How to Do Business in Latvia

Located in the center of the Baltic region, Latvia's growing economic stability supports a market for technology, machinery and consumables. A relatively new member of the European Union (EU), Latvia's gross domestic product growth is among the highest in Europe, at 11.9 percent in 2006. With a stable political climate and an openness to foreign companies, Latvia offers an appealing environment for Europeans and Americans to do business.

Difficulty: Moderate

Instructions

1. Familiarize yourself with the market. Finance, transport, information technology and other service-based industries make up roughly 75 percent of Latvia's business economy, with the other 25 percent coming from industries like textile production, wood export and metalworking. American businesses in every industry will find themselves in stiff competition with countries from the EU, which provide over 70 percent of Latvian imports and receive 70 percent of Latvian exports.

2. Acquire an English-speaking attorney if you wish to open an office in Latvia. While it is not impossible for a foreigner to attempt the process without assistance, an attorney can provide a clearer understanding of regulations, along with required documentation assistance. You can access a directory of Latvian attorneys who speak English at the U.S. Embassy website (see Resources below). The site also lists English-speaking notaries who can help with document certification.

3. Plan to provide local customer service. It is customary to expect vendors to offer service locations within Latvia or the Baltic region. In addition, Latvian law holds high standards for consumer repair or service plans, requiring that businesses provide at least 24 months of warranty coverage for their products.

4. Investigate the tourism industry if you plan to do business in Latvia. The country's tourism sector is the fastest growing in the EU, making the market ripe for the development and expansion of tourism-related industries. Hotels and other lodging provisions are not sufficient to keep up with tourist needs, and the Latvian government is offering tax incentives for companies willing to build hostels to serve outlying areas.

5. Check into the tax implications of any business venture. U.S. citizens and businesses making money overseas must generally file an annual return with the IRS, but you may receive a tax credit if you've been paying Latvian income tax. For more information regarding foreign tax credits or overseas filing regulations, visit the IRS website (see Resources below).

6. Visit the BuyUSA.gov website for more details about Latvian business and commerce (see Resources below). The site offers a comprehensive look at the Latvian economy, customs and trade challenges.

Tips & Warnings

• Note that Latvians tend to be quite formal in the business environment. They do not bring their personal lives to the workplace and are likely to avoid small talk in business situations.
• Shake hands with Latvian businesspeople and look them in the eyes. It is also customary to offer a business card after introductions.

Resources

• U.S. Embassy for list of English-speaking lawyers and notaries.
• IRS international tax information and forms.
• BuyUSA.gov for a Latvian business guide.