If you are a citizen of another country and wish to purchase real estate in Latvia, the bank will ask you for a document on the origin of your funds when completing the transaction.
How does this happen, and what do you need for it?
Let's consider the following example. The seller of the property is a citizen of Latvia, a private individual. The buyer is a citizen of Russia, without a residence permit in Latvia, and without an account in a Latvian bank.
First, the seller will need to notify their bank, where they have a current account, about the planned transaction.
For this, a questionnaire is filled out electronically, which specifies the "transaction parameters". These are the seller's details - name, surname, personal code, address, passport details; buyer's details - name, surname, date of birth, residential address, passport details; address of the real estate property; transaction price; transaction conditions.
Next, the bank reviews the questionnaire. Usually, this takes up to one week, and assigns a manager who will conduct the transaction.
The task of this manager is to collect all necessary information from the seller and buyer to open an "escrow account".
An "escrow account" is a convenient and secure banking service for settlements between seller and buyer. The essence of the escrow account is that the buyer deposits the purchase amount, the bank "blocks the money", then the buyer registers their ownership right, after which the bank verifies the fact of registration, and if everything is correct - transfers the money to the seller.
But to open an escrow account, a questionnaire alone will not be sufficient. The bank manager will request information and documents from the buyer about the "origin of funds".
The package of documents depends on how you earned the money to purchase the real estate.
- Most often - "this is salary". If you are a highly paid specialist, then over a certain period of time, you can accumulate a sufficient amount to purchase real estate in Latvia.
In such a case, the main documents are: a salary accrual and tax payment certificate (in Russia - personal income tax); bank statement extracts for several years confirming salary receipt; certificate from your place of work about your position; documents on your education and qualifications.
- Another common option is - "self-employed specialist". If you work with clients on a contractual basis, you can receive compensation that would allow you to purchase real estate in Latvia.
In such a case, the main documents are: registration certificate; tax registration certificate; several tax declarations reflecting income and paid taxes for the reporting period; bank statement extract confirming receipt of compensation and tax payment; several contracts with your clients specifying what tasks you must perform and what compensation you will receive.
- Another option is - "rental income". If you own residential or commercial real estate in your country of residence, the income received may be sufficient to purchase real estate in Latvia as well.
In such a case, the main documents are: documents confirming your ownership of the real estate; tax registration certificate; several tax declarations reflecting rental income and paid taxes for the reporting period; bank statement extract confirming receipt of rental payments and tax payment; several rental agreements with your tenants.
- In some cases - "income from property sales". For example, you sold your apartment or car in your country of residence, and decided to purchase a property in Latvia with these funds.
In such a case, the main documents are: documents confirming that you owned the sold property; purchase and sale agreement for this property; bank statement extract confirming receipt of funds by bank transfer; tax declaration confirming payment of tax on income from the sale, if applicable.
- In some cases - "dividends". For example, you own shares of a company that pay dividends. And this amount is sufficient to purchase real estate in Latvia.
In such a case, the main documents are: extract from the register of legal entities confirming your ownership of shares; decision of the enterprise on dividend payment; bank statement extract confirming receipt of dividends by bank transfer; tax declaration confirming payment of tax on dividend income, if applicable.
So, when you have prepared all necessary documents, you will need to scan them and send them to the bank manager in electronic form.
If documents are in Russian or English, translation and apostille are not required.
Additionally, you will be asked to fill out a detailed questionnaire, in which you will need to specify the volume of your income, describe the origin of funds "in text format", and confirm the accuracy of the information.
The bank manager will review all provided information within 2-3 weeks. If everything is in order, you will need to come to Latvia to sign the "escrow account agreement", and provide original documents "in paper form".
After signing the "escrow account agreement", the bank will allow you to transfer the purchase amount to a special account that will be used in your transaction.
If the bank has questions or requires clarifications regarding the documents, you will need to provide the missing information.
Main principles: the bank verifies the authenticity of documents, that they are genuine; and also checks the "proportionality" of your income with the real estate being purchased. If this is a very large transaction, you will need to explain very precisely and in great detail how you managed to collect such a large sum of money.
The above information is a summary based on our experience working with clients. Each case is considered individually, so please contact us for a consultation!
If you also wish to purchase a good real estate property, if individual approach is important to you, if you want to communicate with a real estate agent and lawyer in your native language, then contact our company KOM-INVEST! We will be happy to select a suitable property, answer all questions, draw attention to significant nuances, complete the transaction, arrange a residence permit and manage your real estate.
For more detailed information about obtaining a residence permit in Latvia, see here in different sections.
Have questions? We look forward to your email or call!
Phone number: +371 29774775
Email: info@kominvest.com
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