Create a company in Cyprus — or move your company from Latvia

Latvia takes nothing from profit you leave inside the SIA, and when the charge finally arrives it arrives once — at the company, with the dividend landing in your hands untaxed afterwards. If you are still reinvesting, that single-layer design beats anything Cyprus can offer you, and this guide will say so before it says anything else. What follows is about the day that stops being your situation.

Updated for 2026 Cyprus tax law and regulations.

Sumly opens and operates the Cyprus company while you decide the Latvian question

Relocating from Latvia means running two projects at once — closing a position in Riga and opening one in Limassol — and Sumly takes the whole Cyprus half off your desk. We register the company, open the books the day you order, prepare every Cyprus return box by box, and handle the Yellow Slip and the tax residency and non-dom registration at published fixed prices. One partner, one dashboard, one digitalized route through a journey that otherwise means a juridiskais birojs here, a grāmatvedības birojs there, and nobody at all responsible for the seam where two tax systems meet.

This is Sumly — and what we actually do for you

Sumly is the fully digital provider for founders moving a company to Cyprus. You do not need to learn Cypriot company law, find a local auditor, or work out which form goes where. You get in touch, and we do the rest.

And we stay with you on both sides of the move. The Cyprus side we own outright. For the side you are leaving, we put you straight in front of an adviser or lawyer from our network who works on exactly your problem — company law, exit taxation, inheritance, employment — and we hold the thread between them and us. One point of contact for the whole move, however many specialisms your case turns out to touch. If your case is simple, we do all of it for a fixed price.

Part 1: What leaving actually costs you

Your home country does not let go the moment the plane does. What still runs after you have left, and in which order it has to be handled.

Is a Cyprus company cheaper than a Latvian SIA?

Not while the money is staying in the business. Latvia's corporate income tax attaches to distributed profit rather than earned profit, and the State Revenue Service puts it without qualification: CIT shall not be paid for reinvested profit, because the 0% CIT rate is applied. There is no ceiling on that and no deadline attached to it.

Cyprus works the other way round. A Cyprus company pays 15% from tax year 2026 on profit as it accrues, whether the cash is spent, banked or left to compound. Over a four-year build that is four annual deductions from working capital you had no intention of touching, and a Latvian founder in that phase is straightforwardly better off where they already are.

There is a second half to the Latvian concession that most comparisons skip, and it is the part worth conceding properly. Latvia's charge is single-layer. Once the company has paid, the money is finished: dividends are non-taxable income in the recipient's hands where enterprise income tax has been paid in Latvia under the Enterprise Income Tax Law. No second charge, no shareholder-level top-up, no defence contribution. You control the year the tax happens and you only ever pay it once. That is a genuinely good system, and the honest case for Cyprus does not begin by pretending otherwise.

What does 20% of the adjusted base actually cost you?

Twenty euros out of every hundred the business earned — and the reason people get this wrong is a coefficient sitting between the rate and the money. Section 3(1) sets the rate at 20 per cent of the calculated taxable base, and Section 4 then requires that the taxable object be divided by a coefficient of 0.8 before the rate touches it. The Finanšu ministrija states the same mechanic as a fraction: 20% is applied to the gross amount, or 20/80 of the net cost.

Work it once and the confusion disappears for good. You want €80 in your own hand. Gross it up: €80 ÷ 0,8 = €100. The tax on that is €20. The company therefore needs €100 of profit to deliver €80 — twenty per cent of what the business made, or twenty-five per cent of what you received, depending which end you measure from.

The commonest published error is to call this "20% on dividends" and then take 20% of the net sum, which understates the charge by a fifth. The filing rhythm is monthly rather than annual for most payers, with the declaration and the payment both due by the 20th of the following month. That is a light administrative load and deserves saying.

Is Latvia's new 15% alternative rate a tax cut?

No. It is 0.1 of a percentage point worse, and demonstrating that is probably the single most useful thing this page does for a Latvian founder this year.

From 1 January 2026, Section 3(5) of the Corporate Income Tax Law introduces an alternative tax rate of 15 per cent, open only to taxpayers whose members in the period the dividends are calculated are exclusively natural persons. The Finanšu ministrija sets out the rest of the package: with that rate the divisor becomes 0.85, and personal income tax at a rate of 6% has to be withheld from such dividend income paid to an individual.

Set the two routes beside each other and the headline evaporates.

Ten cents per hundred euros is not a difference worth choosing a structure over, and that is exactly the point: the alternative rate is not a reduction, it is a reallocation. Roughly a quarter of the same burden moves off the company's return and onto the shareholder's, changing who pays and when rather than how much. If somebody has told you that Latvia cut its corporate rate to 15% in 2026, they have read the first half of the provision.

We are deliberately not telling you how to elect into it. Whether the choice binds every distribution in a period, whether it can be reversed, and what happens if a legal person acquires a holding mid-year are questions the published text did not settle for us, and guessing at election mechanics is how founders end up with a filing they cannot undo. Take the arithmetic to a Latvian adviser and let them handle the paperwork.

Why does your English-speaking adviser say the 15% rate does not exist?

Because in the law they are reading, it does not. The English consolidation of the Corporate Income Tax Law published on likumi.lv still shows Section 3 ending at its fourth paragraph. The alternative rate lives in the fifth, which appears only in the Latvian text of the same statute.

That is not a trivial documentation lag. It means an international adviser working diligently from the official English translation will conclude, correctly on the evidence in front of them, that Latvian corporate income tax is a single 20% rate. It also means the Baltic tax overviews circulating in English were written before the provision existed and have not caught up. If you are being advised from outside Latvia on anything enacted after 2024 — the personal rate ladder has the same problem — ask whether the adviser read the Latvian text or a translation of it.

Can you just leave the profit in the SIA and use it?

You can leave it. You cannot use it — and this is where the "0% on retained profit" story acquires its conditions. Latvian corporate income tax reaches a good deal more than declared dividends. The taxable base also takes in conditional dividends, payments equivalent to dividends, expenses not related to economic activity, doubtful debts, increased interest payments, loans to related persons, transfer-pricing adjustments, benefits to employees and board members, and liquidation quotas.

Two of those are where founders actually come unstuck.

One more provision belongs here for completeness, because a Latvian reader will know it exists. Since 1 January 2024, credit institutions and consumer-credit service providers pay a 20% surcharge on their pre-taxation profit, creditable against later CIT. Unless you run a lender it changes nothing for you.

Does Latvia charge an exit tax when you move to Cyprus?

Not on you. On assets, sometimes — and the difference between those two sentences is the most valuable thing in this section.

There is no individual exit tax. We are stating that as a reading of the legislation rather than quoting a page that announces it, because no such page exists, so here is how it was established. The law On Personal Income Tax contains no provision deeming a disposal, crystallising a gain or imposing any charge on a person who ceases to be resident — not in the taxable object, not in the capital-gains chapter, not in the rate section. Latvia's tax system is a closed statutory list of fourteen taxes, and no exit tax appears in it. The residency-change procedure VID publishes is evidentiary — an application, a ties test, a foreign certificate — with no computation attached to it anywhere. And the corporate statute does carry an asset-transfer charge, which tells you the legislature knew perfectly well how to write an exit charge and chose to write one only for companies. Four independent lines, all pointing the same way: emigrating is not a taxable event.

The corporate charge is real but narrow. Section 4(2) increases the taxable base by the value of assets that a Latvian taxpayer transfers to a permanent establishment abroad if, as a result of the transfer, Latvia loses the right to impose tax on them, with a parallel case for a Latvian permanent establishment moving assets out to its head office. Where the asset is depreciable, the value enters the base gradually as depreciation runs abroad rather than all at once.

Now read what those provisions are about. They are about assets arriving at a foreign permanent establishment. There is no seat-transfer trigger — nothing in them fires because a company stopped being Latvian, and nothing could, since a Latvian company cannot stop being Latvian by being managed from elsewhere. So your SIA does not "leave" Latvia when you do. Keep it registered in Riga and move only yourself, and Section 4(2) is not engaged, because nothing has been transferred anywhere. It bites when you actually move something — the IP, the equipment, a business line — into a Cypriot establishment. Moving yourself is free; moving the assets is the taxable act.

One boundary we will mark rather than paper over: whether Latvia offers the five-year instalment deferral for intra-EU transfers under that charge was not established from the statutory text we could read, so we say nothing either way. If an asset transfer is part of your plan, that question needs a Latvian answer before the transfer, not after.

Do Latvia's CFC rules reach a Cyprus company, and what about the IP Box?

They do not, and the reason is structural rather than lucky. This is the mildest CFC position of any departure country in this cluster, and the part that surprises people is what it means for the IP Box.

Start with what the rule is called, because the label matters. Latvian law does not use the term "controlled foreign company" at all; the provision is Section 6.1 of the Corporate Income Tax Law, headed Income from Qualifying Holding in a Foreign Company. It sits in the corporate statute and addresses undertakings, not natural persons — so a Latvian individual holding Cyprus shares personally is outside it before any test is applied.

The rule has three moving parts. Control is more than 50 per cent of the shares, voting rights or entitlement to profits, held alone or with affiliated persons, directly or indirectly. The charge reaches profit from an artificial arrangement — a transaction whose primary reason was obtaining a tax advantage. And a de minimis lifts out any case where annual profit is not more than €750,000 and non-sales income is not more than €75,000.

But none of that is ever reached, because of the gate in front of it. The foreign company must be established in a low-tax or tax-free country or territory specified in regulatory enactments. That gate is binary and list-based. Latvia draws no percentage line anywhere in Section 6.1 — there is no "half the Latvian charge" test, no two-thirds test, no effective-rate comparison of any kind. The Cabinet's current list contains eleven jurisdictions, and Cyprus is not one of them. Neither is any other EU member state.

The consequence is the finding worth carrying away from this page. The Cyprus IP Box creates no Latvian CFC exposure either. Qualifying intellectual property in Cyprus is taxed at an effective 3% from tax year 2026 — a rate low enough to pull a company into scope in several neighbouring systems, subject to a substance defence you would then have to run. In Latvia it is simply irrelevant, because Latvia's test never looks at what rate the foreign company paid. There is no line for 3% to fall below.

Two honest caveats. The list is amended from time to time and jurisdictions have moved on and off it repeatedly, so Cyprus's absence is a fact about the current list rather than a permanent feature — check the live list rather than trusting a copy of it. And Section 6.1 being unavailable does not disarm Latvia's transfer-pricing rules or its general anti-avoidance machinery. Latvia can still challenge an artificial Cypriot structure. It just cannot do it through the CFC door.

How does Latvian tax residency actually end?

Later than most people assume, and the reason has nothing to do with counting days. A natural person is a Latvian resident if the declared place of residence of this person is the Republic of Latvia, or if the person stays in the Republic of Latvia for 183 days or longer during any 12 month period beginning or ending in a taxation year, or is a Latvian citizen employed abroad by the Latvian government. Any one limb is enough on its own.

Three details decide real cases.

The first limb is a register test, not a facts test. Your deklarētā dzīvesvieta is an administrative entry in the Population Register, and it does not care where you sleep. A founder who has genuinely moved, rented in Limassol, counted every day and never gone home still satisfies limb one — and is therefore still a Latvian tax resident — if the Riga address is still declared.

The 183 days run over a rolling window. "Any 12 month period beginning or ending in a taxation year" is not the calendar year, so two long stays either side of New Year can combine into a period you never planned.

The exit is asymmetric. Arrivals become resident from the date of first arrival — a date, cleanly. Departures lose resident status only on demonstrating closer ties with the foreign country than with Latvia. Latvia lets you in on a date and lets you out on a test.

We are not printing a form number or a statutory decision deadline for that application, because neither was verified — VID's Latvian-language procedure page would not serve us its text. Expect an evidentiary process rather than a computation, and expect to be asked for the Cypriot certificate first.

Does your SIA become Cypriot when you do?

No, and that is the good news and the trap in the same sentence. Latvia decides corporate residence by registration: a legal person is resident where it has been established and registered or if it should have been established and registered in accordance with the laws of the Republic of Latvia. Read the second clause carefully — it is a narrow hook for entities that ought to have registered here and did not, not a general place-of-effective-management test, and it should never be described as one.

So your SIA stays Latvian, files Latvian returns and stays inside the distribution-only system no matter where the board sits. The risk arrives from the Cypriot side, which does apply a management-and-control test: an SIA genuinely directed from Cyprus can become Cyprus-resident as well, and can create a Cypriot permanent establishment on top of that. Two regimes, two authorities, one argument.

And under this particular treaty that argument has no referee. For companies, Article 4 provides only that the competent authorities shall endeavour to settle the question by mutual agreement — there is no tie-breaker rule at all, no place-of-effective-management default, no self-assessable answer and no deadline by which the two revenue services must agree. Individuals get the usual cascade of permanent home, centre of vital interests, habitual abode and nationality. Companies get a negotiation.

That is the strongest structural argument on this page for making a clean move rather than a partial one. Either put the operating company in Cyprus and wind the SIA down or repurpose it, or stay Latvian and keep the retention advantage. The halfway house — Latvian company, Cypriot founder, everything actually run from Cyprus — is where the cost lands. Our guide to nominee directors in Cyprus explains where a nominee helps with the Cypriot management question and, more usefully, where it does not.

What does the Latvia–Cyprus treaty give you?

An unusually generous set of rates, and one clause worth checking before you sell anything. The convention was signed on 24 May 2016, entered into force on 27 October 2016 and took effect from 1 January 2017.

On dividends, Article 10 gives 0 per cent where the beneficial owner is a company other than a partnership, and 10 per cent in all other cases. Note what is missing: there is no minimum shareholding and no holding period. Almost every treaty of this generation attaches a 10% or 25% participation condition to its zero rate. This one attaches nothing beyond being a company rather than a partnership, and a writer working from a template will insert a threshold that is not in the text. Interest runs at 0 per cent between resident companies and 10 per cent otherwise, and royalties at 0 per cent between resident companies and 5 per cent otherwise.

In practice the dividend article does less outbound work than it looks like it should, because Latvia does not withhold on the ordinary route in the first place — the 20/80 charge falls on the distributing company, not on the shareholder. The treaty earns its keep in the other direction, on interest and royalties both ways, and in a dual-resident year for an individual.

The clause to read before an exit is Article 13. Gains from alienating shares that derive more than 50 per cent of their value directly or indirectly from immovable property situated in the other state may be taxed in that other state. If the value of your Latvian company sits mostly in Riga property, becoming a Cypriot resident does not take that gain out of Latvia's reach. We make no claim about whether the multilateral instrument modifies this convention: no synthesised text was located on either government's site, so we assert nothing in either direction.

Does Latvia tax wealth, inheritance or gifts on the way out?

None of the three, and here the negative is stronger than the usual argument from silence. Latvia's tax system is a closed statutory enumeration. The Finanšu ministrija lists the taxes the law On Taxes and Fees imposes — personal and corporate income tax, real estate tax, VAT, excise, customs, natural resources, gambling and lotteries, mandatory social insurance contributions, electricity, micro-enterprise, vehicle operation, company car and solidarity tax, fourteen in total. A tax absent from that enumeration cannot be levied. Inheritance tax, gift tax and net wealth tax are all absent. Gifts from natural persons are handled inside the income tax as non-taxable income rather than by a separate levy.

Two things not to confuse this with, both of which do exist. Nekustamā īpašuma nodoklis is an annual municipal property tax on real estate; it is not a wealth tax and a Latvian reader will spot any page that treats them as the same thing. Solidaritātes nodoklis is a social contribution levied on income above the social insurance ceiling — VID describes it as a mandatory state social insurance contribution paid from income exceeding the maximum amount for social contributions. It is a charge on income, not on net worth.

Cyprus levies no net wealth tax and no inheritance tax either, so this is a draw and not a reason to move. If someone is selling you Cyprus on estate-planning grounds against Latvia, they are selling you a difference that does not exist.

What does the Latvian personal ladder cost a founder?

More than the corporate side suggests, and it starts biting at the first euro. General income runs at 25.5% on annual income under €105,300 and 33% from €105,300, with a further 3% on income over €200,000 on top. Against that sits a non-taxable minimum of €550 a month, €6,600 a year, fixed rather than tapered, and eligible deductions for education, medical services and donations capped at €600 a year and at 50% of annual taxable income.

Then the two numbers that matter most to a founder.

Salary is expensive. Mandatory state social insurance contributions run at 34.09% in total — 23.59% from the employer and 10.50% from the employee, up to an annual ceiling of €105,300, above which the solidarity charge takes over. This is why Latvian founders pay themselves in dividends and why the dividend exemption carries the whole system.

The exit is where it hurts. Capital gains are taxed at 25.5% under their own flat rate, on a base of disposal price less acquisition value less investments made during the holding period. Capital assets are broadly defined and include shares, real estate, financial instruments, intellectual property and virtual currency. The rhythm catches people out: capital income above €1,000 in a quarter must be declared by the 15th of the following month and paid by the 23rd, while income of €1,000 or less for the whole year is declared by 15 January. A founder selling mid-move is on a quarterly clock, not an annual one.

We are leaving the reliefs qualitative on purpose. Main-residence relief, any relief for long-held shares, and the treatment of Latvian-source gains in the hands of a non-resident all sit in Cabinet regulations we did not verify, so no numbers for them appear on this page.

Part 2: What Cyprus gives you

This is the straightforward half, and the half we build end to end. What you actually get on the other side.

What does the Cyprus side look like for a Latvian founder?

Flat at the company, and close to empty at the shareholder — the mirror image of what you are used to, with the timing choice removed.

The company pays 15% on taxable profit as it accrues, with no coefficient and nothing to elect. Qualifying intellectual property is taxed at an effective 3% from tax year 2026 under the IP Box, a relief with no Latvian analogue at all — Latvia's answer to IP-heavy businesses is deferral, which is worth much less than a preferential rate to a company being groomed for sale. At the shareholder level, a Cyprus tax resident who is not Cyprus-domiciled pays no Special Defence Contribution on dividends for 17 years, and dividends fall outside Cypriot personal income tax entirely. What remains is GeSY at 2.65% on income up to €180,000 a year — a hard cap of €4,770 however much you draw. Without the non-dom registration you would instead pay 5% on dividends from 2026 profits, which is precisely why that registration is not optional in the plan.

Cypriot salary is progressive, running 0% to €22,000 rising to 35% above €72,000 — better than Latvia at the bottom of the scale and worse at the top, which is one more reason the sensible shape is a modest salary and the rest as dividend. VAT registration becomes compulsory at €15,600 of taxable turnover at a standard rate of 19%, which is below the Latvian standard rate. Cyprus levies no net wealth tax and no inheritance tax.

If what you want is the company forms compared rather than the move, that is a different page: start with Cyprus tax benefits for foreigners, then Cyprus non-dom status for the shareholder position and what changed in the 2026 reform.

How does a Latvian founder become Cyprus tax resident?

Usually through the 60-day rule, and the Yellow Slip is available to you because a Latvian citizen is an EU citizen.

The plain route is more than 183 days of physical presence in Cyprus in the calendar year. The other one asks for fewer days and more commitment, and it became easier in 2026 when the old condition about not being tax resident anywhere else was removed from the 60-day rule. Four conditions remain: at least 60 days in Cyprus, no more than 183 days in any other single state, a business, employment or office in a Cyprus tax-resident person held throughout the year, and a permanent home in Cyprus owned or rented.

Those interlock with the Latvian side better than most corridors. The second condition uses the same 183 days that Section 14(2) uses, so a plan built to satisfy Cyprus tends to break the Latvian day count at the same time. Directing your own Cyprus company supplies the office the third condition wants. The Cypriot lease that satisfies the fourth is also part of the ties evidence VID will weigh, and the certificate that follows is the document VID asks for. What none of it does is end your Latvian residency for you — that still needs the declared address cancelled and the application filed.

The Yellow Slip is the registration certificate that puts your residence on the Cypriot record under free-movement rules. It records where you live and says nothing at all about how you are taxed; our guide draws that line properly and Sumly files the application. Tax residency and non-dom is the separate €750-per-person step, with the day counting set out in the 60-day rule guide.

What happens to your Latvian social security and pension?

Less than people fear, and we are going to keep this section short rather than pad it with numbers we could not verify.

Latvia and Cyprus are both EU member states, so the Union's social security coordination framework applies to a move between them. Insurance periods completed in Latvia count towards your pension entitlement, and rights accrued under the Latvian system are not lost because you moved — coordination aggregates periods across member states rather than stranding them. That is the principle, and it is the part you can rely on.

What we are not printing: the branch-by-branch split of the 34.09%, self-employed contribution rates and minimum bases, the A1 certificate procedure for multi-state working, the S1 form for healthcare cover in Cyprus, and the mechanics and timing of pension payment. The relevant VSAA page did not resolve for us, and inventing form numbers or deadlines on a page people make decisions from is worse than admitting a gap. Take the forms to the Valsts sociālās apdrošināšanas aģentūra directly, and register for Cypriot social insurance as part of the move — the contributions you make there are one of the ties VID actually weighs.

Why do people choose Cyprus over other tax havens?

Because it is a place people want to live in, which is not true of most of the alternatives — and for a Latvian founder, who is not being driven out by anything punitive, that half of the argument carries more weight than usual.

Violent crime is among the lowest in the European Union. Business runs in English as a matter of course: contracts, banking, professional dealings, the meeting you turn up to. The island has drawn people from everywhere, so nobody is the odd one out in a room. Business and real estate are both booming, and the administration is open to people who want to trade rather than treating trade as a licence to be granted. Groceries — meat, fruit, vegetables — are genuinely affordable. And the coast is not a footnote: a Cyprus winter still leaves you an afternoon on the beach, and the summers are what people cross a continent to book. Anyone who has spent a February in Rīga knows what that is worth.

Now the Latvian push list, which is short and specific because Latvia is a well-run place to own a company:

• You have switched from building to drawing income. The retention shelter is worth nothing to someone taking money out now, and 20% of pre-tax profit is a real gap against 15% plus a capped health levy.
• A sale is in view. 25.5% on the gain is the largest single number in this comparison. Cyprus generally exempts gains on qualifying securities, and for a founder heading towards a trade sale that difference dwarfs everything else on the page.
• The business is IP-heavy. Latvia has no IP Box analogue, and — uniquely among the countries in this cluster — a Latvian founder can use the Cypriot IP Box without any CFC consequence at home.
• Salary is how you get paid. 25.5% from the first euro, 33% from €105,300 and 34.09% of contributions underneath it is an expensive way to pay yourself.
• The halfway position is costing you. If you already live in Cyprus and still run the SIA from there, you are carrying dual-residence risk with no treaty tie-breaker to resolve it.

If none of that describes you, the right answer is to stay, and we would rather tell you so than sell you a structure whose benefit you will not use for another three years.

Can a Latvian e-commerce brand run through Cyprus?

Yes, though nothing is being unlocked — Latvia and Cyprus are both in the single market and both use the euro, so the change is operational and fiscal rather than about access.

The Cyprus entity brings an EU VAT number that resolves in VIES, zero-rated intra-EU business supplies on the usual conditions, and consumer sales reported through the one-stop shop for the whole bloc. One rate does move: the Cyprus standard rate sits below the Latvian one, but the difference only reaches supplies taxed where the supplier sits — cross-border consumer sales run at the destination rate through the one-stop shop, so a store selling mainly into Germany or Sweden gains nothing there.

What actually breaks a store's books is volume, and Latvian brands tend to run high-volume, low-ticket, multi-currency. Thousands of small orders a month, each with a VAT treatment depending on who bought and where they were, plus fees, refunds and payouts that never reconcile against the orders behind them. Sumly's Shopify and WooCommerce plugins land every one of those in the books with the correct Cyprus VAT code attached, so the return accumulates as you trade instead of being reconstructed in the last week of the quarter — you can watch it build in the VAT feature.

Part 3: How the move runs

From the decision to the first invoice out of the Cyprus company: the order, the mistakes people make before you, and two calculations worked through in full.

What does the move look like, month by month?

Treat this as a shape rather than a schedule. Nothing on the Latvian side imposes a deadline, which makes it easier to start and much easier to leave unfinished.

• Before anything — and we will say this out loud on the call. Are you still reinvesting? If you are, stop here — the move loses money, and we would rather tell you that than sell you a company. If you are not, we model the distribution you actually intend to take and test it against the arithmetic above with you.
• Month 1. We register the Cyprus company with books open the day you order, and start the Yellow Slip. You sign a Cypriot lease in your own name. We set up the Latvian day count on a rolling twelve-month basis rather than by calendar year, because that is the part people get wrong unaided.
• Months 1–3. We put the Cyprus registrations through as one bundle — VAT first, then social insurance, employees and UBO where they apply — rather than meeting each separately at a deadline, and we get banking and EU payments working. You take up the Cyprus directorship, and we minute the decisions there — that record is for the Cypriot management-and-control test, which is the one that actually exists in this corridor.
• Months 3–9. We build the evidence VID will read: the lease, the utilities, the Cypriot social insurance registration, the family's actual home. Together with your Latvian adviser we settle what happens to the SIA, remembering that a liquidation quota is a distribution, so years of untaxed retained profit settle at 20% on the way out.
• After the first full year. We obtain the Cyprus tax residency certificate and register your non-dom status. You cancel or change the deklarētā dzīvesvieta. Only then does your Latvian adviser file the non-residence application with VID, with the certificate and the ties evidence attached.

What mistakes do Latvian founders actually make?

Five, and the first is the expensive one.

Leaving the declared address in the Population Register, and discovering a year later that limb one of Section 14(2) made every month of careful day-counting irrelevant. Reading the 15% alternative rate as a cut and restructuring towards a route that costs ten cents more per hundred euros. Treating a shareholder loan as a way to use retained profit without triggering the charge, when Section 11 makes it a taxable event outright. Moving while still in the reinvestment phase and paying Cyprus 15% a year for a shareholder benefit that is three years away from being used. And living in Cyprus while running the SIA from there indefinitely, which produces dual residence with no treaty tie-breaker — an argument between two revenue services with no rule to settle it and no deadline by which they must.

Two worked examples

A software company reinvesting everything. Turnover €1.1 million, profit €400,000, all of it going into engineers and product. In Latvia the corporate income tax is zero, because nothing is distributed and retained profit bears no charge. In Cyprus the same €400,000 attracts 15% as it accrues — €60,000 in year one, and again in year two, and again in year three, on money the founder never sees. Latvia wins outright and keeps winning. The only reasons to move here are non-tax ones: where the next hundred customers are, where the team wants to live, or a sale that changes the whole picture.

A consultancy distributing €400,000 of profit. Now the systems invert. In Latvia, distributing all of it means grossing up: €320,000 reaches the founder and €80,000 goes in corporate income tax, with no further personal charge because the dividend is exempt. Take the same distribution down the new 15% route and it is worse, not better — €60,000 at the company, then 6% of the €340,000 dividend, or €20,400, leaving €319,600. Through Cyprus, the company pays 15% on €400,000 — €60,000 — leaving €340,000 to distribute, and a Cyprus-resident non-dom shareholder pays GeSY capped at €4,770 and no income tax on the dividend, keeping about €335,230. Cyprus is roughly €15,230 ahead on identical facts, every year, and the gap widens with the amount because the health contribution stops growing at €180,000 while the Latvian charge never stops. Put a trade sale at the end of it — 25.5% of the gain in Latvia, generally exempt on qualifying securities in Cyprus — and this is the profile where the move pays for itself several times over.

Notice that the two examples run on the same €400,000 and reach opposite verdicts purely on whether the money moves, which is the Latvian system doing exactly what it was designed to do rather than an artefact of the arithmetic. Both use headline rates, and neither prices the cost of carrying real substance in Cyprus. The alternative-rate line in the second one is arithmetic rather than advice: how the 15% election is actually made, and whether it binds the distributions that follow it, is precisely the question this page refuses to answer for you.

Part 4: Who does the work

You can do all of this yourself. Below is what that costs in time and in money, against what it costs to let us do it.

Do it yourself — or have Sumly do it

Both routes are real, and Latvian founders — used to a monthly return that takes ten minutes in EDS — often assume the second country will be the same. Cyprus administration is heavier than Latvian administration, and that is a fair concession to make before anything else. Self-service means the Registrar's forms and fees, a registered office you arrange yourself, VAT and VIES registration, provisional tax twice a year, annual statements and books an auditor will sign — stacked on top of a cross-border move you are already running. The Sumly route replaces all of it with three published prices: formation from €950 one-time, the software from €39 a month, and a Sumly certified bookkeeper at €390 a month, with books open the day you order and every return prepared box by box.

The software alone runs the whole company from Cyprus or from Latvia: invoicing, AI double-entry bookkeeping that books your documents itself, live open-banking feeds, every VAT, VIES, provisional and corporate return prepared box by box, live reports, a document inbox with its own email address, mobile receipt capture that books itself, multi-currency invoicing, team roles and the AI assistant — plus payroll at €15 per employee per month, IP Box tracking at €50 a month, Projects at €10 a month, and the e-commerce plugins.

Nothing below is gated behind a plan or reserved for a tier: a virtual address with PO box and digital mail scanning forwarded wherever you are; nominee director and secretary where the structure genuinely calls for them; the Yellow Slip, which a Latvian passport makes available as of right; tax residency and non-dom at €750 per person; and every registration — VAT, social insurance, employees, UBO — done properly the first time.

Each of those is an extra, scoped to your case. Tell us what you need in the meeting and you get one clear package-deal offer covering all of it, the IP Box application included where it fits, since that is complex expert work that has to be examined with you before anyone quotes a number. No hourly billing and no surprises.

Sumly, a law firm, and a traditional bookkeeping firm

Law firm vs Sumly — and what happens when it gets complicated

Sumly is cheaper and faster, and we work WITH lawyers, not against them. When a case gets too complicated for what Sumly handles directly, we simply connect you with the right expert in exactly the legal field you need help in, and everything gets done according to best practice, always. Either way, it starts the same place: contact us.

That division of labour suits a Latvian move precisely, because the open questions on this page — the election mechanics of the alternative rate, whether a deferral exists for asset transfers, the form and timing of the VID application — are Latvian questions that need a Latvian answer. The Cypriot half is one provider, one dashboard and four published prices. That is what makes Sumly the best choice for Latvian founders creating a company in Cyprus and relocating a business onto it.

Why is Sumly the best bookkeeping system for a Cyprus company?

Sumly is the best accounting software for a Cyprus limited company — because it is built for exactly one thing, Cyprus tax law: all 16 Cyprus VAT codes mapped to the official VAT return boxes, VIES and provisional tax native, not a localization. Measure it against whatever you are keeping the SIA's books in today; what follows is the evidence the claim stands on.

The two Cyprus-built alternatives a Latvian founder will be shown are Cybooks and Balabook. We meet their former customers every week — what they tell us, again and again: workflows that made simple bookkeeping overly complicated, rough edges and glitches, support that left them waiting — a messy experience they were relieved to leave behind.

On every one of these checkable dimensions, Sumly leads. That is a factual comparison — not a matter of taste.

Said plainly: the best support, the best bookkeeping software, the best AI for bookkeeping, the best bookkeeper and the best prices, with the whole of it kept simple to actually do. The comparisons are published rather than asserted — Sumly vs Cybooks and Sumly vs Balabook, plus Xero, QuickBooks and Sage if you are arriving from one of those.

On the IP Box, one line is worth repeating for a founder arriving from a country with no equivalent relief and — unusually — no CFC rule that could spoil it: the IP Box is the largest single line in a Cyprus product company's tax position — and the easiest one to forfeit through bookkeeping that was never set up for it. The application itself begins as a conversation about what your qualifying income really is, and for a Latvian founder that conversation is unusually short, because there is no home-country rate test waiting at the end of it.

What happens when you get in touch

You do not need to have decided anything before you speak to us, and you do not need your paperwork in order.

1. The meeting. Fifteen minutes. You tell us what you own and when you want to move. We tell you which rules at home catch you, and what the Cyprus side costs.
2. We tell you what kind of case you have. If it is simple, we do all of it — company, books, residency, non-dom — at a fixed price. If it is not, we say so immediately and bring in the specialist it needs.
3. We start. The company is registered, your books open the same day, and you have one point of contact for the whole thing.

Questions Latvian founders actually ask

Frequently asked

Should a Latvian founder move to Cyprus at all?

Only once the money starts coming out. Latvia charges nothing on profit that stays in the SIA, and the charge that eventually arrives lands once, at the company, with the dividend arriving clean in your hands afterwards. If you are still ploughing everything back into hiring and product, that is a better deal than any Cyprus structure, and we would rather say so than sell you something. The case changes on the day your plan turns from building to drawing income — or when a sale comes into view, because a share disposal is where the Latvian and Cypriot answers diverge most sharply.

Is Latvia's new 15% corporate rate a tax cut?

No — it is marginally more expensive. From 1 January 2026 a company whose members are exclusively natural persons may apply a 15% rate with a coefficient of 0.85, but 6% personal income tax is then withheld from the dividend. Per €100 of pre-tax profit that is €15.00 at the company and €5.10 at the shareholder, so €20.10 in total, against exactly €20.00 on the standard route where the dividend is exempt. Anyone describing it as a reduction has not run the arithmetic. It moves roughly a quarter of the burden from the company to the person.

Why can't I find the 15% rate in the English text of the Latvian law?

Because it is not there yet. The English consolidation of the Corporate Income Tax Law on likumi.lv still shows Section 3 ending at paragraph four; the alternative rate lives in paragraph five of the Latvian text, in force from 1 January 2026. An adviser reading only the official English statute will conclude the rate does not exist. That is also why almost every English-language summary of Latvian tax published before 2026 is silent about it, and why this page carries the arithmetic rather than a link to somebody else's.

Do Latvian CFC rules catch a Cyprus company?

No, and the reason is unusual. Section 6.1 of the Corporate Income Tax Law has no rate test whatsoever. Its gate is membership of the Cabinet's list of low-tax or tax-free countries and territories, which currently runs to eleven jurisdictions and contains no EU member state and no Cyprus. Because the gate never opens, the control threshold, the artificial-arrangement test and the de minimis are never reached. The striking consequence is that the Cyprus IP Box creates no Latvian exposure either — there is simply no rate for it to fail.

Does Latvia have an exit tax for individuals?

It does not. Leaving Latvia is not itself a taxable event for a natural person: there is no deemed disposal of your shares, no deferral balance to maintain and no security to post. The corporate law does contain an asset-transfer charge, which shows the legislature knew how to write an exit charge and wrote one only for companies. The practical rule is that moving yourself is free; moving assets into a Cypriot establishment is the taxable act.

Does my SIA become Cypriot if I run it from Cyprus?

Not from the Latvian side. Latvian corporate residence follows registration, so an SIA registered in Riga stays a Latvian taxpayer wherever its board sits. The danger comes from the other direction: Cyprus applies a management-and-control test, so the same company can become Cyprus-resident as well, or create a Cypriot permanent establishment. That is dual residence, and the treaty resolves it only by mutual agreement between the two authorities — a negotiation, not a rule you can apply yourself.

How do I stop being a Latvian tax resident?

Two things have to be true and one has to be filed. You must not be in Latvia for 183 days or more in any twelve-month period beginning or ending in a taxation year, and your declared place of residence must no longer be Latvian — the Population Register entry is an independent trigger all by itself. Then you apply to VID to be treated as a non-resident from a stated date, with a residence certificate from the Cypriot authority and evidence of closer personal and economic ties abroad.

What does a share sale cost a Latvian founder?

25.5% of the gain, which is usually the largest number in the whole comparison. Capital gains have their own flat rate rather than sitting in the progressive ladder, and the reporting rhythm is quarterly rather than annual: capital income above €1,000 in a quarter is declared by the fifteenth of the following month and paid by the twenty-third. A founder selling mid-move needs that in the calendar, because the deadline does not wait for the annual return.

Does Sumly handle the Latvian side of the move?

No — Sumly builds and runs the Cyprus side: the company, the books from the day you order, Cyprus VAT, VIES, provisional and corporate returns, the Yellow Slip, and the tax residency and non-dom application. This page quotes VID, the Finanšu ministrija and the consolidated statutes so the Latvian half is visible to you, but how Section 6.1 or Section 14 apply to your own structure is a question for a Latvian adviser, and where a case needs one we connect you with expert lawyers from our network.

Keep reading

• Every country's route to Cyprus — the departure guide for wherever you are now
• Cyprus non-dom status — the 17-year exemption in detail
• The Cyprus 60-day rule — day counting and the residency certificate
• The Yellow Slip explained — the EU registration certificate, step by step
• What changed in the 2026 Cyprus tax reform
• Cyprus tax benefits for foreigners — the whole picture in one place
• How to register a company in Cyprus and what it costs

The calculator on this page uses headline rates, an assumed annual return and full distribution of profit, so it shows the shape of the difference rather than your own result — and for a Latvian founder who distributes nothing, the honest figure on the Latvian side is zero. Latvian figures are stated for 2026 and cited to VID, the Finanšu ministrija and the consolidated statutes on likumi.lv; where the English consolidation lags the Latvian text, the Latvian text is cited. No form number, decision deadline or instalment-deferral position is printed for the residence-change and asset-transfer procedures, and no social-security branch rates or transfer forms appear, because none of those were verified. Cyprus figures apply from tax year 2026. All Sumly prices exclude VAT, and government expenses on a formation are invoiced separately once your application is approved.