Company formation in the Baltics: Estonia, Latvia or Lithuania?

Which one we recommend

Founders often ask us which Baltic country is "best". The three company forms are close on paper (one shareholder, one director, limited liability, registration within 5 business days), so we recommend by what you will do with the profit and who owns the company:

Where your licence, clients or staff will be often decides it before tax does. A licensed payment business, for example, needs its company in the country of the licence.

Estonia, Latvia and Lithuania side by side

The key facts for a private limited company in each country, taken from our country pages:

Private limited companies in Estonia, Latvia and Lithuania compared

Factor	Estonia (OÜ)	Latvia (SIA)	Lithuania (UAB)
Minimum share capital	None (shares from €0.01)	€2,800, or from €1 for up to 5 individual owners	€1,000, paid in before registration
Corporate income tax	22%, on distributed profit only	20%, on distributed profit only	17% on annual profit; 7% for small companies
Dividend tax for a private shareholder	None	None	15%, withheld by the company
Standard VAT rate	24%	21%	21%
VAT registration threshold	€40,000 a calendar year	€50,000 a year	€45,000 in 12 months
Register decision	Within 5 business days	Within 5 business days	Within 5 business days
Annual report	Within 6 months of year end	Within 5 months of year end	Approved within 5 months, filed within 30 days
Residency of owners and directors	No requirement	No requirement	No requirement
Operational company package (MAXCORP)	From €2,500	From €2,500	From €2,500

Displayed prices are indicative professional fees excluding VAT.

The real difference: profit tax and dividend tax together

Comparing only the corporate tax rate is misleading. What matters is the total tax between the company’s profit and the money in the shareholder’s account.

Estonia and Latvia use the distribution model. Profit kept in the company is not taxed. When it is paid out as a dividend, the company pays 22% in Estonia (22/78 of the net dividend) or 20% in Latvia (the net dividend divided by 0.8), and that is the end of it: neither country taxes the dividend again for the shareholder as a rule. Latvia applies 20% if the recipient sits in a low-tax or tax‑free jurisdiction.

Lithuania taxes the profit every year, paid out or not: 17% as standard, 7% for small companies with revenue up to €300,000, and 0% for the first two years for an eligible new company. When a dividend goes to a private person, the company also withholds 15% income tax on it. A company shareholder holding at least 10% for at least 12 months is usually exempt from that withholding.

For a private shareholder, a small Lithuanian company paying out its profit ends up at about 21% in total (7% profit tax, then 15% on the dividend), close to Estonia and Latvia. At the standard 17% rate it is about 29.5%. Tax treaties and your own tax residency can change the result, so check your case with a tax adviser.

Running the company from abroad

All three registers accept a notary-certified power of attorney, so we can form the company without you travelling. Digital signing differs:

If you will be the director yourself, plan for the employment side. In Lithuania the law requires the company to sign an employment contract with its manager, and in our practice a paid board member of a Latvian SIA is in most cases set up the same way, with payroll taxes to match.

Each country needs a registered address in the country. Our packages include one in Tallinn, Riga or Vilnius.

Banking in all three countries

The bank account is where most new Baltic companies lose time. Local banks decide on each application themselves and often ask for a real link to the country. Most of our clients open their first business account online with EU providers such as Revolut, Wise or Paysera, and add a local bank once the company is trading. Our guide to opening a business account remotely explains the options.

For a new company with full share capital, the capital is paid before filing in Latvia and Lithuania: into an account opened in the name of the SIA being founded, or for a UAB into an accumulation account at a Lithuanian bank or a foreign account with a bank statement as proof. A ready-made company avoids that step.

How MAXCORP sets it up

MAXCORP forms companies in Estonia, Latvia and Lithuania. You can choose a new registration (from €1,480) or an operational, ready-made company (from €2,500) that is already registered, with an address, bank account support and accounting in place, so only the owner and board change.

Not sure which country fits? Tell us about the business, where your clients are and how you plan to use the profit. We usually start from Estonia and tell you when Latvia or Lithuania fits better.