Parliament passes startup support law

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As part of the set of laws related to the 2017 budget, Saeima on Wednesday adopted a law on support for startups, reported LETA.

The new law will stimulate the creation of new startups in Latvia, thereby fostering research and innovation. The goal is to have twenty new startups annually, creating 120 new jobs.

The law defines what a startup is and what support programs will be available to startups. Startups that have attracted risk capital of at least €30,000 will be qualify for state support and enjoy it for up to five years after setting up.

According to the law, a startup is a company with high growth potential, whose basic activity is development of scalable business models and creation, production or development of innovative products.

The support measures laid down in the law include fixed social contributions for employees paid up to €4,050 a month. If an employee's monthly salary exceeds €4,050, it is also applied the solidarity tax. The fixed social contribution replaces the regular social contributions and personal income tax that the employer would otherwise have to pay for the employee.

Startups will also be able to attract highly qualified employees with the state co-funding their salaries. The new tax regime will apply starting next year.

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