employer's report — by the 17th
VAT return — by the 20th
UIN return — by the 20th (only in months when a liability arises)
Social contributions (VSAOI) and personal income tax (IIN) payment — by the 23rd
When is the annual report due?
For micro and small companies — no later than 5 months after the end of the financial year (by May 31, if the financial year matches the calendar year), or 1 month after approval by the shareholders' meeting, whichever comes first. For medium and large companies — within 7 months (by July 31).
What happens if I don't file the annual report?
Failing to file the annual report can result in an administrative fine — a warning or a monetary fine of up to 400 penalty units (up to €2,000; 1 unit = €5), depending on the length of the delay and repeat offences (Accounting Law, Section 42; see the annual report article for details). In cases of prolonged non-filing (typically several months after a fine has been imposed and the deadline missed), the Register of Enterprises (UR) — not VID — can initiate the company's forced removal from the Commercial Register.
Do I need to file an annual report if the SIA had no transactions at all?
Yes. Even a completely inactive company must file an annual report. The deadline is the same as for active companies.
Can I file the annual report myself, without an accountant?
Technically — yes. But preparing an annual report requires specific accounting knowledge. If an error is found in a filed report, it can be corrected — VID's EDS system has a dedicated corrections and clarifications process, so this isn't a one-shot, unfixable filing. That said, most companies still use an accountant, since fixing errors after filing takes extra time and attention.
What's the minimum wage in 2026?
€780/month under the general regime. In the construction sector — €1,050. Estimate net pay with our salary calculator.
Does a board member have to receive at least the minimum wage?
No, not always. A board member can serve without pay — under a board member's mandate agreement rather than an employment contract, in which case the minimum-wage requirement doesn't apply. If the board member is instead in an employment relationship and this is their only workplace, the salary must be at least minimum wage; if they also work elsewhere, where social contributions are already being made on at least minimum wage, the SIA can pay them less. One important exception: if no one at the company (neither an employee nor a board member) receives at least the minimum wage, and the company's monthly revenue exceeds 5x the minimum wage, board members are then treated as deemed-employed, and social contributions/personal income tax must be calculated on notional income equal to the minimum wage — even if they formally serve unpaid.
What's the limit on representation expenses?
5% of the previous year's gross payroll total. The excess is subject to UIN as deemed profit distribution.
Can I use the SIA's car for personal purposes?
Yes, but you need to be able to separate out the share of business use. Without that separation, input VAT can only be deducted at 50%, and personal use may be treated as deemed profit distribution.
How long do I need to keep accounting documents?
It depends on the document type (Accounting Law, Article 28): at least 5 years — for other supporting documents (such as invoices and receipts); at least 10 years — for accounting registers and organizational documents, as well as personnel payroll records (from 1999 onward; 75 years for earlier records); annual reports must be kept indefinitely — until the company is reorganized or closed.
Shareholder and board questions
What's the difference between a shareholder and a board member?
A shareholder (dalībnieks) is an owner of the SIA — they hold capital shares. A board member (valdes loceklis) is the SIA's executive body — they run the company, sign contracts, and are responsible for its operations. One person can be both a shareholder and a board member.
Is a shareholder liable for the SIA's debts?
No, a shareholder's liability is limited to their invested share capital. The exception is if the shareholder has given a personal guarantee (for example, for a bank loan).
What liability does a board member carry?
A board member is responsible for the SIA's operations and can face civil, administrative, and criminal liability — particularly if they fail to file for insolvency in time, or if the SIA hasn't paid its taxes.
Can a board member be a foreign national?
Yes, without restriction. A board member does not need to be a Latvian resident.
How many board members can there be?
At least one. There's no maximum.
How do I replace a board member?
You need to convene a shareholders' meeting, adopt a resolution removing the board member and electing a new one, and file an application with UR (form KR18). The state fee is €20 (the same regardless of filing method; it rises to €40 if other changes are registered at the same time).
Can a board member also be an employee?
Yes. A board member can either be in an employment relationship (receiving a salary) or receive remuneration solely as a board member (without an employment contract). The tax treatment differs between the two.
What is a Ultimate Beneficial Owner (UBO/PLG)?
A natural person who directly or indirectly owns more than 25% of the SIA's capital shares, or who directly or indirectly controls the SIA. The UBO must be registered with UR.
Can I sell my shares in the SIA?
Yes, capital shares can be sold, gifted, or otherwise transferred. The transaction must be made in writing, and the change must be registered with UR.
How do I amend the articles of association?
You need to convene a shareholders' meeting, adopt a resolution with at least a 2/3 majority of votes, prepare the amendments to the articles, and file them with UR within 14 days of the decision.
Can I pay myself dividends every month?
Yes, technically dividends can be paid at any frequency, but each payout must be based on a shareholder resolution and must respect the limits set by the Commercial Law. Interim (extraordinary) dividends have also been possible since 2014 (Commercial Law Article 161¹), based on an interim financial statement — this is not a 2026 novelty.
Banking and payment questions
Is an SIA required to open a bank account?
When registering an SIA, the founders must open a payment account in the company's name in order to deposit the share capital — this is part of the registration procedure. There's no single statutory provision that explicitly bans using a personal account for SIA transactions, but for practical reasons (accounting, VAT records, AML/KYC requirements) a company account is practically indispensable for day-to-day operations.
How long does it take to open a bank account?
Usually 2–4 weeks. Some banks (especially fintechs like Revolut Business) can open an account considerably faster. For non-residents, the process can take longer.
Why did the bank refuse to open an account for me?
The most common reasons: an unclear business model, an undocumented source of funds, a high-risk sector, or an SIA with no genuine connection to Latvia (particularly for non-residents).
Which banks in Latvia serve SIAs?
Swedbank, SEB, Citadele, Luminor, LPB Bank (focused on serving fintechs and payment institutions), and Revolut Business (issues an LT IBAN). Each has its own advantages and drawbacks.
Can I use Revolut Business for my SIA?
Yes. Revolut Business issues an LT (Lithuanian) IBAN, which functions fully within the SEPA zone. Advantages — fast opening, low cost, a great app. Drawbacks — no cash handling, no loans.
Can I receive payments from foreign clients into my SIA's account?
Yes, without restriction. SEPA payments in euros are fast and cheap. Payments outside SEPA or in other currencies may carry higher fees.
What should I do if the bank blocks my account?
Contact the bank immediately to find out the reason for the block. It's usually related to a KYC update or a suspicious transaction. Prepare any requested documents as quickly as possible; if the matter isn't resolved, you can escalate to the ombudsman of the Finance Latvia association.
Closing and restructuring questions
How do I close an SIA I no longer need?
Two options: voluntary liquidation (a formal process with a liquidator, a creditor period, and a report to VID) or selling the SIA to someone else.
How long does SIA liquidation take?
The minimum is about 4 months (including the mandatory 3-month creditor period set by Commercial Law Article 324(3)). In practice, the process can take 5–8 months.
How much does SIA liquidation cost?
The state fee is a single combined payment of about €30, which covers the entire liquidation process (from initiation through removal from the Commercial Register) and is paid once, when filing the stage-1 application; expedited (1 business day) processing costs €90. Publishing the notice happens on the Enterprise Register's (UR) own website (since July 1, 2023 — no longer in Latvijas Vēstnesis) and is free, not an additional charge. On top of that, budget for an accountant's services to prepare the final accounts (roughly €200–500) and possible liquidator costs.
What happens if I simply "abandon" my SIA?
The SIA continues to exist, tax debts accumulate (even with no activity), and after prolonged failure to file the annual report (typically 7–8+ months after an administrative fine and the underlying violation), UR can initiate the company's forced removal from the Commercial Register. A board member can end up personally liable for tax debts. Never leave an SIA unattended.
Can I sell the SIA instead of liquidating it?
Yes, selling the capital shares is a common alternative to liquidation — especially if the SIA has value (licenses, contracts, a recognized name).
What is a liquidator, and who can serve as one?
A liquidator is the person who manages the SIA's closing process. This can be a former board member, a shareholder, or an outside professional (a lawyer or accountant).
Am I liable for the SIA's debts after it closes?
As a shareholder — no (unless you've given a personal guarantee). As a board member — possibly, if VID proves the board didn't act with due diligence.
Can an SIA be converted into another business form?
Yes, an SIA can be reorganized — merged with another SIA, split, or converted into a joint-stock company (AS). The process is more complex than a simple liquidation.
This article is updated regularly to reflect the latest legislative changes. If you have a question we haven't answered here, get in touch with us — we'll add it to the next update. If you'd like some of this handled for you, learn more about our accounting services.
Frequently Asked Questions
Why can a mazkapitāla SIA pay dividends before its share capital reaches €2,800?
Because the law (Commercial Law Article 185¹) does not impose a full dividend ban — it only requires that at least 25% of annual net profit go to a mandatory reserve while share capital is below €2,800. Shareholders can distribute the remaining ~75% as dividends right away.
Why do articles often state different figures for the SIA registration state fee?
Because the fee depends on two factors — share capital size (mazkapitāla vs. standard SIA) and processing speed (standard vs. expedited) — not on the filing method. Many online sources mistakenly attach different amounts to paper versus electronic filing, even though the current regulation makes no such distinction.
Should I track my VAT turnover by calendar year or by any rolling 12 months?
Since January 1, 2025 — by calendar year. Older sources mentioning a "rolling 12-month period" reflect the rule that was in force through 2024.
Does a board member always have to pay themselves at least the minimum wage?
No — if they serve under a mandate agreement (rather than an employment contract), pay isn't mandatory. The exception is when no one at the company receives at least the minimum wage and monthly revenue exceeds 5x the minimum wage — then the board member is treated as deemed-employed for tax purposes.
Can an error in an annual report or a VID filing be corrected after submission?
Yes. VID's EDS system has a dedicated corrections and clarifications process — the claim that you can only file once and errors can't be fixed does not reflect reality.
How long do a company's accounting documents need to be kept?
It depends on the document type: 5 years for supporting documents (invoices, receipts); 10 years for accounting registers, organizational documents, and personnel payroll records; annual reports — indefinitely, until the company closes or is reorganized.
See also: how to register an SIA in Latvia and SIA vs IK vs self-employed and SIA liquidation.
Sources
Last updated: September 2026. Information is based on the Commercial Law, the Corporate Income Tax Law, the Value Added Tax Law, the Accounting Law, and official materials from UR and VID. Before making decisions, it's advisable to check current information directly with VID or UR, or consult an accountant.
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