Latvia vs Cyprus: Which Country for Your Company

Updated 2026 · Written by the Société Lettonie team, Riga

Latvia vs Cyprus, company formation comparison

Cyprus is often cited for its non-dom regime that exempts dividends, and its IP Box that taxes intellectual property at a very reduced rate. Real advantages, but ones that only concern part of the entrepreneur population. For most service or e-commerce activities forming a Latvian SIA, the calculation is different. Here's the numbers-based comparison.

Cyprus and the non-dom regime: powerful, but for whom?

Cypriot non-dom status lets you, under conditions, receive dividends without personal tax for up to 17 years. That's a real advantage for a specific profile: an entrepreneur who distributes heavily, with high income, and who is willing to genuinely relocate to Cyprus to benefit from it.

For an entrepreneur who reinvests profits without relocating, the non-dom advantage loses much of its appeal. Latvia, with its 0% on reinvested profits and no physical-residency condition, responds more directly to this scenario, the most common one among the international entrepreneurs we support.

The numbers-based comparison, point by point

Criteria	Latvia (SIA)	Cyprus (Ltd)
CIT	0% reinvested / 20% distributed	15% (since 2026)
Dividends (non-dom)	Taxed at company level	0% for non-dom (up to 17 years)
IP Box	No	Yes (~2.5 to 3% effective)
Minimum capital	€1 / €2,800	€1
VAT	21%	19%
EU / Eurozone / Schengen	Yes / Yes / Yes	Yes / Yes / No
Annual costs	€1,500 – 3,000	€3,000 – 8,000
Substance required	EU standard	Stronger requirement

Verdict

Cyprus is interesting for non-dom profiles and IP-heavy activities. Latvia remains simpler and cheaper for a standard service or e-commerce business.

Advantages of Latvia and Cyprus

Advantages of Latvia

Two to three times lower annual costs
No physical-residency requirement to benefit from the 0%
Lighter substance requirements, EU standard
Dedicated support focused on a single country

Advantages of Cyprus

Dividends exempt for non-doms, up to 17 years
Very favourable IP Box for intellectual property
Common-law legal framework, familiar to some investors
Long-established financial centre in the Mediterranean

Who Latvia is the best choice for

If your activity is consulting, e-commerce, or standard B2B services, with no IP-Box-eligible intellectual property, and you don't plan to relocate to Cyprus to activate non-dom status, Latvia offers a clearly better simplicity-to-cost ratio.

Who Cyprus may suit better

Cyprus becomes relevant if you hold high-value patents, software, or trademarks exploitable through the IP Box, or if you generate high income you plan to distribute heavily as dividends while being ready to genuinely relocate to the island to obtain non-dom status.

Go further

Another low-CIT European alternative: see our comparison Latvia vs Bulgaria, the EU's lowest flat rate.

Frequently asked questions

No, it mainly targets high-income profiles who distribute heavily in dividends and are willing to genuinely relocate to Cyprus. For an entrepreneur who reinvests profits without moving, the advantage loses much of its appeal.

No, it only applies to income from qualifying intellectual property (patents, protected software, certain intangible assets). A standard service or e-commerce business generally doesn't benefit from it.

Annual management costs are generally two to three times lower in Latvia, and substance requirements are lighter, aligned with the baseline EU standard.

Cyprus is in the eurozone but not in the Schengen area, unlike Latvia which is a member of both, since 2008 and 2014/2007 respectively.