On April 19 the Latvian parliament with majority votes supported a bill banning Latvia’s banks from doing business with shell companies in the first reading.
Under the draft law, the shell company is defined as an entity that fits one or several of the following three criteria. Firstly, there is no actual economic activity and no documentary proof to the contrary. Secondly, the entity is registered in a jurisdiction where companies are not required to submit to the authorities their financial statements. Thirdly, the entity has no place of business in its country of domicile.
The bill says banks will have to cease cooperation with shell companies within 14 days and close their accounts within 60 days. Therefore clients have time to finalize their business and move assets abroad freely until end of June 2018.
Following this period, these clients will be able to retrieve the money to their accounts in the holder bank or another one, but the clients will not be able to use this money for business.
This serves as a last call to businesses to abandon old style tax-free and audit-free structures, and relocate their business and banking to more reputable jurisdictions like Cyprus and others benefiting from minimal tax obligations but complying fully with all EU and international standards and requirements.
Should you require any advice on closure of Latvian bank accounts, or solutions for relocating your businesses and funds, please get in touch with us and NAKLAW team will be happy to help!
