Temporary Bank Accounts and Share Capital Payments: What Foreign Founders Should Know
Establishing a Latvian limited liability company - Sabiedrība ar ierobežotu atbildību (SIA) - is generally considered a straightforward and efficient process compared to many other jurisdictions within the European Union. However, one issue that often raises questions among foreign founders is the procedure for paying the share capital and the documentation required to confirm that payment. Understanding these requirements is essential to ensure that the company registration process proceeds smoothly before the Register of Enterprises of the Republic of Latvia.
Latvian law provides a flexible system for share capital contributions, but the documentation requirements depend on the amount of capital invested and the type of contribution made. For foreign entrepreneurs, this flexibility is particularly important because opening a bank account before a company exists can often be challenging due to banking compliance procedures.
Share Capital Requirements for a Latvian SIA
Under Latvian law, a standard SIA must have a minimum share capital of EUR 2,800. The share capital represents the founders’ contribution to the company and can be provided either in cash or through non-cash (in-kind) contributions such as equipment, intellectual property, or other assets.
Although the concept of share capital is common across most European jurisdictions, Latvia differs in one important respect: a temporary bank account is not always required before company registration. The necessity for such an account depends primarily on the amount of share capital contributed in cash.
When Confirmation from a Bank or Payment Service Provider Is Required
If the cash contribution to the share capital exceeds EUR 50,000, Latvian law requires additional proof that the capital has been paid. In such cases, the founders must submit a certificate from a payment service provider or a bank confirming that the share capital has been paid.
This certificate must confirm that the funds have been deposited into a temporary capital account established for the future company or held by a licensed payment institution. The document is submitted together with the incorporation documents when registering the company and submitting the documents at the Commercial Register.
The purpose of this requirement is to ensure transparency and financial verification for companies that are established with larger capital investments, confirming that the declared share capital actually exists.
When Founder Confirmation Is Sufficient
If the share capital contribution in cash does not exceed EUR 50,000, the procedure is significantly simpler. In this case, no bank certificate or payment institution confirmation is required.
Instead, the founder may confirm the payment of share capital directly in the company registration application submitted to the Commercial Register. By signing the application form, the founder declares that the share capital has been paid into the company’s temporary account.
This declaration serves as sufficient proof of capital payment for the purposes of company registration, which significantly simplifies the incorporation process for foreign entrepreneurs.
Contributions in Assets (Non-Cash Contributions)
Share capital does not always have to be paid in cash. Latvian law allows founders to contribute assets instead of money, provided that these assets have a measurable economic value and can be transferred to the company.
When such non-cash contributions are made, additional documentation must be submitted. Founders must provide documents confirming the valuation of each contributed asset and documentation proving that the asset has been transferred to the company.
These documents must demonstrate both the fair value of the asset and the fact that ownership has been transferred to the company as part of its share capital. Depending on the nature and value of the asset, an independent expert valuation may be required to ensure that the declared capital reflects the real value contributed.
Examples of non-cash contributions may include equipment, intellectual property rights, technological systems, vehicles, or other tangible or intangible assets that can be legally transferred to the company.
Practical Considerations for Foreign Founders
For many international entrepreneurs, the most practical challenge in company formation is opening a bank account before the company legally exists. Due to strict AML and KYC procedures applied by financial institutions throughout the European Union, banks often require extensive documentation and due diligence before opening a corporate account.
Because of this, many founders choose a practical and legally compliant approach. They first register the company by declaring the payment of share capital in the registration application (where the capital does not exceed EUR 50,000). Once the company has been registered and has a legal identity, they proceed to open a corporate bank account and transfer the share capital from temporary bank account to the company account.
This approach is widely used and fully compliant with Latvian legal requirements.
Final Remarks
Latvia offers one of the most flexible company incorporation frameworks in the European Union, particularly in relation to share capital payment procedures. The legal framework balances administrative efficiency with financial transparency, making it attractive for both local and international entrepreneurs.
In practical terms, founders should remember a simple rule. If the cash share capital exceeds EUR 50,000, confirmation from a bank or payment service provider must be submitted with the incorporation documents. If the share capital is EUR 50,000 or less, the founder’s declaration in the registration application is sufficient. Where contributions are made in the form of assets rather than cash, appropriate documentation confirming the valuation and transfer of those assets must be provided.
By understanding these rules in advance, foreign founders can structure the company formation process efficiently and avoid unnecessary delays when establishing their Latvian SIA.
Last updated 2026, March 16
