Latvia Introduces Beneficial Ownership Rules for Foreign Companies

As of July 1, 2020, all foreign companies operating in Latvia are required to submit information on their beneficial owner to the Latvian Commercial Register. This new regulation aims to increase transparency in the country’s business sector and prevent money laundering.

What is a Beneficial Owner?

A beneficial owner is defined as a natural person who:

• Owns more than 25% of the shares or voting rights in a company through direct or indirect shareholding
• Controls the company directly or indirectly

Companies must provide documentation supporting the chain of control up until the beneficial owner, including extracts from commercial registers or other public documents.

Who is Affected by this Regulation?

The regulation applies to all foreign companies operating in Latvia, regardless of whether they have registered a branch or representative office with the Latvian Commercial Register. If a company has only registered as a taxpayer with the State Revenue Service (SRS) for business purposes, it must file the beneficial ownership information with the SRS instead.

Consequences of Non-Compliance

Companies that fail to comply with this regulation risk being excluded from the Commercial Register or SRS register. To avoid this, companies operating in Latvia are advised to:

• Verify their beneficial ownership
• Gather necessary documentation by January 1, 2021 (the deadline for submission expires)

By taking these steps, foreign companies operating in Latvia can ensure compliance with the new regulation and maintain a transparent business presence in the country.