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Residence Permit for Foreign Investors in Latvia

June 2011

In July 2010 new amendments to the Latvian Immigration Law came into effect, which significantly change the legal rules regulating the procedure that foreigners must follow when entering Latvia. As a result of the amendments Latvia has become a lot more attractive to foreign investors as the new amendments have significantly expanded the grounds for getting a temporary residence permit and reduced the amount of red tape that must be dealt with to obtain entry.

Yelena RakovaIn Latvia it is the Citizenship and Migration Affairs Office of the Latvian Republic that is in charge of issuing residence and work permits to foreigners. Formerly these issues were the responsibility of several government agencies. Now if a foreign employee who has been invited to work in Latvia needs to legally stay in the country for a period of between 90 days and six months, the employer must file a request for a residence permit for the employee with the Citizenship and Migration Affairs Office. The Citizenship and Migration Affairs Office then issues a residence permit and a work permit simultaneously. As before, preference will be given to Latvian citizens in the labour market. This means that before inviting a foreign worker, the employer must first register the vacancy with the State Employment Agency. If no candidate with sufficient qualifications can be found in Latvia within one month, the employer may hire a foreign national for the position.

As a result of the amendments Latvia has become a lot more attractive to foreign investors as the new amendments have significantly expanded the grounds for getting a temporary residence permit and reduced the amount of red tape that must be dealt with to obtain entry

According to the new amendments to the Immigration Law, from July 1, 2010 a five-year residence permit in Latvia can be given to investors on the following grounds:

  1. If the investor has made an investment of at least LVL 25,000 (EUR 35,500) in the share capital of a limited liability or joint stock company incorporated in Latvia and the company in question has paid at least LVL 20,000 (EUR 28,400) worth of taxes in the state or local government budget. It should be noted that for a residence permit originally issued on these grounds to be extended, the company in question must ensure the payment of at least LVL 20,000 (EUR 28,400) in taxes in the previous year.
  2. If the foreign investor has purchased or is the owner of:
    • Real property in Riga, the Riga region or in a large city of country-wide significance such as Daugavpils, Jelgava, Jekabpils, Jurmala, Liepaja, Rezekne, Valmiera or Ventspils, that is worth at least LVL 100,000 (EUR 142,000);
    • Real property in any other region of Latvia that is worth at least LVL 50,000 (EUR 71,000).
    Besides that, there must be no property tax arrears on the real property in question and all the payments for the property must be made by bank transfer. The value of the real property purchased by a foreign investor is appraised on the basis of the price specified in the contract to buy the property. A foreign investor who’s been given residence permit on these grounds must confirm that the property is still his/her with the Citizenship and Migration Affairs Office every year.
  3. If the foreign investor has invested LVL 200,000 (EUR 284,000) in the subordinate capital of a Latvian bank. The investment must have been made at least five years ago.

The aforementioned grounds can also be used to issue residence permits to the spouse, underage children and dependants of the foreign investor.

Note

In late 2010, temporary residence permits in Latvia were issued to 100 foreign investors and with members of their families counted in the total number of issued residence permits was 230; 61% of the investors were given temporary residence permits after purchasing real property in Latvia, 34% were given residence permits as they had investments in the subordinated capital of Latvian banks and the remaining 5% of all investors were given residence permits after setting up limited liability partnerships in Latvia. Statistics show that the majority of investors getting residence permits in Latvia are Russians and citizens of other CIS nations.

In April 2010, Latvia’s parliament, the Saeima, approved draft amendments to the country’s immigration law, which have not yet come into effect and are currently going through legislative procedures. The new proposed amendments will introduce stricter rules for the issuance of temporary residence permits to foreign investors. Thus, for example, investment of LVL 25,000 (EUR 35,500) in the share capital of a Latvian company and the payment of LVL 20,000 (EUR 28,400) in taxes will only entitle the investor to get a residence permit if the company’s annual sales do not exceed LVL 7 million (EUR 9,940,000) and the company employs no more than 50 people. If the company does not exceeds these criteria, i.e. either its annual sales are greater or it employs more people, the minimum investment for qualifying for a residence permit must be at least LVL 100,000 (EUR 142,000). At the same time in its current revision, in the case of investments in large companies there is no requirement that they must pay at least LVL 20,000 (EUR 28,400) in taxes.

Despite the proposed amendments, getting a temporary residence permit in Latvia will remain a viable option for foreign investors and offers the added benefit that the holder of a Latvian temporary residence permit can freely travel within the European Union

Amendments are also planned for the issuance of temporary residence permits to buyers of real property. In Latvia there is such a concept as the ‘cadastre value of real property’. The cadastre value of a property is calculated on the basis of regulatory documents and is used for the calculation of the state duty that must be paid when title to the property is registered in the National Land Register, as well as in the calculation of real property tax. According to the proposed amendments, an additional condition will be added that the cadastre value of the real property purchased in Riga, the Riga region or a large city must be at least LVL 30,000 (EUR 42,600) and for other regions of Latvia it must be at least LVL 10,000 (EUR 14,200).

Despite the proposed amendments, getting a temporary residence permit in Latvia will remain a viable option for foreign investors and offers the added benefit that the holder of a Latvian temporary residence permit can freely travel within the European Union.

It should be noted that a foreign national who has been issued a temporary residence permit in Latvia may stay outside Latvia as long as he/she wishes. However, a holder of a permanent residence permit may not leave Latvia for longer than 12 consecutive months at a time, except for compelling reasons that do not depend on the holder’s personal circumstances or getting an education. At the same time a foreigner cannot get a permanent residence permit in Latvia if he/she has not stayed in Latvia for longer than 6 months in a row or for one year with short breaks over the past five years.

Yelena Rakova,
Sworn Attorney of the Republic of Latvia
Contact partner AUDIT ADVICE LLC, Nexia International (Riga, Latvia)
www.auditadvice.lv
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