Latvia passes a new law that provides special support for startups

On November 23, the Latvian parliament passed a new start up law that creates a favorable tax regime for startups. The law foresees two tax plans: a special flat tax regime, currently 252 euros/month per employee, regardless of salary paid, for minimal social benefits. Or for more highly qualified employees with a doctors or masters degree or 5+ years of experience, a regime where all their social and personal taxes are covered by the state, and they receive full social benefits. The new law should spur on the creation of new startups in Latvia, thus, fostering research and innovation.

For purposes of clarification, the law specifies the definition of a startup and spells out the support programs that will be available to startups. According to the law, a startup is a company with high growth potential, whose basic activity is development of scalable business models and creation, production or development of innovative products.

To qualify, a startup would need to meet some basic criteria such as being less than 5 years old, have earned less than EUR 2000,000 in revenues during the first two years since registration, not be paying dividends, and have produced an innovative product or service.  But the startups are also required to have secured EUR 30,000 or more in early-stage venture capital funding.

Latvia already has a lot going on to support the claim of a growing startup ecosystem, and a great place for startup development. There is no shortage of educated and talented people from the region and CIS countries, the living costs are low, the internet infrastructure is well above the European average and almost 95% of the population speak a foreign language.

Source: LETA, Labs of Latvia