Being qualified as the small country of Northern Europe, Latvia is known for attracting entrepreneurs. Although it is a small country, it can be said that the vitality within itself is more than in many countries. The number of trained people is quite high and usually, people can speak 2 or 3 languages fluently. Moreover, it is very close to major markets such as Europe, Russia, and Scandinavian countries. All these reasons have led to an increase in the number of entrepreneurs in Latvia and the growth of this field. Why should a person be an entrepreneur in Latvia? What are the advantages it provides different from other countries? All the details are in our article.
1. Government Incentives
The Latvian Government gives incentives in different areas to attract young and talented entrepreneurs to the country. As is known, there are stages in entrepreneurship such as creating ideas, concretizing the idea, realizing, developing, and expanding it. Entrepreneurs can benefit from government incentives whichever stage they are at. In short, the expectations of entrepreneurs from the state are fully met.
One of the procedures that make it easier for entrepreneurs to come to the country is about the visa. Entrepreneurs are provided with an important facility under the name of “startup visa” [see]. This visa is issued for a maximum of 3 years. Spouses and children can also benefit from it. However, it should not be forgotten that a maximum of 5 founders can benefit from the startup visa.
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3. Tax Rates
In the beginning, entrepreneurs need substantial capital to bring their ideas to life. Therefore, they look for ways to pay as little tax as possible on capital. At this point, Latvia has reduced the startup tax rates to reasonable levels for entrepreneurs. There is an individual tax of 0% for the startup level regardless of wage. Besides, 45% of financial support is provided for highly skilled employees by the government. Again, there is some reduction in the social tax of new beginners. For all the details about Latvia’s tax system, you can check out this official tax page.
4. Innovation Incentives
Latvian government issues innovation coupons to support entrepreneurs. Entrepreneurs of all levels can benefit from these coupons. The value of coupons ranges from €5,000 to €25,000. There are 3 different coupons and these can be listed as follows:
- The value of the first coupon is €5.000 and it is all donation. This support is given for feasibility study, industrial research, experimental development, and developing the design.
- The value of the second coupon is €25.000, the donation rate here is 85%. This support is given for making a prototype, testing or certification of a new product, and similar processes.
- The third coupon is worth €25.000 and the donation rate is 45%. This support is the above-mentioned incentive on tax and employee wages.
5. Acceleration Funds
A special fund has been created through ALTUM to support and accelerate Latvia-based initiatives. The total size of the fund was 15 million Euros. This fund was then divided into 3 equal parts. These are;
- Overkills Ventures supporting B2B software initiatives
- Buildit, which supports the internet and hardware of objects
- Commercialization Reactor supporting deep technology initiatives
With the support given here, entrepreneurs do not face any problem of slowing down because of financial difficulties.
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6. Commercialization of the Enterprise
An idea has to be commercialized after it is embodied and the product or service has emerged. Latvia supports entrepreneurs in this regard. There are some incentives provided by the Latvian Investment and Development Agency, such as doing feasibility, industrial research, and creating a commercialization strategy. Latvia is also one of the leading countries in business establishment support.
7. Business Travel Convenience
In the process of realizing the idea found and thereafter, entrepreneurs need to make business trips. Latvian Investment and Development Agency facilitates entrepreneurs to reach investors, customers, and partners. This convenience is in the form of financial support to attend conferences, seminars, trade fairs, and similar events.
8. Incentive Centers
Latvia is very advanced in terms of trained people. As stated above, the trained staff in the country can speak two or three languages. This opportunity is used effectively to facilitate the work of entrepreneurs and to enable them to reach their goals more comfortably. There are more than 15 centers that provide donations, training, and similar supports.