Estonia vs Lithuania vs Latvia: Which Baltic Country for Your Company?

The three Baltic states are the most popular place in the EU for a non-resident founder to form a company — low barriers, English-friendly registries, strong digital infrastructure, and no residency requirement. But Estonia, Lithuania, and Latvia are not interchangeable. Each has carved out a distinct niche, and the right choice depends on whether you are optimising for tax on retained profit, fintech banking, or pure speed and remote setup.

The three at a glance

Tax: Estonia and Latvia defer, Lithuania charges as you go

This is the biggest practical difference. Estonia and Latvia both run a distributed-profit tax system — you pay nothing while profits stay in the company, and tax only triggers when you pay dividends. For a business reinvesting everything into growth, the effective rate is zero for years. Lithuania uses a conventional system — a standard corporate tax of around 16% on profit as it is earned, with a reduced rate for small companies and a 0% rate in the first year of qualifying micro-companies.

So if you intend to retain and reinvest, Estonia or Latvia wins. If you will distribute profits regularly, Lithuania’s lower in-year rate and small-company relief can come out ahead — and its first-year 0% relief is a genuine head start. See each country page for the current rates and conditions.

Remote setup and e-Residency: Estonia leads

Estonia’s e-Residency programme is the reason it became the default for location-independent founders. A government-issued digital identity lets you incorporate, sign documents, and manage the company entirely online, from anywhere, with no visit. Lithuania and Latvia both allow remote formation through a qualified electronic signature or power of attorney, but neither offers an equivalent all-in-one digital-ID system. If running the company online with zero paperwork friction is the priority, Estonia is built for it.

Banking and fintech: Lithuania leads

Lithuania has deliberately become the EU’s largest hub for electronic money and payment institution licences — the Bank of Lithuania has authorised more EMIs than any other member state. If your business is fintech, or you want the smoothest access to EU-licensed EMI banking, Lithuania has the deepest ecosystem. For an ordinary operating company, all three onboard with EU EMIs easily; traditional bank accounts are more relationship-driven everywhere in the Baltics, and most founders start with an EMI and add a local bank later.

Which Baltic country should you choose?

• Choose Estonia if you are a digital or reinvesting founder who wants 0% tax on retained profit and a fully online company via e-Residency.
• Choose Lithuania if you are in fintech or payments, want EMI-friendly banking, or will distribute profits and benefit from the small-company and first-year relief.
• Choose Latvia if you want Estonia’s deferred-tax model at a slightly lower-cost, lower-profile base — a solid middle option for holding and trading.

All three sit inside the EU single market with EU VAT and no residency requirement, so any of them gives you a credible European company. For the wider picture, see our guide to company formation in Europe.

Frequently asked questions

Is Estonia or Lithuania better for a startup?

For a startup reinvesting its profit, Estonia is usually better — its 0% tax on retained earnings means you pay nothing until you distribute, and e-Residency lets you run everything online. For a fintech or payments startup, Lithuania is better, because it has the EU’s deepest EMI-licensing ecosystem and EMI-friendly banking. Both form quickly with no residency requirement.

Which Baltic country has the lowest tax?

Estonia and Latvia both effectively charge 0% on profits kept in the company, taxing only distributions — the lowest effective rate for a reinvesting business. Lithuania charges a conventional rate of around 16% as profit is earned, reduced for small companies and 0% in the first year for qualifying micro-companies. The “lowest” depends entirely on whether you retain or distribute profit.

Can a non-resident open a company in the Baltics?

Yes, in all three. None require residency or citizenship. You provide a passport and proof of address, and the company needs a local registered office, which we provide. Estonia additionally offers e-Residency for fully online management; Lithuania and Latvia allow remote formation by electronic signature or power of attorney.

Do I need to visit to form a Baltic company?

Not necessarily. Estonia is fully remote with e-Residency. Lithuania and Latvia can be formed without travelling, using a qualified electronic signature or a notarised power of attorney. A bank visit is sometimes requested for traditional accounts, but EU EMI accounts onboard online in all three.

Related guides

• Company formation in Europe: how to choose the right EU country
• Cheapest countries to form a company in Europe
• EU company formation comparison: all 27 member states