Regulations for an EMI License in Latvia

Latvijas Banka (the Bank of Latvia) is the national authority responsible for licensing and supervising Electronic Money Institutions (EMIs) and Payment Institutions (PIs). The bank assesses governance, capital, safeguarding, AML/CTF, ICT/security, and operational resilience before granting authorisation. The same supervisor oversees ongoing reporting, audits, and change-of-control reviews—ensuring long-term compliance and operational sustainability.

Latvia’s regime combines EU-level rules (PSD2/EMD2, RTS on SCA/CSC, EBA Guidelines) with national laws and Latvijas Banka regulations:

A transparent, EU-harmonised process with clear documentary checklists, structured interviews, and ongoing supervisory dialogue—designed to support safe scale-up of payment/e-money operations.

Types of Payment Authorisations in Latvia

Payment typeDescription
Electronic Money Institution (EMI)Full permission to issue electronic money and perform the broad set of payment services (IBANs, SEPA credit transfers/direct debits, cards issuing/acquiring, merchant services, currency exchange ancillary to payments), plus safeguarding of client funds.
Standard Payment Institution (PI)Permission to provide payment services under PSD2 (e.g., account services, credit transfers, card-based payments, money remittance, PIS/AIS as applicable) without issuing e-money. Initial capital depends on the services offered (see capital table below).
Limited Payment Institution (Domestic scope)A local-only PI regime for selected payment services within Latvia, subject to volume caps and simplified requirements appropriate to smaller operators (authorised by Latvijas Banka).

Services Allowed Under an EMI License

  • Issuance of e-money and maintenance of e-wallet balances
  • Payment account services: opening/operating IBAN accounts; cash-in/cash-out
  • Execution of payments: SCT/SCT-Inst/SDD, card-based payments, standing orders
  • Payments with credit line coverage (where applicable)
  • Issuing and/or acquiring of payment instruments (cards & tokenised instruments)
  • Money remittance and merchant services (incl. payouts, pay-ins)
  • Ancillary currency exchange, PIS/AIS where included in programme of operations

Services Allowed Under a Payment Institution (PI) License

  • Payment account services (where authorised), execution of payments (credit transfers, direct debits, card-based), money remittance
  • Payment initiation services (PIS) and/or account information services (AIS) (subject to programme and PII/insurance expectations)
  • Acquiring and merchant services, settlement processing and payouts (no e-money issuance)

Overview of Requirements to Obtain an EMI/PI License in Latvia

Main requirements (both EMI & PI):

  • Latvian-incorporated company under local law, licensed and supervised by Latvijas Banka in line with EU PSD2/EMD2.
  • Management board of at least two qualified members with solid payments/banking experience and good repute; “fit and proper” for all controllers and key function holders.
  • Appointment of mandatory officers (AML/CTF Compliance Officer, Risk Manager, IT/Security function, internal audit proportional to size).
  • Physical office and operational presence in Latvia; local record-keeping and regulatory accessibility.
  • Safeguarding arrangements with an EU credit institution; daily reconciliations and written safeguarding policy.
  • Comprehensive internal framework: AML/CTF, governance, risk, outsourcing, ICT & security, incident management, business continuity, complaints handling, and conduct rules.
  • Programme of operations and 3-year financial plan with liquidity modelling and own funds methodology.

Share capital:

  • EMI: EUR 350,000 minimum initial capital, fully paid before authorisation decision (per EMD2).
  • PI: Depending on services (per PSD2 Annex I):
    • EUR 125,000 (payment services 1–5)
    • EUR 20,000 (money remittance only)
    • EUR 50,000 (payment initiation services)
    • Account information services (AIS) only require professional indemnity insurance.

Legal Services for obtaining EMI/PI license in Latvia

Foundational Licensing Support

for companies entering the Latvian market

  • Incorporation of Latvian company & provision of legal address (12 months)
  • Drafting of constitutional & governance documents
  • Initial due diligence for shareholders, directors & UBOs
  • Strategic overview of business model and financial forecasts
  • Organizational structure review
  • Compliance review of existing internal documentation
  • Filing of license application with Latvijas Banka

Regulatory & Operational Build-Out

for full EMI/PI application readiness

  • Development of tailored business plan & program of operations
  • Drafting of complete internal policy suite (AML/CTF, risk, ICT, outsourcing, complaints, governance, etc.)
  • Accounting setup & regulatory reporting templates
  • Assistance in opening safeguarding & operational bank accounts
  • SEPA and SWIFT connectivity arrangements
  • Card scheme access (BIN sponsorship with Visa/Mastercard)
  • Apostilled & certified corporate documents
  • Integration with licensed software provider & testing of operational readiness
  • Continuous legal & regulatory support

Ready-to-Operate EMI/PI Company

for clients seeking immediate market entry

  • Pre-incorporated Latvian entity
  • Valid legal address & governance already in place
  • Active EMI/PI license
  • Transfer of ownership & corporate control
  • Banking infrastructure (safeguarding & operational accounts)
  • Connections with service providers (IT systems, AML/CFT, compliance)
  • Qualified personnel assigned and ready for operations
  • Regulator notifications & supervisory coordination until go-live

Jegor Kupratsevits

Head of Fintech

Detailed Requirements for EMI/PI Licensing in Latvia

List of Required Documents

  • Application forms and controller declarations (shareholders/UBOs)
  • CVs, diplomas, references and fit-and-proper dossiers for board and key function holders
  • Business plan & 3-year financials; ICAAP-lite/own-funds rationale (as applicable)
  • Programme of operations; customer journeys; product & geography matrix
  • Safeguarding policy & evidence of arrangements with an EU credit institution
  • Internal policies & manuals: AML/CTF; risk; governance; outsourcing; ICT & security; incident & major-incident; BCP/DR; complaints; conduct; conflicts; remuneration; record-keeping
  • ICT documentation: architecture, hosting & data residency, access control, backups, DR site, logging/monitoring, vulnerability & patch management
  • Outsourcing inventories, due diligence files, exit strategies; cloud terms (if used)
  • AML pack: risk assessment, CDD/EDD, PEPs/sanctions screening, monitoring scenarios, SAR process and training materials
  • Safeguarding reconciliations templates; process narrative; accountant/auditor engagement letter
  • SoF/SoW documents for qualifying shareholders; police clearance (where requested) 

Business premises requirements

  • Physical office in Latvia (regulatory correspondence, storage of originals/records, on-site inspections) with secure access and ICT controls; capacity commensurate with scale and activity.

Share capital & government fees

  • EMI: EUR 350,000 paid-in before authorisation decision (EMD2)
  • PI: EUR 125,000 / 50,000 / 20,000 depending on services (PSD2)
  • Regulatory fees: application and ongoing supervision fees per Latvijas Banka schedule at the time of filing (fixed + income-based elements). We prepare fee calculations and ensure timely payment.

Bank account requirements

  • Safeguarding Account – Dedicated account with an EU credit institution to securely hold client funds, including daily reconciliations, segregation controls, and payout procedures to protect customer money.
  • Operational Accounts – Separate accounts for managing the company’s operating expenses, payroll, and tax obligations, ensuring a clear distinction from safeguarded funds.
  • Current Accounts – Standard current accounts for day-to-day transactions, including SEPA/SWIFT payments and card settlement, supporting smooth service operations.

Personnel Requirements

  • Management Board (Minimum 2 Members) – At least two qualified individuals must effectively direct the business in line with the EU “four-eyes” principle. Each must demonstrate strong experience in payments, e-money, or banking, possess a spotless reputation, and show competence through CVs and credentials. They are expected to reside in or maintain regular presence in Latvia to ensure effective management and interaction with the supervisor.
  • General Manager / CEO – A single individual responsible for daily leadership and execution, with clear delegation of authority and reporting lines.
  • AML/CTF Compliance Officer – Ensures compliance with anti-money laundering and counter-terrorism financing requirements, including customer due diligence, transaction monitoring, and reporting obligations. Deputies may be appointed depending on the scale of operations.
  • Risk Manager – Oversees operational, ICT, outsourcing, and safeguarding risks, ensuring a consolidated risk management framework and regular reporting to the board.
  • IT / Security Lead – Either in-house or outsourced, but with a designated internal owner accountable for cybersecurity, ICT controls, data protection, and incident response.
  • Internal Audit (Proportionate to Size) – May be in-house or outsourced to an independent party. Ensures regular testing and assessment of compliance, governance, and internal controls.
  • Data Protection Officer (DPO) (if applicable) – Required if core operations involve large-scale processing or monitoring of personal data, in line with GDPR obligations.
  • Chief Financial Officer (CFO) (optional, depending on scale) – Oversees financial reporting, accounting integrity, and tax compliance; ensures adequate financial controls.
  • Chief Risk Officer (CRO) (optional, depending on scale) – Provides strategic oversight of enterprise-wide risk, consolidating compliance, operational, and governance risk management.

Roadmap to an EMI/PI License in Latvia

Jegor Kupratsevits

Head of Fintech

1

Initial Scoping & Strategy

We assess your business model, define whether EMI or PI is the correct fit, and outline regulatory, capital, and operational requirements. This stage ensures you avoid missteps and build a license application around a sustainable structure. It also sets the project scope, identifies potential risk factors early, and aligns expectations with regulatory standards.

2

Incorporation & Governance

We establish your Latvian entity, set up the board and key roles, and put in place a governance structure that meets regulator expectations. By doing so, we create the legal and organisational backbone of your project from the outset. This stage also includes preparing statutory documents, securing a legal address, and ensuring governance arrangements are fully transparent.

3

Business & Operations Planning

A full programme of operations and business plan is developed, showing customer journeys, financial forecasts, and growth strategy. This demonstrates to the regulator that your company can grow responsibly while protecting clients and the payment system. Additional focus is placed on stress testing financial models and building a roadmap for long-term operational sustainability.

4

Compliance & Control Framework

We prepare the key policies and controls that regulators require — covering AML, risk management, ICT, incident response, customer protection, and safeguarding of client funds. The framework ensures that compliance is not only on paper but also workable in daily operations. Special attention is given to aligning all policies with EBA guidelines and Latvian AML legislation to avoid delays at the review stage.

5

Safeguarding & Banking Setup

We arrange safeguarding and operational bank accounts, and demonstrate how client funds will be securely held and reconciled. This provides early confidence to both regulators and banking partners that your safeguarding model is robust. We also prepare reconciliation workflows and segregation procedures to show how customer funds are fully protected.

6

ICT & Security Readiness

Your IT systems, security measures, and outsourcing arrangements are documented to meet the high standards set by EU and EBA guidelines. We also ensure that processes like access control, monitoring, and incident handling are practical and ready for audits. This step often includes testing of security protocols and preparing evidence of business continuity planning.

7

Management & Key Personnel

Fit-and-proper checks are completed for all board members, shareholders, and compliance officers. We also prepare interview narratives and supporting materials to show each individual’s competence and commitment to regulatory standards. The process ensures that the team’s collective experience and reputation meets supervisory expectations.

8

Application Filing

We submit the full application to Latvijas Banka, ensure government fees are paid, and manage the regulator’s completeness review. By taking ownership of the filing process, we minimise back-and-forth and keep your timeline under control. Our legal team ensures the application is harmonised, preventing unnecessary clarifications.

9

Regulator Engagement

We guide you through Q&A rounds, address follow-up requests, and make refinements where necessary to satisfy the supervisory team. Our team ensures communication with the regulator stays smooth and that expectations are consistently managed. This stage often involves detailed discussions on ICT, AML, and governance, where proactive handling accelerates the decision process..

10

License Approval & Go-Live

Once approved, we complete registrations, finalise banking and payment connections, and prepare you for live operations under regulatory supervision. This means you can launch confidently, knowing your setup meets all EU requirements from day one. We also provide first-year reporting support to help establish strong compliance from the start.

Detailed Time Frames to Obtain an EMI/PI License in Latvia

1. Preparation & Company Setup

Time Frame: 8-12 weeks

Scoping, incorporation, governance setup, and full documentation package: programme of operations, business plan & financials, policy suite, ICT/security documentation. Fit-and-proper dossiers are compiled for all board members and key function holders. Parallel work begins on safeguarding and banking partner engagement.

2. Filing & Submission to Latvijas Banka — 1–2 weeks

Time Frame: 1-2 weeks

Final QA of application pack, payment of government fees, and submission to regulator. Completeness check is usually performed within days, confirming the file enters substantive assessment.

3. Assessment & Clarifications

Time Frame: ~3–5 months

Latvijas Banka conducts a full review of governance, capital, safeguarding, AML/CTF, and ICT/security. Expect Q&A rounds, document refinements, and interviews with board members and compliance officers. Supervisory feedback may require adjustments to controls, reporting templates, or banking arrangements.

4. Decision & Authorisation

Time Frame: ~4–6 weeks

Upon approval, the license is formally issued, the company is entered into the public register, and pre-launch conditions (safeguarding confirmations, reporting templates, SEPA/EKS setup, BIN sponsorship where relevant) are finalised.

Total indicative timeline: ~6–9 months from project start, depending on file quality, responsiveness, and business model complexity.

Tips to Reduce Delays

 Submit harmonised policies from day one (AML/CTF, safeguarding, ICT/security); maintain high availability of board and key officers for regulator interviews; and respond to clarifications quickly. Standardising outsourcing registers, incident procedures, and banking letters with EBA templates significantly shortens review time.

Advantages of an EMI/PI License in Latvia

Key Legal Resources

Core Latvian law on PI/EMI licensing, safeguarding, governance and disclosures.

Official licensing portal, steps and contact points.

Application contents, documentation and information duties for PIs/EMIs.

EU framework for payment services, including PIS/AIS.

EU rules on issuing electronic money and EMI capital.

Strong customer authentication and secure communications.

ICT risk expectations for PIs/EMIs.

Reporting scope and templates. 

EU-wide register to verify authorised PIs/EMIs and passport notices.

National AML/CTF statute; supervisory handbook available from Latvijas Banka.

Taxation of EMI/PI Companies in Latvia

Latvia offers one of the most competitive tax regimes in the European Union, making it attractive for payment institutions (PIs) and electronic money institutions (EMIs). The system is simple: profits are not taxed while retained or reinvested. Tax applies only once profits are distributed, allowing licensed institutions to use earnings to strengthen capital buffers, technology, and compliance before paying out.

Corporate Income Tax (CIT)

Corporate Income Tax (CIT)

  1. Undistributed profits: 0% CIT. Operational income, transaction fees, and other profits are tax-free while kept in the company.
  2. Distributed profits: 20% tax on the net distribution (20/80 method, equal to 25% of the gross dividend). Triggered when profits are paid out as dividends or treated as deemed distributions (e.g., non-business expenses, certain profit transfers).
  3. Scope: Applies on worldwide income, regardless of where services are provided.
Dividends & Withholding Tax (Non-Resident Owners)

Dividends & Withholding Tax (Non-Resident Owners)

  1. General rule: Dividends to non-residents are not subject to Latvian withholding tax.
  2. Exceptions: Payments to low-tax or black-listed jurisdictions may trigger 20% WHT under anti-avoidance rules.
  3. EU/treaty relief: Double-tax treaties and EU Parent-Subsidiary Directive often eliminate double taxation for cross-border structures.
Paying Salaries to Founders & Staff

Paying Salaries to Founders & Staff

  1. Latvia-based employees (including AML officers, compliance, or management):
    • Personal Income Tax (PIT): Progressive rates of 25.5% and 33%, plus 3% solidarity surcharge above EUR 200,000/year.
    • Social security contributions: Approx. 23.59% (employer) and 10.5% (employee), with ceilings and solidarity rules at higher income levels.
    • Payroll mechanics: Employer withholds and remits PIT and contributions monthly.
  2. Non-resident founders/staff outside Latvia:
    • Salary for work performed entirely outside Latvia is not taxed in Latvia (source-based taxation; treaties may apply).
    • If a non-resident physically works in Latvia (e.g., during board duties), Latvian PIT/social security rules apply pro-rata.
VAT on EMI/PI Services

VAT on EMI/PI Services

  1. Standard VAT rate: 21%.
  2. VAT exemption: Core payment and financial services (account operations, transfers, issuing/acquiring of payment instruments, credit) are VAT-exempt under EU VAT Directive Article 135.
  3. Ancillary services: Technology, advisory, or SaaS-type services may be VAT-liable. Each revenue stream must be assessed.
Accounting, Reporting & Compliance

Accounting, Reporting & Compliance

  1. Financial statements: IFRS-quality reporting required; annual audited accounts filed in Latvia.
  2. Transfer pricing: OECD-aligned TP rules apply for intra-group services.
  3. Transparency regimes: CRS/FATCA and DAC6 reporting obligations apply.
  4. Supervisory expectations: Latvijas Banka expects transparent intra-group pricing and proper documentation of related-party transactions.

We can calibrate your tax and payroll posture (local vs. remote teams, TP for shared services, and dividend flows) with a Latvia-qualified tax advisor before launch.

FAQ – EMI/PI License in Latvia

Who is the regulator?

Latvijas Banka licenses and supervises EMIs and PIs in Latvia, publishes rulebooks/templates, and maintains public registers.

What initial capital is required?

EMI: EUR 350,000 (fully paid). PI: EUR 125,000 / 50,000 / 20,000 depending on services (and PII for AIS-only).

Do I need a Latvian office?

Yes—regulatory correspondence, record-keeping, access for inspections, and operational oversight are expected locally. 

Can foreign founders apply?

Yes. There is no nationality restriction for shareholders/UBOs. Fit-and-proper and governance standards apply to all controllers and key function holders.

What about safeguarding?

Client funds must be safeguarded with an EU credit institution and reconciled daily. Policies, reconciliations and audit trails are reviewed at authorisation and on-site inspections.

Are outsourcing and cloud allowed?

Yes—under EBA Outsourcing Guidelines with robust governance, risk and exit strategies; critical functions demand heightened oversight. 

How long does licensing take?

Typical projects complete in ~6–9 months from kick-off, depending on model complexity, file quality and responsiveness during Q&A. (See timeframes above.)

Can we add card issuing and acquiring?

Yes. EMIs commonly integrate via BIN sponsors (Visa/Mastercard) and connect to SEPA/EKS for account-to-account payments.

What languages are accepted?

Latvian is official, but Latvijas Banka works with English documentation widely; sworn translations may be required for certain acts.

What ongoing reporting is required?

Periodic prudential/operational reports, safeguarding reconciliations, ICT incident notific

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