Escrow account – is an arrangement made under contractual provisions between transacting parties, whereby an independent trusted third party (usually a bank) receives and disburses money or documents for the transacting parties, with the timing of such disbursement by the third party dependent on the fulfilment of contractually-agreed conditions by the transacting parties. It is commonly used to support sale/purchase transactions, such as the purchase of a real estate, reducing the risk between the parties to the minimum, and providing a mechanism which ensures trust and confidence.

The buyer, the seller and the bank sign an agreement, whereby they agree on necessary documents, terms and other conditions as required to complete the deal, along with any critical milestones along the way. An escrow agent – the bank, acts as an impartial holder of the money or documents, and in this way keeps the risk of such things as fraud to a minimum for both parties.

Although escrow accounts are generally used during a real estate transaction, in practice, it can be used in any transaction where there is a desire to reduce the risks to all parties, for example:

Purchase of a second hand car, where the money may be released at the end of a warranty period.
Deposits for a property rental, where the money is released after the tenant moves out according to the condition of the property.
Provision of construction services, where all or part of the money may be released when the building work is complete to a defined standard, or when defined stages (milestones) of the work are complete.

How does an escrow account work?
The bank creates an escrow account, and the buyer/client transfers the agreed purchase price or payment amount;
Once the seller/contractor has the required documents or has completed relevent requirements – he submits documents or evidence to the bank;
The bank informs the buyer/client, that the seller has submitted the documents/evidence;
If the documents/evidence meet the requirements as provided for by the agreement, and the buyer/client accepts them – and the bank finalizes the transaction: transfering the money to the seller/contractor and handomg out the original documents to the purchaser/client. The transaction is then closed.

According to Latvian Immigration Law, a foreigner has the right to request a temporary residence permit in accordance for the time period of studies of educational establishments accredited in the Republic of Latvia or full-time students.

Under Latvian Immigration Law, a residence permit gives a foreigner the right to reside in the Republic of Latvia for a specified time period, for example, students may reside in Latvia for the time period of studies.

Visa certifies that a person has requested an authorisation to enter and reside in the Republic of Latvia or in any Schengen Agreement Member State for the period of time indicated in visa and for the number of times indicated therein.

Practically, in the case of studying abroad, a student arriving from third countries (residing outside Schengen Area) a residence permit is more suitable instead of student visa.

In order to receive a residence permit in the Republic of Latvia in connection with studies at an accredited higher educational establishment or participation in studies programme you shall present at embassy of Republic of Latvia a valid travel document admitted in the Republic of Latvia (passport) and submit the following documents:

filled application for a residence permit request;
a photography;
a statement on punishability issued by a competent institution of the citizenship or the host country, if a foreigner has resided in that country longer than 12 months
a document confirming the necessary subsistence - EUR 285 per month (12x 285EUR = 3415 EUR a year). In this regard you should present a statement from bank indicating that you own at least 3415 EUR;
a document confirming the envisaged place of residence in the Republic of Latvia and the rights to stay there;
a document confirming state duty payment;
an agreement on studies in the Republic of Latvia;
Documents confirming that you have acquired the necessary education to start the studies.
Before the submission of the documents your inviter shall approve the call at the Office of Citizenship and Migration Affairs Foreigners Service Centre or at a territorial office. Probably the invitation would be granted by the particular educational institution concerned. The Inviter shall require the invitation at Migration Office in Latvia and afterwards the invitation shall be sent to the embassy by post. Invitation is mandatory document in the process of obtaining visa.

The Baltic Sea region is the fastest growing business region in Europe. The trade flow among the states in this region has been steadily increasing year by year. The taxation system of Estonia is considered one of the most liberal taxation systems in the world. In 2000, Estonia implemented a comprehensive tax reform with an aim to create the simplest, most comprehensible and most convenient taxation system possible. The main advantage of Estonia is the low-tax system that can be described as a simple system with no hidden surprises and that was basically established to promote business and increase profits.

The taxation system of Estonia includes state taxes stipulated by the tax legislation and local taxes imposed by local governments or city councils in the respective territories according to laws and regulations.

The state taxes are the following:

excise duty;
income taxes;
gambling tax;
value added tax;
land tax;
social tax;
customs tariffs;
heavy goods vehicle tax.
Corporate income tax
As a result of reforms, the main benefit of entrepreneurs was the exemption from the corporate income tax in the event of reinvesting the profits. Thus, Estonian enterprises must pay the income tax only on their distributed profits, namely, dividends. The corporate income tax (tax on distributed profits) is 21 % of gross dividends.

This taxation system is conceptually different from the classic income tax system, because the tax is levied on distributed profits (also hidden distributed profits) instead of company profits.

Value added tax (VAT)
The value added tax payers are enterprises the taxable supply (except for import) of which does not exceed EUR 16,000 during a calendar year. The tax is levied on transactions with goods and services in Estonia and on the import of goods. The tax rate is 20 % of the taxable value.

The taxable period is one calendar month, and the value added tax must be paid into the state budget by the twentieth day of each month. The tax is fully paid into the state budget.

The registration of enterprises is carried out by the Tax and Customs Board also administering the VAT levied on domestic goods and services.

Personal income tax
In 2010, the tax rate is 21 % of taxable income, and residents must pay the tax on their income received both inside and outside Estonia. The taxable income includes the income from employment (salary, wage, bonus and other remunerations), business income, interest, royalties, rent, capital gains, maintenance support, pensions, scholarships (except for scholarships paid from the state budget or pursuant to law).

Social tax
This tax is imposed to ensure state pensions and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33 % of the taxable amount. The tax must be calculated monthly, and a corresponding amount of money must be transferred no later than by the tenth day of each month.

Since 1 January 1999 the social tax payments have been personalised, and they form pension funds which will be considered in each specific case. The tax is accumulated in a special account of health and pension insurance funds within the state budget.

Excise duty
In Estonia, the excise duty is levied on tobacco, alcohol, fuel, packaging and vehicles.

The excise duty helps to control the amount of a specific product or provision of a specific service seeking to adjust the consumption of domestically sold goods.

Like value added tax revenues, also excise duty revenues are affected by changes in domestic demand, increase in imports of excise goods, as well as changes in excise duty rates.

Gambling tax
The gambling tax is levied on income from games of skill, totalisators, betting and lotteries, as well as gambling tables and machines used for organising games of chance in licensed places. The tax is based on payments out of which the winnings are paid. The taxable period for organising lotteries, games of chance and skill is one calendar month. The taxable period for totalisators is the period during which the betting is organised (it must be within the same financial year).

Tax rates are the following:

EUR 447 per one gambling machine;
EUR 1278 per one gambling table.
The tax rate on betting is 5 %, on totalisators - 5 %, on games of skill - 18 %, and on lotteries - 18 %.

Land tax
The tax rate is 0.1-2.5 % of the taxable value. The tax on land where the economic activity is restricted has been determined by the decision of Estonian government in the amount of 25 %, 50 % or 75 % of the tax rate. The land tax is paid three times a year - by 15 April, 15 July and 15 October.

The national land tax is paid on all land except:

land where economic activity is prohibited;
land adjacent to buildings or parts thereof of diplomatic missions and consular representations of foreign states;
cemeteries and land under churches and temples of congregations;
land in the use of a foreign state or international organisation. In addition, the municipal land tax is not paid on land in municipal ownership or land in public use based on the decision of the local government.
The value of land is stipulated by the Land Valuation Act. There are exemptions which are the following: the rate of land tax for areas under cultivation and for natural grasslands and forest land is 0.1 % to 2.0 % of the assessed value of the land annually.

Recipients of pensions may be exempted from the obligation to pay land tax on up to 0.1 hectares in cities and 1.0 hectare in rural municipalities on the condition that the applicant for the tax exemption uses the land for living and does not receive rent on the basis of the right of use of land.

The tax is fully paid into the municipal budget of the local government at the primary level. The tax is administered by the Tax and Customs Board.

What are the benefits of living in Europe?

Welfare
Despite the fact that Europe covers only 10,180,000 km2 (50 countries) and Europe is the second smallest continent, Europe, as a whole, currently has the largest economy in the world, which reflects well on living standards and welfare provisions. In 2009 Europe remained the world's wealthiest region. It's $37.1 trillion in assets under management representing one-third of the world's wealth.

Free movement and single market
Existence of the European Union and Schengen area provides excellent opportunities for EU citizens to move and travel freely, without any physical or legal obstacles, which is an obvious advantage. Since there is a single market with unified standards in place within the European Union, the quality of products and services is also generally high.

Start your business
Do you want to start your own business? You can do so easily in Europe. In many European countries legal regulations allow you to register your company in as little as just 3 days - sometimes less. The single market is full of new opportunities, so that you can be free to expand your business into other European countries.

Social security
Educational standards in European countries are considered relatively high. There are many universities and colleges, which offer education enabling you to compete for the best career opportunities throughout the world. The oldest university in the world – University of Bologna (est. in 1088), which still operates, is located in Europe (Italy). European higher educational facilities operate under single, unified system, which provides an opportunity for students to choose where they want to study. Also, the European Union has grants and discounts available for students who are citizens of the EU, which means that you can often get one of the best educations in the world for a good price.

Work in European countries can be both interesting and well paid. The open labor market includes freedom of movement for workers, allowing you the possibility to travel to a place, where specialists in your specialty are in high demand. This allows EU member states to exchange specialists in different fields, thus making the local labour market more stable, decreasing unemployment rates and contributing to the economy and welfare of the region as a whole.

Healthcare is also a very important factor, which must be taken into account. Most European countries provide very comprehensive healthcare benefits for EU residents. That is compares very favorably with many regions and provides many benefits, no doubt.

European lifestyle
European lifestyle is considered western by the majority of the world.

First, there are a lot of things to see in Europe. Not only tourists from other parts of the world come to Europe sightseeing, Europeans also love travelling around the region. Europe has one of the richest cultural heritages in the world, making it a perfect object of curiosity. Open borders and small distances create an environment friendly to travellers. Each country and sometimes each city has its own traditions and language, so cultural diversity is pretty high. You can travel by car and see a lot of things, and that is what many Europeans do for vacation.

Second, it is people. Most people in Europe are very friendly and open. Europeans have etiquette and respect for many things, especially traditions. Their mindset is often focussed toward living and enjoying life.

Third, it is about taking it easy. People in Europe sure do know how to relax. You can find any kind of relaxation and entertainment in almost any European city: from theatres and operas to night clubs and bars. Most Europeans work hard, but they also do like to party. In case you prefer more cultural experiences, European cities have many museums, memorials, theatres etc.

Fourth, it is the cuisine. European cuisine really differs, and not just from country to country, but also from city to city. Because of the high level of European integration, often you can find a wide selection of such cuisines in each city. The cuisine itself varies: from olives, kebabs and pizzas in the south to cooked fish, roasted meat and cold soups in the north.

European culture
European culture has a rich historical heritage, which can be seen today in the form of museums, architecture, literature and art. Europe has a long history that dates back to Ancient Greece. Europe is considered the birthplace of a modern western civilization.

Latvia is an active participant in the international arena - the country has a number of embassies, is a member of various international organizations and participates in decision-making on international affairs at various levels. The state organization responsible for maintaining these relations is the Ministry of Foreign Affairs of Latvia.

Being located in Europe and having limited political resources, Latvia mainly concentrates on building relations with the countries of the Northern Hemisphere, especially those that belong to the Western society. Latvia's foreign relations are also influenced by its past - a couple of decades ago, the country was part of the USSR, and this context affects Latvia's relations with all other former Soviet countries.


Nearest political neighbors
Latvia has the closest political ties with neighboring countries and countries with which it shares a common history. In this context, the term "political ties" does not necessarily mean alliances or trade networks, but rather an active political dialogue and special attention to each other's political landscape.

Historically, Latvia's closest political ties have been with Lithuania, Estonia, Russia, Germany and, to a lesser extent, Sweden. Culturally, Lithuania is the closest neighbor to Latvia, which has always been the basis for cooperation, trade and political alliances. Estonia is also a Baltic country (the others being Lithuania and Latvia itself), sharing much of Latvia's history due to geographical proximity. The three Baltic states were further brought closer together through joint efforts to gain independence from the USSR, marked by such cultural-political events as the Baltic Way - a 675.5 km human chain that crossed in a move to promote independence across extended to all three countries.

With Latvia being a major trading hub on the Baltic Sea thanks to its geographic position (which nowadays is used as part of Latvia's logistic system), Sweden, Russia (its earlier incarnations) and Germany have all competed for power over the country. Germany was the first to conquer the territories of modern Latvia, spreading its culture and political power across the region. Because of this, Germany has historically been viewed as a political enemy by Latvia. Today, when both Germany and Latvia are member states of the EU, the political discourse has shifted and Germany is seen as one of the allies.

Similar to Germany, Sweden has historically conquered parts of the territory of modern Latvia. However, unlike Germany, these times are seen in a more positive light as Sweden improved Latvia's economic and social situation. Today Sweden, like Germany, is an EU ally of Latvia.

Russia's political influence on Latvia has had the most recent and lasting impact on the country. Latvia was a part of the Russian Empire for a long time, and later the country was absorbed into the USSR, and Latvia regained its independence only in 1991. This turned Russia-Latvia relations into an active political discourse, with Latvia viewing Russia as a political opponent. This view has become even clearer since Latvia joined the EU and became an active political supporter of European politics.

Ready-made Company, also known as Shell Company, previously formed company, seasoned company or aged company, describes a limited liability company (LLC) or partnership that had no activity, metaphorically put on the shelf to age or how to be an empty shell. As a rule, a complete company is subject to VAT.

Advantages of the shelf company

process of business purchase

Change of company name and/or address

Recent practice

Advantages of the shelf company are:

Time saving. The incorporation process takes time, faster registration costs more money due to higher government fees. It's faster to change ownership of an existing business.

longevity in the company. Some partners or credit institutions may check the registration date before proceeding with the cooperation. Potential customers will trust older companies that could be used for advertising.

history of your company. Boosts the company's image with age and increases credibility.

Need a bank loan. It may be easier if you have proof of your inclusion history.

Baltic Legal provides legal support in the purchase of ready-made companies and offers first-class services and useful advice in related matters.

Process of business purchase

The business purchase takes only a few days. Due to the reliability and cooperation with our partners, we are able to arrange a turnkey company for you in one day! Registration with the commercial register takes 4 working days (can be shortened to up to 2 days).

Our current offers appear at the top of this page, but we or our partners may have additional offers. If you are interested in buying a ready-made company, contact us: Go to the contact page

Change of company name and/or address

The age, but not the name, of the finished business is of primary importance as a name change can be easily accomplished.

Legal address is mandatory in Latvia. Changing legal address or registering an additional office takes up to four business days or can be changed at the same time as the business purchase.

The Wave Market Entry strategy is a simultaneous expansion of business into a number of foreign markets, but unlike the Sprinkler strategy, it limits the number of eligible markets by dividing them into groups. It does this by analyzing the culture and business environment of the available markets and grouping them according to how similar they are to the home market. For example, Latvia, Lithuania and possibly Estonia would be grouped together based on similarities in culture, business environment and economic relationships between the countries (although Estonia may not be included due to some parameters, it all depends on the analysis performed by the company itself).

Similar to the waterfall strategy, the wave-like business expansion can be divided into stages. The first stage includes markets that are similar to domestic ones and are also typically closer geographically. Each successive level includes another group of markets that resemble the domestic market less and less. This is reminiscent of circles of waves that emanate from a single center and first have to traverse the immediate vicinity in order to reach more distant areas.

Implementation
The Wave market entry strategy is usually initiated with a thorough analysis and grouping of the available markets. Then, for the initial expansion, a group most similar to the domestic market is selected. Due to the similarities, the business model from the home market can be transferred to these markets. With the initial expansion secured, the company can move into the next group of foreign markets, which now resemble less the domestic markets. Thus, the gains and experiences from each previous group offset the potential risks of each subsequent market as they become less and less known.

When grouping the available markets, it is important not just to choose one or more parameters, but to integrate them into a system. It would be a good idea to develop a rating table where each country gets its own score based on all the criteria and parameters. This is crucial as a foreign market can be culturally similar to the domestic one but radically different in terms of business environment or political stability. A company that fails to take this into account risks grouping economies that are intrinsically different in their own right, thereby diminishing the benefits of the wave market entry strategy.

Advantages
The main benefit of the wave market entry strategy is that it combines the breadth of the sprinkler strategy and the security of the waterfall strategy.

First, when entering multiple markets at the same time, a company gains multiple sources of profit and experience in internationalizing companies. While not as extensive as the sprinkler strategy, it also gives the company an advantage over the competition. This is particularly effective against domestic competitors who may be interested in the same first wave/group markets as they are the easiest to enter. Such an early and simultaneous expansion into all well-known foreign markets gives the competition no opportunity to gain a technological advantage, unless your business withdraws.

On the other hand, the Wave strategy also offers a certain level of stability and security in the event of failure to enter another group of markets. If the entry of the first wave fails, the company can withdraw to its domestic positions. If one of the following waves fails, the company can use resources from previous waves to recoup the losses and continue its international expansion. This minimizes the risks of each individual case, making the wave strategy quite cost-effective.

Disadvantages
While the wave strategy combines the advantages of the waterfall and sprinkler strategies, it is also a middle ground between the two and does not take full advantage of their advantages. It does not allow to enter all available markets at the same time, and the competitive advantage there can be lost. This is particularly noticeable when a competitor succeeds in entering more distant markets, and once there, the company in question will lag behind in introducing it to the local market.

While this is not always a disadvantage, the Wave strategy is sometimes criticized for taking extra time to analyze many markets in order to group them. Although market analysis is required in any strategy, the wave method needs to analyze more markets than the waterfall strategies

In Latvia, the registration of VAT payers by the State Tax Service (SRS) in the register of VAT payers is subject to the following provisions:

Article 3 and paragraphs 1 and 9 of Article 26 of the Value Added Tax Act.
Cabinet Order No. 933 “Procedures for Applying the Provisions of the Value Added Tax Act”, adopted November 14, 2006.
Due to the accession to the EU, some provisions have been added according to which non-taxable persons who carry out an economic activity in the EU area and purchase goods whose value reaches or exceeds EUR 50,000 (excluding VAT) in the current calendar year must be obliged by the state tax authority within entered in the register of persons subject to VAT within 30 days of reaching or exceeding the said amount. After registration, this person can voluntarily apply for deregistration no earlier than 2 years after the date of registration.

Registration applies to the following persons and organizations:

natural persons - registered according to their declared places of residence;
legal entities - registered according to their registered addresses;
partnerships - registered according to their registered addresses;
If a group of people carries out a joint economic activity on the basis of a contract, the natural person authorized to represent this group of people must be registered according to the registered place of residence;
if a person from another member state or a person who is not registered in the EU territory carries out one or more taxable domestic transactions.
Only companies, such as general partnerships, limited partnerships, sole proprietorships, limited liability companies (SIA) and joint-stock companies (AS), are obliged to submit VAT returns to the Business Register of the Republic of Latvia.

Registration as a VAT payer is mandatory if the total value of taxable transactions performed by a natural or legal person whose declared residence or registered address is in the Republic of Latvia has reached or exceeded LVL 10,000 in the last 12 months. 12 months are not to be considered a calendar year, but can refer to any period of 12 months. Registration must be made within 30 days of reaching or exceeding the stated amount.

The SRS examines the application for registration and decides whether to register a person in the register of persons subject to VAT within 15 working days of receipt of the application.

If the SRS has decided to reject the registration, it will mail this decision to the person concerned, stating the reason for the rejection, within five working days. A person who has received a decision to refuse registration has the right to amend and resubmit the application for registration to the SRS.

A person is deemed to be registered in the SRS register of persons liable for VAT from the date on which the certificate of registration of a person liable for VAT is issued to that person.