Latvia versus Estonia versus Lithuania

If you will make money and keep it in the company, Latvia and Estonia both let you defer corporate tax until you take it out, and Latvia's version is the cheaper of the two. If you will be profitable and distributing every year, Lithuania's flat annual rate is lower than either. If you are raising from American investors, none of the three, and that is worth saying before the table rather than after it.

Everything below comes from the statutes, with a link to each. Latvian and Estonian figures are re-checked automatically every month. Lithuanian ones cannot be, for reasons given at the end, and are re-read by hand. Nothing here is advice.

What Is the Difference Between Latvia, Estonia, and Lithuania for Startups?

Latvia and Estonia tax company profit only when it is distributed, at 20% and 24% of a grossed-up base, so retained profit is untaxed. Lithuania taxes profit every year as it is earned, at 17%. An Estonian private company needs no minimum share capital, a Lithuanian one EUR 1,000, and a Latvian one EUR 2,800.

Two rows in that table are doing all the work, and both are widely misreported. Whether Latvia counts as a tax haven is a separate question with its own page.

Is Corporate Tax Lower in Latvia or Estonia?

Latvia. Both tax distributed profit on a grossed-up base, but Latvia divides by 0.8 and Estonia by 0.76, so on what actually reaches the shareholder the gap is closer to seven points than the four between the headline rates. A company distributing all its profit every year pays least in Lithuania.

Latvia and Estonia run the same machine. Neither taxes profit as it is earned; both tax it when it leaves. Both build the taxable base from the sum handed to the shareholder and then gross it up by dividing, which is why comparing the headline rates alone gets the answer wrong.

Take a company with EUR 100 of profit, distributing all of it.

So on identical mechanics, getting money out of a Latvian company costs meaningfully less than out of an Estonian one, and the gap is wider than the four points between the headline rates suggests. Anyone quoting "Estonia 24, Latvia 20" is understating Latvia's advantage.

Lithuania is not running this machine at all. Its 17% applies to profit in the year it is earned, whether or not anything is distributed. That is lower than both of the others as a headline number and it is the wrong comparison, because it is charged on a different thing at a different time. For a company reinvesting everything, Latvia and Estonia charge nothing and Lithuania charges 17%. For a company distributing everything annually, Lithuania is cheapest.

What Is the Minimum Share Capital in Latvia, Estonia, and Lithuania?

An Estonian private company has needed no minimum share capital since February 2023. A Lithuanian UAB needs EUR 1,000, and a Latvian SIA needs EUR 2,800, paid in full before filing. A public company needs EUR 25,000 in Latvia, EUR 25,000 in Estonia, and EUR 25,000 in Lithuania.

The Estonian statute now says only that share capital is expressed in euros. Latvia also has a reduced-capital variant that carries conditions worth reading before you take it.

This matters less than it looks, because share capital is not a fee. It stays the company's money and can be spent the next day. But it is real cash that has to exist at incorporation, and on that narrow point Estonia is the easiest of the three and Latvia the hardest.

What Is Each Baltic Country Best For?

Estonia is best for ecosystem size, investor depth, and running a company remotely through e-Residency. Latvia is best for a profitable company that stays put, with the cheapest route for money leaving the company and the lowest salaries and cost of living of the three capitals. Lithuania is best for licensed fintech.

Estonia has the largest ecosystem and the deepest investor base of the three, e-Residency and genuinely remote administration, and now no minimum capital. If your priority is to incorporate and operate entirely from elsewhere with the least friction, this is the honest answer, with the caveats in the e-Residency section below.

Latvia has the cheapest route for money leaving a profitable company, a corporate tax regime that costs a reinvesting company nothing at all, and the lowest cost of living and salaries of the three capitals. It is the best of the three for a company that intends to be profitable and stay put.

Lithuania has the deepest fintech licensing practice in the Baltics, by some distance, and the largest domestic talent pool. If you need an EMI or a payments licence, the question is close to settled before you ask it.

Does Estonian e-Residency Give You Residency or a Bank Account?

No. Estonian e-Residency is a digital identity for signing and filing electronically from anywhere. It gives no right to live or work in Estonia, no tax residency, and no bank account, and it does not decide where a company is taxed, which usually depends on where the company is actually managed.

Estonia's e-Residency is the single most cited reason founders pick Estonia over the other two, and it is the thing most often misunderstood. This section describes what the programme is rather than what a statute says, so read it as orientation and check anything that would change your decision.

It is a digital identity, not residency. An e-resident gets a state-issued smart card and the ability to sign and file electronically. It confers no right to live in Estonia, no right to work anywhere, no visa, no path to citizenship, and no tax residency for the person holding it. The name does most of the misleading.

What it genuinely solves is signing. Company formation, filings, annual reports and tax returns can all be done from anywhere, which for a founder who will never set foot in the country is a real and significant convenience. Estonia built the packaged experience around this earlier and better than anyone in the region.

What it does not solve is banking. An e-resident with no connection to Estonia meets the same wall a foreign founder meets in Latvia, and for the same anti-money-laundering reasons. Estonian banks decline companies with no local substance routinely, and the usual outcome is an electronic money institution, exactly as it is in Latvia. If your plan depends on a bank account at a credit institution, e-Residency does not deliver it.

And the expensive misunderstanding: it does not decide where your company is taxed. Most countries look at where a company is actually managed rather than where it is registered. A founder living in one country, running an Estonian company alone from a desk there, can create a taxable presence in the country they are sitting in, whatever the Estonian registry says. That is not an Estonian problem and Estonia does not cause it; it is a question your own country answers, and it is worth answering before incorporation rather than after the first enquiry.

Latvia has no equivalent programme, and the gap is narrower than the marketing suggests. A non-resident can already register and run a Latvian company without living here, without a Latvian signature and without visiting, using the notarial route the registration guide sets out. What Estonia sells is a smoother path to the same capability, not a capability the others withhold. The honest difference is friction, not permission.

Which Baltic Country Is Best for Running a Company Remotely?

Estonia, if you want the least friction incorporating and filing from abroad and will solve banking separately. Latvia, if you will be profitable and distribute, using the notarial route. None of the three solves an account at a real bank remotely, and a founder managing from a fourth country should first ask what that country will tax.

What Are the Disadvantages of Starting a Company in Latvia?

Latvia's investor base is smaller than Estonia's, and no tax rate closes that gap. Its companies fail at ordinary register rates rather than brochure rates, and state programmes reach few companies: the Startup Law has supported 127 since 2017, and the startup visa granted 30 permits in 2025.

An article concluding that Latvia wins on every axis would not be believed, and should not be.

The investor base is smaller. This is the substantive gap and no tax rate closes it. Estonia's later-stage rounds and its density of funds are ahead of Latvia's, and a company planning to raise a Series B in the region will find more of the market in Tallinn.

Companies here fail at ordinary rates, not startup-brochure rates. Our own survival report puts two-year survival for register cohorts in the mid-nineties per cent and five-year survival far lower, and that is the whole register rather than a curated list. Any national figure that looks better than that is measuring a survivor set.

State support reaches very few companies. The Startup Law's own register names 127 companies since 2017, and the startup visa granted 30 permits in 2025. Those are real programmes with real value to the companies inside them, and they are not an ecosystem-wide advantage.

And one thing we cannot yet tell you. The re-domicile question, how many Latvian startups wind up the Latvian entity and carry on from a foreign holding company, is the one most worth answering here and we have not finished it. We have a candidate list; the first company we checked by hand turned out to be a false positive, and the case needs a named public source per company. We would rather say that than publish a number we cannot stand behind.

Should You Incorporate in Latvia, Estonia, or Lithuania?

If you are raising from US venture investors, none of them: you most likely need a Delaware C-corp. If you will reinvest profit, choose Latvia or Estonia, and Latvia if you will ever distribute. If you distribute every year, Lithuania. For fully remote administration, Estonia. For licensed fintech, Lithuania. For hiring engineers on a budget, Latvia.

• Raising from US venture investors? None of the three. You will most likely need a Delaware C-corp, because that is what the funds are built to invest in, and a later flip is expensive enough to price now rather than discover.
• Bootstrapped and expecting profit you will reinvest? Latvia or Estonia, and Latvia if you will ever distribute, because of the divisor.
• Profitable and distributing every year? Lithuania's flat rate is genuinely lower. Run your own numbers rather than trusting a table.
• Want to run everything remotely and never visit? Estonia, for the administration built around e-Residency, as long as you have read what it does not do and have a plan for the bank account.
• Building a licensed fintech? Lithuania.
• Hiring engineers on a budget? Latvia, where the payroll arithmetic is predictable and the total cost is gross times 1.2359.

Which Baltic Country Registers the Most Companies?

Estonia, by a distance that is partly real and partly an artefact of counting. In 2024 Estonia registered 23,154 companies, or 26.5 per thousand working-age residents, against 6.9 in Latvia and 7.6 in Lithuania. Estonia's rate is 3.8 times Latvia's, and both of the other two figures need unpacking before anyone quotes them.

This is the section that exists instead of an assertion about dynamism, because two of those three numbers are not counting the same thing.

• Estonia's figure includes e-residents. E-residents founded 5,556 Estonian companies in 2025, and Estonia's own programme describes that as around one in every five new companies each year. Strip a fifth out and the rate is 21.2 per thousand, still far ahead of the other two, but the gap is no longer a straightforward statement about where people start businesses.
• Lithuania's headline is usually understated. Of the 14,239 companies registered there in 2024, only 4,069 were UAB or AB, the forms comparable to a Latvian SIA. The other 10,170 were mažoji bendrija, a small partnership form Latvia has no equivalent of. International comparisons that count only UAB and AB put Lithuania below Latvia, and ones that count everything put it above.
• Latvia sits between them on a like-for-like basis and is the least distorted of the three counts.

Registering is not surviving, and the survival picture reverses the ranking depending on which source you use. Of the 2022 cohort, 87.1% of Latvian companies were still on the register after 36 months against 96.7% of Lithuanian ones, because the two registers strike companies off at different speeds rather than because Lithuanian companies last longer. Eurostat's business demography, which measures activity instead of registration, puts three-year survival for the 2021 cohort at 62.6% in Estonia, 50.1% in Latvia, and 43.5% in Lithuania.

Those two sources disagree about Lithuania by more than fifty points, and neither is wrong. They measure different things. The Baltic formation report sets out both in full, with what each register does and does not see, and why Estonia cannot be placed in the register comparison at all.

Choosing where to incorporate is a different question from expanding into a neighbour, and this guide answers only the first. What a Latvian company has to do to sell, hire, or establish across the border is in the expansion guides for Estonia and Lithuania.

How Are the Figures in This Comparison Checked?

Latvian and Estonian figures are hashed to the sentence in the statute that carries them and re-checked automatically every month. Lithuanian figures cannot be, because Lithuania's registers refuse scripted requests, so they are marked as needing a human and re-read by hand from the editions noted in the ledger.

Latvian and Estonian law is machine-readable. Riigi Teataja renders through JavaScript but exposes a public API that serves each act as plain HTML, so Estonian figures here are hashed to the sentence that carries them and re-checked every month, exactly as the Latvian ones are.

Lithuanian law is not. Its registers answer scripted requests with 403, and the consolidated texts that do load sit behind session-scoped URLs that fail for anyone else. Rather than hash a JavaScript shell that would never change and would have reported the Lithuanian rate as verified every month while it silently moved, the three Lithuanian figures are marked as needing a human. They were read on the date shown, from the editions noted, and the review asks a person to re-read them once a quarter rather than pretending to have checked them.

That is a worse guarantee than the other two countries get, and you should know which cells carry it.

Frequently Asked Questions

Does Estonia Tax Companies?

Yes. Estonia taxes company profit at 24% when it is distributed, and on the amount that actually reaches the shareholder that is nearer a third. The deferral is the benefit rather than an exemption, and the same is true of Latvia.

Is the Corporate Tax Gap Between Latvia and Estonia Four Points?

No. The headline rates of 20% and 24% differ by four points, but because both are charged on a grossed-up base, the gap on what actually reaches the shareholder is closer to seven points.

Is Lithuania the Cheapest Baltic Country for Corporate Tax?

Only for a company distributing its profit every year. Lithuania charges 17% on profit as it is earned, so a company reinvesting everything pays it every year and would pay nothing in Latvia or Estonia.

Can a Non-Resident Run a Latvian Company Without e-Residency?

Yes. Latvia has no e-Residency programme, but a non-resident can register and run a Latvian company without living there, without a Latvian signature, and without visiting, using the notarial route. The difference from Estonia is friction, not permission.

Are Latvia, Estonia, and Lithuania Basically the Same for Startups?

No. They have three different corporate tax models, three different minimum capital rules, and three different investor bases, and Estonia removed minimum capital for private companies entirely in 2023. The differences are larger than the similarities.

Sources

• Uzņēmumu ienākuma nodokļa likums and the Komerclikums, for Latvia.
• Tulumaksuseadus and the Äriseadustik, for Estonia. The ledger points at the Riigi Teataja API that serves each act, which is what makes them checkable.
• Pelno mokesčio įstatymas article 5, and the Akcinių bendrovių įstatymas article 2, for Lithuania.
• Our own register-derived reports for the Latvian ecosystem figures.

Rates and thresholds move on budget cycles in all three countries. Check the date at the top of this page against the calendar before you rely on it.