Estonian OÜ vs Lithuanian UAB vs Latvian SIA: Which Baltic Company Should You Actually Register?
The rate on the page is the least useful number in this comparison. Estonia and Latvia both tax company profit only when it leaves the company — the money can sit inside the OÜ or the SIA for years at 0%. Lithuania taxes profit every year it’s earned, whether you take it out or not. That timing difference, not the headline percentage, is what actually decides which Baltic company fits a given founder — and it’s the question most comparison pages skip entirely.
The short answer
Estonia (OÜ) and Latvia (SIA) defer tax until distribution; retained profit is taxed at 0% in both. Lithuania (UAB) taxes annual profit as it’s earned, currently 17% from 1 January 2026.
Estonia’s distribution tax is 22% calculated as 22/78, equal to 28.2% of the net amount paid out. Latvia’s standard distribution tax is 20% on a base divided by 0.8, equal to an effective 25% of the net payout.
From 1 January 2026, Latvia added an elective 15% rate (base ÷ 0.85) for companies whose only shareholders are individuals — but it adds a 6% personal income tax withheld from the shareholder, so it isn’t a flat win.
Lithuania gives small companies (under 10 employees, under €300,000 revenue) a 7% rate from 1 January 2026, and 0% for the first two tax years of any new qualifying small company.
Only Estonia has a mature remote-incorporation pipeline built around e-Residency; Lithuania’s e-Residency card requires an in-person pickup and doesn’t yet support online incorporation, and Latvia has no dedicated program at all — it relies on ordinary electronic signatures instead.
None of the three changes your personal tax residency. Where you actually live and manage the company from can override any rate on this page.
Why the timing of tax matters more than the rate itself
A rate you never pay is worth more than a lower rate you pay every year, and that’s the entire logic behind Estonia’s and Latvia’s systems. Both countries only tax distributed profit — money the company pays out to shareholders as dividends. Profit that stays inside the company, reinvested in equipment, hiring, or working capital, is taxed at 0% in both jurisdictions, for as long as it stays there. Lithuania works the opposite way: the tax authority (VMI) charges corporate income tax on profit as it’s earned, in the year it’s earned, regardless of whether a single euro ever reaches a shareholder’s pocket. The Estonian Tax and Customs Board publishes the current Estonian rates and rules.
This means a founder who reinvests aggressively for three or four years pays close to nothing in Estonia or Latvia during that stretch, while the same founder running a Lithuanian UAB pays the standard rate every single year on whatever the company earned, reinvested or not. Conversely, a founder who wants to draw a steady dividend income every year gets less benefit from the deferral model, because the tax bill still arrives — just at a different stage of the transaction — and Lithuania’s flat annual rate can end up simpler and, in some structures, cheaper over time.
What this looks like for two different founders
Consider a founder building a SaaS product who plows every euro of profit back into product and marketing for three years before taking a first dividend: an OÜ or SIA structure lets that reinvestment happen at 0% company tax the whole time. Now consider a consultant who invoices clients and wants to withdraw most of the profit every quarter as personal income: the deferral advantage barely applies, since the money isn’t staying in the company — and a UAB’s flat annual rate might be no worse, and is arguably more predictable for cash-flow planning.
Estonia’s OÜ: 0% while retained, 22/78 on distribution
Estonia’s OÜ is taxed at 0% corporate income tax on retained profit and 22% on distributed profit, calculated as 22/78 of the net amount paid out — which works out to 28.2% of the net distribution. The reduced 14/86 rate that used to apply to regular dividends was abolished from 1 January 2025, and a planned rise to 24/76 was cancelled in December 2025, so 22/78 is the figure that holds for 2026. Minimum share capital is €0.01, and the state registration fee through the e-Business Register is €265 online.
Estonia is also the only one of the three with a mature, dedicated remote-access product: e-Residency, a digital ID (application fee €100–€150 depending on pickup location) that lets a non-resident found and manage an OÜ, sign documents, and file with the e-Business Register entirely online, often within one business day once the ID card is in hand. Be clear-eyed about what e-Residency is not: it is not tax residency, and it doesn’t change where you personally owe income tax.
Lithuania’s UAB: tax on annual profit, not on distribution
Lithuania’s standard corporate income tax is 17%, effective 1 January 2026 (down from 19%), charged on profit as it’s earned — there is no Estonian-style deferral. Small companies get a reduced 7% rate from 1 January 2026 (up from 5%) if they have fewer than 10 employees and under €300,000 in gross annual revenue, and brand-new qualifying small companies get 0% CIT for their first two tax periods before the 7% rate kicks in. That two-year window is genuinely attractive for an early-stage founder, but it expires — a growing company loses the 0% status the moment it crosses either the headcount or revenue line.
Minimum share capital for a UAB is €1,000, with only 25% required paid in before registration and the rest due within 12 months — cut from a €2,500 minimum by a 1 May 2023 law change. Remote formation is possible but noticeably more manual than Estonia’s: the standard route runs through a notarised power of attorney to a local representative who files with the Centre of Registers (Registrų centras), not a single online self-service portal.
Latvia’s SIA: the deferred model, plus a new 2026 election
Latvia runs the same deferred-profit model as Estonia: undistributed profit is exempt entirely, and corporate income tax is only triggered on distribution (or on deemed distributions like certain non-business expenses). The standard rate is 20%, applied to a base divided by 0.8 — a 20/80 gross-up — which comes out to an effective 25% of the net amount actually paid to a shareholder. This is a corporate-level tax, not a withholding tax, so a double tax treaty doesn’t reduce it, the same logic that applies in Estonia.
New from 1 January 2026: companies whose direct shareholders are only individuals can elect an alternative regime — a base divided by 0.85 taxed at 15% CIT, plus a 6% personal income tax withheld from what the individual actually receives. It’s designed partly so non-resident individual shareholders can claim relief or a credit at home, but it isn’t simply ‘cheaper’ than the standard 20/80 route — it shifts part of the tax burden from the company to the individual, and the right choice depends on that individual’s home-country tax position.
Latvia offers two capital tracks: a standard SIA at €2,800 minimum share capital, or a low-capital ‘micro’ SIA from €0.01 to €2,799.99, available only when all shareholders are natural persons and capped at five people. State registration fees are correspondingly low: €20 for the micro track, €75 for the standard one. Formation can be done genuinely fully online using a Qualified Electronic Signature (QES), with no notary visit required by law — closer to Estonia’s model than Lithuania’s, even without a dedicated e-Residency brand.
Point | Estonia (OÜ) | Lithuania (UAB) | Latvia (SIA) |
|---|---|---|---|
When tax falls due | On distribution only; retained profit = 0% | On annual profit, as earned — no deferral | On distribution only; retained profit = 0% |
Headline rate (basis) | 22% of gross distribution (22/78) | 17% of annual profit, standard | 20% of gross distribution (20/80); or elective 15% (÷0.85) if all shareholders are individuals |
Effective rate on net payout / net profit | 28.2% of the net amount distributed | 17% of profit, paid annually regardless of distribution | 25% of the net amount distributed (standard); 15% CIT + 6% PIT on the elective route |
Rate effective date | 2026 (unchanged; 24/76 rise cancelled Dec 2025) | 1 Jan 2026 (was 19%) | 1 Jan 2026 for the new elective option; 20/80 standard is unchanged |
Small-company relief | None | 7% if under 10 employees and under €300,000 revenue; 0% for first 2 tax years | Elective 15%/6% PIT route (individuals-only ownership), from 1 Jan 2026 |
Minimum share capital | €0.01 | €1,000 (25% paid before registration) | €2,800 standard, or €0.01–€2,799.99 micro (individuals only, max 5 shareholders) |
A 22% Estonian rate and a 17% Lithuanian rate aren’t the same kind of number — one is charged on money you haven’t taken yet, the other on money you already earned this year. Comparing them without saying so is the fastest way to mislead a founder.
Can a non-resident actually register and run any of these remotely?
Yes for Estonia and Latvia, with meaningful friction for Lithuania. Estonia’s e-Residency program is the only one of the three built specifically as a portable digital ID for non-residents, letting you sign documents and file with the e-Business Register online end-to-end, typically within a business day once you have the card. Latvia has no equivalent branded program, but its Qualified Electronic Signature (QES) route achieves a similar practical result — full online incorporation, no in-person notary step required by law.
Lithuania’s own e-Residency scheme (running since 1 January 2021) is real but considerably weaker: it issues a digital-ID smart card for e-signatures, but you must travel to Lithuania in person to collect the card, and it does not currently support online company registration or bank account opening. The Lithuanian Centre of Registers has said online incorporation will ‘gradually expand,’ but as of 2026 the standard route for a non-resident founder is a notarised power of attorney to a local representative rather than a single self-service portal.
Estonia: e-Residency digital ID → online e-Business Register filing → often 1 business day.
Latvia: no e-Residency brand, but QES-based electronic filing → typically 1–3 business days at the Enterprise Register.
Lithuania: e-Residency card exists but needs an in-person pickup; standard route is notarised power of attorney → registration once documents are complete typically takes 3–5 business days.
Do any of the three require a local director or shareholder?
No — none of the three requires a resident director or a local shareholder. A single non-resident individual can hold 100% of the shares and sit as sole director of an Estonian OÜ, a Lithuanian UAB, or a Latvian SIA. What all three do require is a local registered legal address, which for a non-resident founder is normally a paid service from a formation agent or law firm rather than an actual office lease. Company data on the Estonian side is public in the e-Business Register.
Latvia’s sources flag one practical, not legal, wrinkle: an all-non-resident board can draw extra scrutiny from banks and from the tax authority (VID) during registration or account-opening, even though nothing in the law requires a local director. That’s worth planning around before you assume incorporation and banking will move at the same pace.
How do the VAT registration thresholds compare?
Estonia’s VAT registration threshold is €40,000 in annual turnover, Latvia’s is €50,000, and Lithuania’s is €45,000 — all measured on a rolling basis, with voluntary registration allowed below the line in every case. Estonia’s standard VAT rate is 24% (since 1 July 2025); Latvia’s is 21% with reduced rates of 12% and 5%; Lithuania’s is also 21% with reduced rates of 9% and 5%. One Lithuanian figure needs a caveat: several 2026 sources describe a proposed rise of the €45,000 threshold to €60,000, but they disagree on whether it has actually taken effect — check the current VMI-published threshold before relying on either number.
Point | Estonia | Lithuania | Latvia |
|---|---|---|---|
Standard VAT rate | 24% (since 1 Jul 2025) | 21% | 21% |
VAT registration threshold | €40,000 / 12 months | €45,000 / 12 months (a rise to €60,000 for 2026 is reported but unconfirmed — verify with VMI) | €50,000 / 12 months |
Annual report deadline | 30 June (6 months after year-end) | ~4 months to shareholder approval, then 30 days to file (roughly end of April/May) | Tiered: micro/small by 30 April; medium/large by a July deadline |
Resident director required? | No | No | No |
Local legal address required? | Yes | Yes | Yes |
What are the annual reporting obligations in each country?
Estonia requires the annual report (majandusaasta aruanne) within six months of financial year-end, meaning 30 June for a calendar-year company; late filing risks fines up to €3,200 per violation, chargeable to the company and the board members personally. Lithuania requires shareholder approval of financial statements within four months of year-end, then filing with the Centre of Registers within 30 days of that approval — landing most calendar-year companies around late April to May; late filing since 1 July 2024 carries fines of €200–€1,450 on the manager, with compulsory liquidation as the ultimate risk for repeat non-filers.
Latvia tiers its deadlines by company size: micro and small companies file by 30 April, medium and large companies by a July deadline, with consolidated group reports due within seven months of year-end. Filing runs exclusively through VID’s electronic EDS system, and once submitted a report cannot be amended inside EDS. Roughly 70% of Latvian SIAs qualify as micro or small, which usually means a lighter-scope statement and often no audit requirement — though that’s a general share, not a guarantee for any specific company.
So which one should you actually register?
There’s no universal winner here, and any comparison page telling you otherwise is selling something. The honest version: pick based on how you plan to use the profit, how much remote-first tooling matters to you, and where you’re personally tax resident — because none of these three companies changes that last variable.
Choose Estonia (OÜ) if you plan to reinvest profit for years before taking dividends, want the most mature remote-incorporation and online-filing experience of the three, and are comfortable with the 22/78 (28.2% net) charge whenever you do eventually distribute.
Choose Lithuania (UAB) if you’re an early-stage founder who qualifies for the small-company relief (under 10 employees, under €300,000 revenue) and want 0% for your first two years, or if you plan to draw profit out regularly and prefer a single predictable annual rate over a deferred one.
Choose Latvia (SIA) if you want Estonia’s deferral mechanics but your ownership is 100% individuals who could benefit from the new elective 15%-plus-6%-PIT route from 2026, or if the lower micro-SIA capital and registration fees (€20 state fee) matter more to you than brand-name e-Residency tooling.
Reconsider all three if your actual day-to-day management, staff, and decision-making happen somewhere else entirely — place of effective management, permanent establishment, and CFC rules in your home country can pull any of these three companies into a different tax outcome regardless of what’s printed on the registration certificate.
Whichever you land on, banking is usually the practical bottleneck, not the registry. All three countries make registration remote-friendly to varying degrees, but a traditional local bank account for a non-resident-directed company is a harder ask than the incorporation paperwork suggests — an EMI (Wise, Payoneer, Revolut Business) is often the realistic first step in Estonia, Lithuania, and Latvia alike, not a deposit-insured domestic bank.
Frequently asked questions
Is Estonia’s 22% corporate tax lower than Lithuania’s 17%?
Not directly comparable as printed. Estonia’s 22% applies only to distributed profit, calculated as 22/78 of the net payout (28.2% of what actually reaches the shareholder), while retained profit stays at 0%. Lithuania’s 17% applies to annual profit as earned, whether distributed or not. A company that never distributes pays 0% in Estonia and 17% in Lithuania every year; a company that distributes everything pays roughly 28.2% in Estonia versus 17% in Lithuania.
Does Latvia have an e-Residency program like Estonia’s?
No dedicated program has been found. Latvia instead makes formation remote-friendly through a Qualified Electronic Signature (QES), which lets a non-resident sign and submit incorporation documents online without a notary visit, but it is a company-registration mechanism rather than a portable personal digital-ID product the way Estonia’s or Lithuania’s e-Residency schemes are.
Can I register a company in these countries without visiting?
For Estonia and Latvia, generally yes — Estonia through e-Residency plus the online e-Business Register, Latvia through QES-based electronic filing. For Lithuania, physical travel isn’t strictly required for incorporation itself, but the standard route runs through a notarised power of attorney to a local representative, and the separate Lithuanian e-Residency card requires an in-person pickup to obtain.
What is Latvia’s new 2026 tax election and who qualifies?
From 1 January 2026, a Latvian SIA whose direct shareholders are only individuals can elect a base-divided-by-0.85 calculation taxed at 15% CIT, with an additional 6% personal income tax withheld from the amount actually paid to the shareholder. It’s an alternative to the standard 20/80 (effective 25%) route, not an automatic discount — the right choice depends on the individual shareholder’s home-country tax treatment of that withholding.
Does Lithuania offer a 0% tax rate for new companies?
Yes, but only temporarily and only for qualifying small companies. New entities that meet the small-company criteria (fewer than 10 employees, under €300,000 gross annual revenue) get 0% corporate income tax for their first two tax periods, after which the 7% small-company rate applies (effective 1 January 2026) as long as they still qualify, or the standard 17% rate applies once they don’t.
Do I need a local director for an OÜ, UAB, or SIA?
No — none of the three jurisdictions requires a resident or EU-citizen director, and a single non-resident individual can be sole shareholder and sole director in all three. All three do require a registered legal address inside the country, which non-resident founders typically obtain as a paid service rather than a physical office.
Which country has the lowest VAT registration threshold?
Estonia’s is the lowest at €40,000 in a rolling 12-month period, followed by Lithuania’s €45,000 (with an unconfirmed report of a rise to €60,000 for 2026 — verify directly with VMI) and Latvia’s €50,000. All three allow voluntary registration below the threshold.
Will incorporating in Estonia, Lithuania, or Latvia change where I personally pay tax?
No. Incorporating in any of these three countries does not, by itself, change your personal tax residency. If you live and work primarily in another country, that country’s rules on tax residency, permanent establishment, and controlled foreign company (CFC) attribution generally still apply to you and can tax the company’s profit regardless of where it’s registered.
Which Baltic company is cheapest to set up?
On bare state fees, Latvia’s micro SIA is the cheapest to register at €20, followed by Estonia’s OÜ at €265 online and a €0.01 minimum share capital. Lithuania’s bare registration fee is reported around €30–€40, but realistic all-in costs for a non-resident — covering the notary, translation, and local agent typically required — run closer to €700–€2,000+, so compare all-in cost, not just the state fee, before deciding.
