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.

The differences between Estonia, Latvia and Lithuania that matter for a company

The three are EU member states and euro area members, and together they are called the Baltic states. All three register companies electronically, keep a public company register, and require an annual report to be filed with it. None of them asks a shareholder or a director to be resident.

The differences start below that surface. Estonia files through the e-Business Register, Latvia through the Register of Enterprises, and Lithuania through the Register of Legal Entities at Registrų centras. Each register works in its own language, so the articles and the annual report follow Estonian, Latvian or Lithuanian practice even when the founder never learns the language. Paid-in capital and the tax model are the two hard differences, and both are set out in the table and the tax section above.

As an operating base the three are not the same size. Lithuania is the largest by population and has the deepest local labour market. Estonia is the smallest and the most digital, and Latvia sits in between, with the busiest airport in the region at Riga. For a company with no local staff the size gap barely registers. It starts to matter the moment you hire.

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.

Which of the three has the highest tax?

Latvia carries the highest headline figure, 20% on distributed profit, but it falls due only when profit leaves the company. Lithuania’s rate of around 16% is charged every year on profit as it is earned. A company that pays out nothing is taxed there, and not in Latvia or Estonia.

Do Estonia, Latvia and Lithuania use the same currency?

Yes. All three are euro area members: Estonia joined in 2011, Latvia in 2014 and Lithuania in 2015. Share capital, bookkeeping, VAT returns and the annual report are all in euro. Payments run over SEPA, so a Baltic company invoices the rest of the euro area without conversion.

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