Company formation and accounting in Latvia
Last updated: 2012-07-10
On this page is collected basic information on doing business in several European countries: Germany, France and the UK.

Most important economic sectors.

Germany. Automotive, machinery, electronics, chemicals, miscellaneous services (e.g., tourism services, transport and financial services).

France. Telecommunications, aerospace and defence industry, shipbuilding, pharmaceutical and chemical industry, construction, textiles, automobiles, nuclear power generation. An important sector is also an agricultural activity and tourism.

UK. Financial services, aerospace, pharmaceuticals, mining of natural resources, tourism, transport and telecommunication services, business services (registration of business and support of business).

Major cities

Germany. Frankfurt (financial centre), Hanover, Berlin, Dusseldorf, Stuttgart, Munich, Cologne, Bonn.

France. Paris, Lyon, Marseille, Lille, Toulouse, Nice, Strasbourg.

UK. London, Birmingham, Manchester, Bristol, Liverpool, Leicester, Edinburgh and Glasgow.

Accounting and tax questions, audit

Germany. Duty to do accounting, to keep source documents for a certain time (6-10 years). It is possible to store accounting information in electronic form. The obligation to prepare the annual report. An audit is required for large and medium-sized companies. The obligation to submit tax returns (for example, VAT return). Income tax rate is 15%, but the municipalities levy sales tax by rate of 14% of the profit. The basic VAT rate is 19%, reduced rate is 7%. The rate of personal income tax is from 14% to 45%. Social tax rate is approximately 50% (employee and the employer pays half of the amount of social tax).

France. Accounting must be done in French language. The law establishes the requirements to manage three types of books: a general journal, inventory ledger and general ledger. Duty to prepare an annual report. An audit is required for SA, SAS and SCA (joint stock companies and public partnership). Other types of companies must appoint an auditor under certain conditions (turnover, total assets, number of employees). Eased requirements of accounting and reporting for micro-enterprises. The basic rate of income tax - 33%. In France, there is the progressive rate of income tax - from 0% to 40%. The standard VAT rate is 19.6%. Reduced VAT rate is 5.5%. The rate of social tax is about 45%. But the actual rate depends on the type of activity, the size of the company, the type of work and amount of salary. The social tax rate in France is among the highest in the world.

UK. The obligation to file an annual declaration of company income tax, as well as the annual report. An audit is required if the company exceeds two of the following indicators: net turnover of £ 6,5 million, total assets of £ 3,26 million, the number of employees - 50. The Company is obliged to submit a VAT return and reports related to employment. For the late submission of reports amount of the penalty starts from £ 100 (but the penalty may be £ 900 and more). The basic tax rate on company profit is 24% (if the profit does not exceed £ 1,5 million, then the tax rate is 20%). In Year 2013 basic rate will be lowered to 23%. The basic rate of personal income tax - 20%. The maximum rate - 50%. Social security tax rate depends on income. The basic rate is 25.8% (12% withheld from salaries and the employer pays 13.8%). The standard VAT rate is 20%.

In case of delivering the goods (rendering services) to another country of the European Union, the supplier (service provider) is not obliged to pay VAT (subject to certain conditions).


In Europe, there is a relatively well-developed banking system (Internet banking, ATMs, debit and credit cards, multi-currency). Banks are required to comply with the requirements for the prevention of terrorism and legalization of illegally obtained funds (money laundering). Banks should know their customers. To open a bank account, in most cases need to go to bank personally. In the banking operations checks are used relatively rarely. Making European payment (payments in euro to the bank of another EU Member State), the bank commission is less than making usual international payment.

Liquidation and bankruptcy

Germany. Shareholders can make the decision about voluntary liquidation. The liquidator is appointed (board of directors / director also may be a liquidator). About the liquidation need to inform the Register of Trade. Also need to publish in the official newspaper. Liquidator of the company informs the creditors about the liquidation. Liquidator of the company sells the property and funds of the company are used to settle the obligations of the company. After the settlement of the obligations with creditors, the remaining assets are distributed among the shareholders. The company may be excluded from the Trade Register no earlier than after one year after reporting to creditors about the liquidation. Bankruptcy law is aimed at restructuring the business. The regional court (district court) and insolvency administrator deal with insolvency.

France. In order to liquidate the company, need to make an appropriate decision and appoint a liquidator. Within a month after the decision, must notify the business registration centre (Centre Formalités Entreprises). The decision on the liquidation and the appointment of a liquidator need to be published in a special edition (journal d'annonces legales). It is also necessary to inform the tax and social service about the liquidation. Liquidator during three months collects debts from debtors, makes settlements with the creditors and makes profit and loss statement. The shareholders make a decision on the approval of the final liquidation balance sheet. Such a decision of the shareholders must be taken not later than 3 years after the date of the decision on liquidation. The decision need also to be submitted to state bodies, and the information need to be published in the legal newspaper (legal gazette). When the above mentioned process is finished, the company is officially liquidated. Institutions, involved in the process of commercial bankruptcy are district (regional) courts and insolvency administrators. In France there is low degree of creditor protection.

UK. Under the Companies Act, the company has the right to apply for liquidation if the company had not done business during the previous 3 months, during the previous three months the company have not changed its name and the company is not (will not be) subjected to judicial proceedings, and the company has not alienated his property or rights (for example, fixed assets). Before the submission of an application to the registration agency about the intention to liquidate the company, it is advised to inform the creditors, shareholders and other persons that may be affected by liquidation. Then, to the registration agency (Companies House) need to be submitted application of certain form. The information about the start of liquidation must be published. After application, the director(-s) of the company must inform the shareholders, creditors, employees, managers or trustees of pension fund of each employee and those directors that have not signed the liquidation application. The main duties of a liquidator are getting (back) of the property of the company and the distribution of funds among the creditors. The funds remaining after settlement of creditors' claims are distributed among the shareholders. Insolvency Service (Insolvency Service) is a governmental authority involved in bankruptcy process.

Consumer rights

Germany. The seller must provide detailed information about the product. In Germany there are organizations for the protection of consumer rights. Consumer is the person who receives the goods or services for direct use and possession (but not for resale or use in production). In case of defective goods, the consumer during a certain period is entitled to require a repair of the goods, cancel the contract of purchase or payment of damages.

France. If the consumer's rights are violated by a large national company, then in the dispute is involved special institution - a mediator. Mediators exist in the following economic activities: insurance, postal services, electricity supply, gas supply, transportation services, telecommunications, tourism and direct sales. In France, there also exist consumer associations. If the goods have hidden defects resulting that they are not suitable for use, then the buyer has the right to demand substitution of goods, partial or full refund or to cancel the contract. By legislation are stated negative consequences for the seller if the goods do not match the description or the product has caused losses due to defects in other cases.

UK. The seller must comply with trade standards. Citizens Advice consumer service is working. If necessary, the consumer may contact the service by calling special support (help) number. Consumer rights are similar to rights in Germany and France.

Questions related to employment. The rights of employees.

Germany. There are right to conclude collective agreements (depending on the sector of activities). Night time, depending on the field of activities is from 22:00 to 06:00. During night time it is allowed to work not more than 48 hours per year. Standard working hours are 8 hours each working day. By legislation is stated compensation for work on Sunday and public holidays. Rather strict requirements for the employer in connection with the termination of the employment contract (social guarantees for employees.) Employees have rights for vacation duration of which is one twelfth for each worked month.

France. The duration of paid vacation is 5 weeks. The employer must pay the so called "13th salary". As well as in Germany, in France also exist collective agreements. The probationary period is from 2 to 4 months. There are restrictions to the rights of an employer to terminate an employment contract during pregnancy. The employer has the right to terminate the employment contract only on the basis that directly stated in the legislation (Labour Code and Litigation). The process of termination of an employment contract must comply with certain formalities.

UK. The maximum number of working hours during a week is 48 hours. The minimum hourly rate depends on the age of the employee. For workers aged 21 and over, the minimum hourly rate is £ 6.08. There are many requirements related to the dismissal of the employee (basis, process). In the UK there is a relatively long trial period - the first 2 years of labour relations. In case of breach of employment contract, the employee is entitled to file a claim in the Labour Tribunal or Civil Court.

Property rights

Germany. A very high degree of protection of property rights (90 points out of 100). There is a strong and well-functioning legal and regulatory framework. The professional judiciary system exists. The main legal act is the German Civil Code. Property rights are absolute rights (absolute and direct control over a thing). Property rights include the right of possession, the right to use, and protection against possible obstacles (violation) of these rights. In the registration of real estate the German Land Registry is involved. The German Office of Patents and Trademarks is involved in the registration of intellectual property rights.

France. The index of property rights protection is relatively high - 80 points. In legal relations connected with the lease of real property, law is more favourable to the lessee. The judicial system is less effective than in Germany (longer process). French public land register deals with registration of real estate. The National Institute of Industrial Property (Institut National de la Propriété Industrielle) deals with registration of intellectual property rights.

UK. Index of protection of property rights - 85 points. The Land Registry deals with registration of real estate. Ownership of the property is confirmed with the registration in the Land Registry. There are subsidiary rights, such as Commonhold (possession of real estate). These rights (commonhold) can be sold. The Bureau of Intellectual Property deals with the protection of intellectual property rights.


Germany. There is modern (developed), transport infrastructure (auto service, rail service). In Germany there is a relatively large number of airports (Frankfurt, Munich, Berlin, Dusseldorf, Cologne, Leipzig). There is created a well developed transportation between cities. An important sea port of Germany is Hamburg. Other important port is Wilhelmshaven. Other ports are Bremen and Bremerhaven.

France. Very dense transportation network (roads and rail lines). Good rail transport with neighbouring countries. Well-developed network of waterways (river transport) is created. A lot of sea and river ports, Bordeaux, Brest, Calais, Le Havre, Marseille, Nice and Toulon. And many airports (more than 400 airports) exist in France.

UK. In the UK there is a developed network of roads and railway lines. Many airports (more than 400) exist. The biggest airports are: London Heathrow, London Gatwick Airport, Manchester, London Stansted Airport, Birmingham, Cardiff, Edinburgh and Belfast. The largest sea ports are: Port of Felixstowe, Tilbury and Southampton Port. Since Britain is an island, there are a large number of ports.

Entrance and residence

Germany and France are part of the Schengen area. The requirements associated with obtaining short-term visa type C are the same for these countries. Also, uniform requirements in connection with obtaining a residence permit for highly skilled workers (blue card).

Germany. Some of the grounds for obtaining a residence permit are: economic activities (such as self - employed person), employment (job), education and investments.

France. The grounds for obtaining a residence permit are: education, employment and investments. To obtain a residence permit must demonstrate knowledge of French. It is also necessary to prove the existence of the necessary funds for living.

UK. The UK is not a part of the Schengen area. Residence in the UK may be required, for example, in connection with education, employment, business and investments. In connection with the investment and employment, there are two programs: Tier 1 (Investor) and Tier 1 (Entrepreneur). The main requirement for the program of the Tier 1 (Investor): an ability to invest in the UK £ 1 million. The main requirements for the program of the Tier 1 (Entrepreneur): an ability to invest in the company of Great Britain not less than £ 50,000, English proficiency and the availability of sufficient funds to stay in the UK. There is a system of points (in order to obtain a residence permit, you must receive a certain number of points).

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