Portugal appeals with its climate, its perceived-affordable cost of living, and its former NHR regime. But for an entrepreneur forming a Latvian SIA intending to reinvest profits, the tax comparison tilts clearly in Latvia's favour. Here's why, with the numbers to back it up.
Portugal's NHR regime: an advantage that's eroding
The Non-Habitual Resident (NHR) regime long built Portugal's tax reputation. Since its reform, access is more restricted and eligibility conditions have tightened. Many entrepreneurs relocating today find they no longer fit the boxes that made the regime attractive a few years ago.
Latvia doesn't play on that field: it doesn't need a special regime to attract entrepreneurs, its base taxation on reinvested profits (0%) is structurally competitive and stable since 2018, without depending on a personal status subject to revision.
The numbers-based comparison, point by point
| Criteria | Latvia (SIA) | Portugal (Lda) |
|---|---|---|
| Standard CIT | 0% reinvested / 20% distributed | 19% (15% on the first €50,000 for SMEs) |
| Minimum capital | €1 / €2,800 | €1 |
| VAT | 21% | 23% |
| Formation time | 2 to 5 days | 5 to 10 days |
| Personal tax residency | Possible (residence permit) | NHR (evolving / restricted) |
| EU / Eurozone / Schengen | Yes / Yes / Yes | Yes / Yes / Yes |
| Cost of living (Riga vs Lisbon) | Lower | Higher |
| Substance / admin burden | Moderate | Heavier |
Verdict
Portugal remains more expensive on taxation and cost of living. Latvia clearly wins on taxation of reinvested profits and on day-to-day administrative simplicity.
Advantages of Latvia and Portugal
Advantages of Latvia
- 0% CIT on reinvested profits, with no personal-status condition
- Cost of living in Riga notably lower than Lisbon
- Lighter administration and substance requirements
- Dedicated support focused on a single country
Advantages of Portugal
- Climate and quality of life highly sought after internationally
- Already-established international community
- Reduced 15% rate for SMEs on the first bracket
- Strong "lifestyle" image for a life project, not just a company
Who Latvia is the best choice for
If your priority is your business's taxation, Latvia wins clearly: 0% on reinvested profits versus 19% in Portugal, with no need for a specific, revisable personal status. It's also the most rational choice if you don't plan to physically relocate and simply want a solid, low-cost European structure.
Who Portugal may suit better
Portugal still makes sense if your main goal is a genuine life project, not just company optimisation: climate, an already well-established international expat community, a real desire to relocate. In that case, the company's taxation becomes a secondary criterion against the lifestyle you're after.
Go further
Weighing a Baltic country instead? See our comparison Latvia vs Estonia, the most direct comparison of the two tax models.
Frequently asked questions
Ready to set up your SIA in Latvia?
Free consultation with an expert. Response within 24h, no commitment.
Request my quote View our packagesCompare Latvia to other countries
Every country has its own strengths. Explore the other comparisons to refine your choice.
