Quick answer
A Latvian resident can own and run an Estonian OÜ without relocating. A Latvian eID or Smart-ID logs you into the Estonian e-Business Register but cannot sign the founding application, so you register with an e-Residency card, at a Tallinn notary or by a power of attorney certified in Latvia — no apostille needed. The company needs an Estonian legal address; a contact person is mandatory only if you register it at a Latvian address. Dividends taxed in Estonia are generally exempt from Latvian personal income tax; salary for work done in Latvia is taxed in Latvia.Latvian founders come to Estonia for two reasons, and neither is the headline tax rate: Latvia runs the same distribution-based model, and our Estonia vs Latvia comparison settles that debate. One group is expanding north and needs an Estonian counterparty for Estonian clients and tenders. The other runs a digital or export business and wants an entity administered entirely online, without the Latvian rules that make a small SIA expensive to keep. This guide answers what both groups ask when they decide to open a company in Estonia from Latvia: how a person living in Latvia signs, what the register requires, and where salary, dividends and social insurance are taxed.
Why Latvian Entrepreneurs Open an Estonian OÜ
- No deemed board salary. Latvia taxes a board member on a notional minimum wage (*valdes locekļa domājamais ienākums*) in any month when turnover exceeds five minimum wages and nobody is paid at least the minimum. Estonia has no deemed-income rule and no minimum social tax for an unpaid board member — though the Estonian Tax Board expects an actively managing owner to draw a sensible fee rather than take everything as dividends.
- An Estonian face for Estonian customers. An OÜ with an Estonian VAT number and registry code closes deals with Estonian companies and public buyers where a Latvian SIA would first have to explain itself.
- One system, no local go-between. Commercial Register, Tax Board and annual reporting sit in one English-language environment that an owner in Latvia can run alone; share capital starts at one cent.
Registering an OÜ from Latvia: Latvian eID, e-Residency or Notary
Most Latvian founders assume a Latvian ID card or Smart-ID opens the Estonian Company Registration Portal the way it opens Latvian e-services. That is half right: EU eID logins, Latvian credentials included, only let you view data. Founding applications and annual reports must be signed with an Estonian ID card, an e-Residency card, Estonian Mobile-ID or Estonian Smart-ID — a Smart-ID linked to a Latvian personal code does not qualify. That leaves three realistic routes for registering an Estonian company from Latvia.
| Route | What you need | Time to a registry code |
|---|---|---|
| e-Residency for Latvian citizens | Online application, €150 state fee, card collected at the Estonian Embassy in Riga | Card in 3–8 weeks; company usually entered the next working day after signing |
| Tallinn notary | One appointment with your Latvian passport or ID card; no digital ID required | Typically 1–5 working days after the appointment |
| Power of attorney | A PoA certified by a Latvian notary — no apostille, thanks to the Estonian–Latvian legal assistance treaty | Typically 1–5 working days after the PoA reaches Tallinn |
If you plan to sign register changes and reports yourself for years to come, apply for e-Residency now and use a notary or power of attorney for the founding step if you cannot wait for the card. The mechanics of the notarial route are covered in our guide to registering without e-Residency; what changes for a Latvian founder is that the power of attorney needs no apostille and the card can be collected in Riga.
What the Estonian Register Expects from a Latvian Founder
- Address and contact person. Most Latvian owners rent an Estonian legal address from a licensed provider; a contact person is then optional, though many keep one so that official post has an Estonian recipient. If the OÜ is registered at a Latvian address instead, a licensed contact person in Estonia becomes mandatory.
- Capital and fee. Share capital from €0.01 per shareholder, payable later; €265 state fee for the founding entry.
- Identity. Your Latvian passport or ID card is enough; no local director or shareholder is required.
Company in Estonia, Work in Latvia: Where Salary, Board Fees and Dividends Are Taxed
The question Latvian accountants field most often: the company is in Estonia, the owner is a Latvian tax resident, the work is done in Latvia — so who taxes what? Under the Estonia–Latvia double taxation convention, three kinds of payment follow three different rules.
| Payment | Estonian side | Latvian side |
|---|---|---|
| Dividends | The OÜ pays 22/78 corporate income tax at distribution | Generally exempt from Latvian personal income tax, because corporate income tax has already been paid in an EU state |
| Board member fee | Estonia withholds income tax on directors’ fees regardless of where you live (the treaty permits this), and adds social tax unless a Latvian A1 certificate applies | Social insurance normally stays in Latvia — obtain the A1 from the VSAA before the first payment |
| Salary for work done in Latvia | Not taxed in Estonia | Taxed in Latvia: you register there as a salary-tax payer, or the OÜ registers as an employer in Latvia; social contributions follow the VSAA’s determination |
Managing the OÜ from Latvia: the substance question
In theory, an OÜ run entirely from Latvia could be treated as having a permanent establishment there (*pastāvīgā pārstāvniecība*). In practice it is rarely an issue for an owner-managed company with foreign clients: Latvia taxes company profit only on distribution, just as Estonia does, and dividends from an EU company are already exempt from Latvian personal income tax, so there is little for the Latvian side to claim. What does draw attention is payroll — people physically working in Latvia while their salary is taxed nowhere or only in Estonia. Keep any Latvian-based staff on Latvian payroll and keep the Estonian side real; our guide on running an Estonian company while living abroad covers the substance question in detail.
VAT when your customers are in Latvia
Sales to Latvian VAT-registered businesses are reverse-charged. Selling to Estonian customers, or passing €40,000 of taxable supply in Estonia, calls for an Estonian VAT registration.
Registering Your Estonian OÜ from Latvia with Eesti Firma
Eesti Firma helps Latvian founders start a business in Estonia from Latvia through any of the three routes: preparing the file while your e-Residency card is in transit, booking the Tallinn notary around your visit, or drafting the power of attorney for your Latvian notary and filing on your behalf. Our company formation in Estonia packages include a legal address and a contact person, and the same team takes over accounting, VAT and the A1 paperwork.
