Fractional CFO services in Latvia

Deferred corporate tax

Latvia, like Estonia, taxes only distributed profits - retained earnings are not taxed at the corporate level. Effective rate of 20% only applies on dividend distributions. Allows companies to reinvest retained profits without immediate tax burden.

Altum loans and guarantees

Altum is the Latvian state development finance institution. Provides loans, guarantees and equity investments to Latvian SMEs and innovative companies via multiple programmes including startup acceleration funds and the venture capital fund-of-funds.

Latvian R&D incentives

Latvia provides an R&D super-deduction allowing additional deductions on qualifying R&D expenditure. Combined with the deferred corporate tax system, materially reduces the cost of building R&D-heavy companies in Latvia.

EU structural funding

Latvian companies have access to EU Recovery and Resilience Plan funding and operational programmes administered by ministerial agencies and the Investment and Development Agency of Latvia (LIAA). Programmes vary across competitive calls.

Latvian VC ecosystem

Latvia's VC scene is small but growing. Active funds include BaltCap (Pan-Baltic), Buildit Latvia and several Altum-anchored co-investment vehicles. Cross-border participation from Estonian, Lithuanian and broader Nordic/European investors is common at growth stage.

Venture debt

Limited domestic venture debt market. Cross-border providers (Kreos Capital, Claret Capital Partners, HSBC Innovation Banking) operate in Latvia via Baltic and Nordic lending arms. Typically deployed against ARR or contracted revenue from Series A onwards.

Latvian favourable option regime

Latvian employee stock options can benefit from preferential tax treatment under specific conditions - extended holding periods, qualifying employer status. The regime is less developed than Estonia's three-year deferral but provides a workable framework for venture-backed Latvian startups.

Standard stock options

Options outside the favourable regime are taxed at exercise on the spread as employment income at marginal rates. Less attractive - most Latvian startups structure plans to qualify for the favourable regime where possible.

Phantom shares and SARs

Cash-settled equity-like instruments are widely used in Latvian startups. The holder receives a cash bonus equal to the value of a notional option at exit. Taxed as employment income at payout.

Restricted Stock Units (RSUs)

Used at later-stage Latvian companies, particularly those with US investors or a US parent. Taxed as employment income at vesting at marginal rates. Less common in early-stage venture-backed startups.

Option valuation

Latvian startups typically peg option strike values to the price of the most recent priced round. Independent valuations are useful for material grant programmes to support the State Revenue Service (VID) position on fair market value at grant.

Reporting and VID

Option exercises and equity events flow through Latvian payroll for personal income tax and social contributions. Annual employer reporting required. Worth aligning between cap-table tool, Latvian payroll provider and tax advisor at each material equity event.

Accounting

• •Tildes Jumis - common Latvian accounting platform.
• •Zalktis - alternative widely used at Latvian SMEs.
• •Xero - used by Latvian companies with international operations.

Payroll

• •Local payroll modules in Tildes Jumis or Zalktis - common at Latvian accounting firms.
• •Factorial - modern HR + payroll alternative.
• •Deel or Remote - for hiring contractors and staff outside Latvia.

Business banking

• •Swedbank Latvia, SEB Latvia or Luminor - for treasury, FX and traditional debt facilities.
• •Revolut Business - for early-stage simplicity.
• •Wise Business - for multi-currency operations.
• •Mercury - for founders with a US C-corp alongside the Latvian entity.

Cap table & equity admin

• •Ledgy - strong European coverage; common at Latvian venture-backed startups.
• •Carta - for Latvian companies with US investors or a US parent.
• •Pulley - modern alternative at later stage.

Expenses & corporate cards

• •Pleo - European default; clean integrations.
• •Spendesk - strong approval workflows for larger teams.
• •Payhawk - alternative with CEE coverage.