Latvian entrepreneur on his way to European markets

For Latvian entrepreneurs, the local market often becomes too narrow for more ambitious business growth. The European Union (EU) single market opens up enormous opportunities – access to more than 450 million consumers without customs tariffs and with relatively uniform rules of the game. However, this does not mean identical rules in absolutely all areas of business. Starting a business or expanding an existing company abroad requires careful preparation. To become a global leader from a local player, a clear business model and an understanding of legal, tax and cultural aspects are required. Entrepreneurs must be able to balance courage with pragmatism, using both national and European level support instruments.

Remote operation or physical presence

One of the first questions an entrepreneur faces is the choice of an operating model. 

Doing business in the EU means more than just exporting. It is an opportunity to:

• establish a company in another country,
• open a branch or representative office,
• offer services without a physical presence.

Remote export is the easiest way to start a business abroad. It allows you to maintain a base in Latvia and use digital channels or logistics partners to reach customers in other countries. This approach is relatively safe, as it does not require significant capital investments in infrastructure.

On the other hand, a physical presence – the creation of a branch or subsidiary – means much deeper integration into the target market. Such an approach is often necessary in industries where prompt customer service, local reputation or participation in public procurement are important. When choosing a legal form, an entrepreneur must assess the risks and scope of liability. A limited liability company (Ltd, GmbH, etc.) is often the optimal solution, while operating as an individual merchant will be a simpler option, but with greater risk. If you already have a company in Latvia, it is possible to establish a branch abroad, but for larger companies, the European company form may also be suitable, which ensures uniform regulation in several countries.

Market selection: opportunities and challenges

The European market is not homogeneous. Each country offers a different business environment, influenced by tax policy, administrative burden, consumer habits and level of competition. Before making a decision, evaluate the country's: tax system, level of bureaucracy, market potential, competition in the specific industry, data-list-item-id="e73081e6bcc15159b68f6d1a5822d63e0">availability of labor.

For example, the Nordic countries stand out with high purchasing power and level of digitalization, while Central European countries offer a larger market size and industrial base. Estonia is known for its digital environment, while Germany – with a large market, but more complex regulation, etc.

Market research is a critical stage. An entrepreneur must evaluate not only the demand for a product or service, but also cultural nuances, price sensitivity and competitors' offerings. Often, seemingly insignificant differences – packaging design, communication tone or customer service standards – determine success or failure.

Taxes, human capital and mobility

One of the most complex aspects of international operations is the tax system. Value added tax (VAT) in cross-border transactions requires a precise understanding of the rates and registration conditions of each country. Therefore, it is necessary to clarify whether it is necessary to register with the VAT payer register when carrying out a specific transaction, the appropriate rate must be applied, and the rules for cross-border transactions must be understood. Errors in tax calculations can be costly, so it is often worth attracting a local tax specialist. A centralised declaration system, which allows you to administer taxes in one place, is a significant relief for e-commerce companies. Depending on the country and business model, corporate income tax and specific local taxes may also have to be paid, and social contributions must be made. It is important to note that tax systems in the EU are not completely unified.

In addition to tax regulations, legal regulations also play a significant role. Depending on the industry, licenses, certificates, and compliance with EU standards may be required. This is especially important if you work with food, provide medical or financial services, or use personal data in transactions with third countries, such as the USA or China. If a transaction takes place between Latvia and another EU or European Economic Area (EEA) country, the free movement of data is allowed without additional restrictions, as the General Data Protection Regulation (GDPR) rules are in force in these countries.

Product certification, labeling requirements, and personal data protection regulations can significantly affect a company's operations. Compliance with these requirements is not only a legal obligation – it is also a part of building trust in the eyes of customers.

When expanding abroad, companies face labor issues, so special attention should be paid to:

• employment contract requirements,
• minimum wage regulations (if any),
• social guarantees,
• job security.

Labor law in Europe is strictly regulated, and each country has its own nuances. If it is planned to send employees from a Latvian company to work abroad, it is important to know and comply with the labor law norms of the specific country, including minimum wage requirements, as well as work safety requirements. In turn, attracting local labor means full integration into the regulations of the relevant country.

Human capital often becomes the decisive factor. The ability to attract and retain qualified employees determines the company's long-term competitiveness.

LIAA support on the path to foreign markets

The Latvian Investment and Development Agency (LIAA) plays a significant role in Latvian entrepreneurs' international growth, offering not only strategic support, but also very specific, practical tools.

First, entrepreneurs are advised to start with the Export Readiness Wizard on the unified platform for entrepreneurs Business.gov.lv. This digital tool helps to assess a company's ability to compete in foreign markets in a structured manner - from product suitability to team capacity. It serves as a kind of “reality test”, which allows you to avoid hasty and financially risky decisions.

Secondly, LIAA provides access to a wide network of international contacts. LIAA has representative offices in almost 20 countries around the world.  The agency’s representative offices abroad provide information about the specific market, help identify potential partners and navigate the local business environment. Diplomatic and institutional support is also available, which is often crucial for the first steps in a new market to be targeted and effective.

Thirdly, an important tool is financial support for participation in international exhibitions and trade missions. Entrepreneurs can receive co-financing, which often covers up to 60% of the costs. In practice, this means that a company can participate in high-level industry events with a significantly lower financial burden, while gaining access to potential customers and cooperation partners.

Application for this support is carried out centrally on the digital platform Business.gov.lv. The process usually includes several steps: selecting a suitable event from the calendar, consulting with LIAA experts and submitting an electronic application. It is important that the support is not only financial - it also includes organizational and advisory assistance, which significantly increases the effectiveness of participation.

In addition, LIAA regularly organizes trade missions, contact exchanges, where it is possible to gain insight into several markets at once. It is also possible to participate in seminars that help entrepreneurs not only present their product, but also understand the specific market from the inside. Such activities promote not only exports, but also the creation of long-term cooperation.

EU-level instruments and support mechanisms

Starting a business in Europe is becoming increasingly easier. In many countries, a company can be registered remotely within a few days using an electronic signature. The “one-stop shop” principle allows you to complete most formalities in one place, significantly reducing the administrative burden. Companies that effectively use digital tools – from document management to customer relationship management – are able to adapt faster and reduce costs. In addition to national support, entrepreneurs also have access to European-level instruments. These include funding programs for innovation, partner search networks and legal assistance mechanisms. These resources allow companies not only to expand, but also to protect their interests in difficult situations. The most important online platforms at EU level:

• Your Europe is a key resource that brings together information on taxes, employment, product requirements and public procurement in each EU country;
• The Enterprise Europe Network (EEN) is the world's largest support network for small and medium-sized enterprises, operating in more than 60 countries. It helps you find partners, offers international networking opportunities and explains EU legislation;
• Access2Markets helps you understand import/export rules, taxes and trade barriers;
• SOLVIT is a free service that helps you if other EU country authorities do not respect your EU rights as an entrepreneur.

It is also advisable to research the information on the websites of the government, business register and tax administration of the specific country. Local chambers of commerce and  will also provide useful information. business incubators.

In the early stages of business development, websites where you can search for funding and experience can also be crucial tools:

• Startup Europe – for start-ups,
• InvestEU – investment support,
• EIC Accelerator – for innovations,
• Erasmus for Young Entrepreneurs – for experience exchange

Practical recommendations

Successful expansion is based on a structured approach, so entrepreneurs are advised to:

• start with an export readiness assessment;
• use the LIAA consultation and contact network;
• focus on a few priority markets;
• attract local experts;
• digitalize processes and use available EU tools.

This approach reduces risks and increases the possibility of achieving sustainable results.

It is also worth paying attention to the fact that intellectual property protection is becoming particularly important in the international environment. A brand, patent or design is a strategic asset of a company that must be protected in all markets in which it operates. Timely registration and monitoring help avoid legal disputes and reputational risks.

In conclusion

The European single market offers Latvian entrepreneurs a unique platform for growth. Although the path to international business requires knowledge, resources and patience, it is a logical next step for companies with ambitions. The practical support provided by LIAA significantly facilitates this process, turning a complex expansion into structured and managed growth.

Latvian entrepreneurs have all the prerequisites to become significant players in the European and global markets. The decisive factor is the ability to use the available tools and act strategically. 

The creation of the platform is being implemented within the framework of the European Union Recovery and Resilience Mechanism investment 2.1.2.1. “Digital Services Platform business.gov.lv”, in close cooperation with state institutions and business representatives.
Its development is taking place gradually - by testing solutions, improving usability and adapting the platform to the real needs of entrepreneurs. Special attention has been paid to user experience in the development process – entrepreneurs are actively involved in testing and provide feedback on the ease of use of the platform.
The project “Digital Services Platform for Promoting Business Development” is implemented with funding from the European Union's Recovery and Resilience Mechanism (NextGenerationEU).