The Cabinet of Ministers has approved government regulations on Applying for and Administration of Startup Aid Programs. "Therefore startups and their investors are invited to register and submit their applications for participation in aid programs at the Investment and Development Agency of Latvia," said Deputy Prime Minister and Economics Minister Arvils Ašeradens.
"Our goal is to make Latvia the number 1 choice for startups in the Baltic countries. The Law on Aid for Startup Companies is the foundation to foster the development of these companies. By introducing specific aid programs targeted at this particular group of companies, we expect that at least 30 such companies will be set up in Latvia annually, hiring around 160 highly-qualified employees," comments Arvils Ašeradens.
Thus the Law on Aid for Startup Companies has fully come into force, the goal of which is to foster the creation of rapidly-developing technology companies or startups in Latvia, thereby contributing to the development of research and commercialization of research products (innovative ideas, products or processes).
The following state aid programs are available to startups:
- Fixed payment aid program, with the option of personal income tax and enterprise income tax relief
- Aid program for attracting highly qualified employees, with the option of enterprise income tax relief
The procedure of applying for and administration of startup aid programs approved by the Cabinet provides the following:
- Documenting of applications submitted by startups and venture capital investors (including standard application forms) for evaluation of startups' compliance with the criteria for granting aid programs and evaluation of venture capital investors' compliance with the qualification conditions
- Duties and rights of the Investment and Development Agency of Latvia (LIAA), the aid program administrating body
- Procedure of administration of startup aid programs (from the submission of applications to the LIAA to decisions taken by the Commission, and throughout implementation of the aid programs)
- Procedure of determination of de minimis aid provided through the aid programs.
Decisions on whether a given startup qualifies for aid programs available under the Law on Aid for Startup Companies, and on allocating aid, as well as decisions on whether a given venture capital investor meets the requirements provided in the law will be taken by the Commission for Startup Company Activity Assessment, the duties and responsibilities of which will be laid down in the Statute of the Commission for Startup Company Activity Assessment.
The Commission has to take a decision on granting the aid program within one month after the day the application documents are received. The Commission is made up of 5 persons, including representatives from the LIAA (2 representatives), the Ministry of Economics (2 representatives) and the State Revenue Service (1 representative). The Commission is chaired by the LIAA Director, while one representative of the Ministry of Economics is the deputy chairperson of the Commission. The LIAA will also perform the secretariat functions of the Commission.
The law defines a startup as a capital company possessing a high growth potential, whose main economic activity is related to design, production of development of scalable business models and innovative products. One of the main criteria for granting the aid program to a startup is the investment of at least EUR 30,000 into equity capital of the startup by a qualified venture capital investor every aid application submission year, thereby proving the viability of the business idea of the startup.