The Baltic Sea region is the fastest growing business region in Europe. The trade flow among the states in this region has been steadily increasing year by year. The taxation system of Estonia is considered one of the most liberal taxation systems in the world. In 2000, Estonia implemented a comprehensive tax reform with an aim to create the simplest, most comprehensible and most convenient taxation system possible. The main advantage of Estonia is the low-tax system that can be described as a simple system with no hidden surprises and that was basically established to promote business and increase profits.

The taxation system of Estonia includes state taxes stipulated by the tax legislation and local taxes imposed by local governments or city councils in the respective territories according to laws and regulations.

The state taxes are the following:

excise duty;
income taxes;
gambling tax;
value added tax;
land tax;
social tax;
customs tariffs;
heavy goods vehicle tax.
Corporate income tax
As a result of reforms, the main benefit of entrepreneurs was the exemption from the corporate income tax in the event of reinvesting the profits. Thus, Estonian enterprises must pay the income tax only on their distributed profits, namely, dividends. The corporate income tax (tax on distributed profits) is 21 % of gross dividends.

This taxation system is conceptually different from the classic income tax system, because the tax is levied on distributed profits (also hidden distributed profits) instead of company profits.

Value added tax (VAT)
The value added tax payers are enterprises the taxable supply (except for import) of which does not exceed EUR 16,000 during a calendar year. The tax is levied on transactions with goods and services in Estonia and on the import of goods. The tax rate is 20 % of the taxable value.

The taxable period is one calendar month, and the value added tax must be paid into the state budget by the twentieth day of each month. The tax is fully paid into the state budget.

The registration of enterprises is carried out by the Tax and Customs Board also administering the VAT levied on domestic goods and services.

Personal income tax
In 2010, the tax rate is 21 % of taxable income, and residents must pay the tax on their income received both inside and outside Estonia. The taxable income includes the income from employment (salary, wage, bonus and other remunerations), business income, interest, royalties, rent, capital gains, maintenance support, pensions, scholarships (except for scholarships paid from the state budget or pursuant to law).

Social tax
This tax is imposed to ensure state pensions and health insurance. It is paid by legal persons, natural persons and non-residents with regular income. The tax rate is 33 % of the taxable amount. The tax must be calculated monthly, and a corresponding amount of money must be transferred no later than by the tenth day of each month.

Since 1 January 1999 the social tax payments have been personalised, and they form pension funds which will be considered in each specific case. The tax is accumulated in a special account of health and pension insurance funds within the state budget.

Excise duty
In Estonia, the excise duty is levied on tobacco, alcohol, fuel, packaging and vehicles.

The excise duty helps to control the amount of a specific product or provision of a specific service seeking to adjust the consumption of domestically sold goods.

Like value added tax revenues, also excise duty revenues are affected by changes in domestic demand, increase in imports of excise goods, as well as changes in excise duty rates.

Gambling tax
The gambling tax is levied on income from games of skill, totalisators, betting and lotteries, as well as gambling tables and machines used for organising games of chance in licensed places. The tax is based on payments out of which the winnings are paid. The taxable period for organising lotteries, games of chance and skill is one calendar month. The taxable period for totalisators is the period during which the betting is organised (it must be within the same financial year).

Tax rates are the following:

EUR 447 per one gambling machine;
EUR 1278 per one gambling table.
The tax rate on betting is 5 %, on totalisators - 5 %, on games of skill - 18 %, and on lotteries - 18 %.

Baltic LegalLinks to an external site. provides useful advice and quality legal support for obtaining temporary residence permits in Latvia and Lithuania through investments. It is possible to obtain a residence permit for up to 5 years in Latvia and for up to 1 year in Lithuania, which can be renewed at the end of this period. Obtaining a residence permit in a member state of the Shengen Agreement grants its holder the opportunity to travel visa-free within the Shengen area under the same conditions as for citizens of said member state. Latvia and Lithuania are current member states of the Schengen Agreement. Along with the main investor, the residence permit can also be obtained by his spouse and minor children.

The process of obtaining a residence permit is relatively complicated and requires knowledge of local legal and procedural issues. Our lawyers provide the necessary advice to choose the best type of investment and take care of preparing all the necessary documents and obtaining the residence permit.

Latvia
The Latvian Immigration Law provides several ways for foreign investors to obtain a residence permit in Latvia.
The most common options are:

Residence permit through investment in real estate, e.g. B. Buying a home. Continue reading
Residence permit for managing directors, e.g. B. Managing director, managing director, member of the board of directors, authorized signatory
Residence permit by investing in share capital with shareholder status, e.g. B. Company formation and registration or joining an existing company with significant investments
Residence permit through investments in subordinated capital of the bank
Other options (non-investment related):
Student Visa: The Latvian Immigration Law also provides for a stay for students. Residence permit for students.
EU Blue Card: If you are highly qualified, you can apply for the Blue Card.

Lithuania
The Lithuanian Immigration Law provides the possibility to apply for a residence permit for up to 1 year by investing in companies. In order to obtain a temporary residence permit in Lithuania, the investment must meet the following conditions:

a company has at least EUR 28 000 share capital;
a company has real economic activities and pays minimum taxes;
The presence of an investor is necessary for a company to operate.
Are you still wondering?
If you are still considering immigration options and wondering how to apply for a residence permit, what the conditions are and how long it takes, visit this website and find all the necessary information in one step!

Baltic Legal offers a wide range of services and support in establishing and promoting your business in Latvia and other Baltic countries. If you are considering opening a restaurant, bistro, cafe, bar or any other venue in Latvia, we will discuss aspects such as real estate, business registration and company formation, permits and licenses, recruitment, creating a potential client base and tax regulations.

Today, Latvia is in many ways a growing country with great business potential due to its advantageous geographic location. Opening a restaurant in Latvia is a good choice and a potentially lucrative venture. However, it is important to be fully informed about all relevant factors and risks.

Hundreds of thousands of tourists visit the country every year and they love to have a good time - especially in restaurants, bars and cafes, just like the locals. It is therefore not surprising that the restaurant business is currently one of the most popular and profitable sectors of the Latvian economy.

Contact us now if you are interested in opening your restaurant business in Latvia!

Commercial real estate and business premises
Finding space is the first step in starting your restaurant. In recent years there has been an increase in construction activity across the country, so finding the right property shouldn't be too difficult. First you need to decide what type of property you need and where. Next you need to buy or rent the right premises to support the success of your business in Latvia.

This process can take a few months if you do it yourself, but we are here to help and save your time and resources. Our team of specialists is ready to help you choose the best location for a restaurant across the country.

We will help you choose a property to rent or buy based on your goals. To make sure you choose the best option and all the formalities are taken care of, contact us for a consultation!

A company in Lithuania has to submit reports to the Tax Inspectorate, Social Insurance Fund, Statistical Office, Register Center, Customs Office and Migration Offices. It can be difficult for a foreigner to keep accounts and bookkeeping – he needs to know the Lithuanian language, Lithuanian legislation and understand bookkeeping and bookkeeping requirements. Failure to comply with annual report requirements or non-payment of taxes will cause problems with the authorities. Every Lithuanian company must have an accountant who will help prepare the necessary reports and submit them to the state authorities, as well as give advice on what taxes to pay.

Accounting reforms in Lithuania
Lithuania has been one of the frontrunners in the rapid transition to International Public Sector Accounting Standards (IPSAS) with consolidated state and local government financial reporting. Transitioning to this system was challenging and required preparation.

The reforms not only included a change in accounting principles, but also aimed to increase the effectiveness of the accounting function itself. Policy makers at central and local levels started working on reforms five years earlier. The preparatory phase included pilot programs by several public sector organizations, as well as the development of regulations, detailed accounting manuals and transition instructions. Extensive training for public sector auditors and the completion of standardized IT solutions took place. Another was the implementation of a centralized IT solution for national financial reporting for more than 4,000 public organizations.

Public Reception
These changes are not a painless transformation process. They called for changes in the qualifications of all public accountants and initially met with strong resistance. Strong political support and determined Treasury leadership were critical to ensuring their successful implementation. There was still a one-year delay from the original launch date. This was due to a lack of preparation on the part of public sector organizations.

Current status and results
The system is well established and there have already been two cycles of awards based on IPSAS. To secure reforms, the Treasury Department is now focused on changing standards and other regulations. This provides support for a call center set up to handle IPSAS requests and offers on-site training to improve the quality of financial data.

Future prospects
The implementation of reforms was a step in transforming the public finance system. To maximize the potential benefits of this system, the country must have a consistent vision for public finance reform as a whole. Following the implementation of IPSAS, Lithuania has strengthened the qualifications of public sector auditors and the IT systems used for its government accounting. The process is ongoing and the country still faces many challenges; The successful implementation of IPSAS has given a critical edge on the road to excellence in public finance.