Portugal vs Latvia: the real calculation for your business
Portugal lost its tax advantage. NHR is dead. Cost of living is soaring. Latvia delivers what Portugal once promised: tax stability, low cost of living, and 0% on reinvested profits.
Why Portugal attracts entrepreneurs
The sunshine, the (formerly) low cost of living, and above all the NHR regime made Portugal a popular destination. But the reality of 2026 is very different from the promise.
The appealing pitch
Pleasant climate, EU and Eurozone member, the NHR programme promised a flat 20% rate for 10 years for new residents. Golden Visas attracted investors worldwide. Portugal had become Southern Europe's legal tax haven.
The 2026 reality on the ground
NHR was abolished at the end of 2024. Its replacement IFICI is reserved for R&D, tech, and qualified startup profiles. Standard CIT is 21% minimum, with surcharges reaching up to 31.5%. The cost of living in Lisbon has exploded. Rents have doubled in 5 years. Combined social charges hit ~35%. Portugal is no longer what it promised.
Portugal vs Latvia: the full comparison
| Criterion | Portugal | Latvia |
|---|---|---|
| CIT on reinvested profits | 21% minimum (up to 31.5%) | 0% |
| CIT on distributed profits | 21%+ CIT + 28% dividend tax | 20% (CIT + dividends included) |
| Special tax regime | NHR dead (2024). IFICI very restrictive. | 0% reinvested since 2018, stable |
| Social charges (total) | ~34.75% (23.75% + 11%) | ~34% (23.59% + 10.50%) |
| VAT | 23% | 21% |
| Company formation (time) | 4 to 8 weeks | 2 days |
| Minimum capital | €1 (Lda) | €2,800 |
| EU member | Yes (since 1986) | Yes (since 2004) |
| Schengen area | Yes (full) | Yes (full) |
| Eurozone | Yes (since 1999) | Yes (since 2014) |
| OECD | Yes | Yes (since 2016) |
| Cost of living (vs Paris) | -10 to -20% (Lisbon rising fast) | -30 to -40% |
| Tax stability | NHR abolished, Golden Visa restricted | 0% reinvested stable since 2018 |
| Bureaucracy | Slow (Financas, Seguranca Social) | Fast, digitalised |
| Tax treaties | 79+ DTTs | 62+ DTTs (EU + OECD framework) |
| English-speaking support | Available (expat community) | Yes (Balt Partners) |
The pitfalls of Portugal
Portugal was attractive. But the rules have changed, costs have soared, and the promise no longer holds. Here are the realities that blog articles do not mention.
Portugal taxes ALL profits at 21%+
Portuguese CIT is 21% standard, but with the municipal surcharge (1.5%) and state surcharges (3% to 9% depending on brackets), the effective rate can reach 31.5%. Every euro of profit is taxed, whether you reinvest or not. In Latvia, reinvested profits are taxed at 0%. Over 5 years of growth, the capitalisation difference is massive.
NHR is DEAD. IFICI is very restrictive.
The NHR (Non-Habitual Resident) regime that made Portugal attractive was abolished at the end of 2024. Its replacement, IFICI, is reserved for professionals in R&D, tech, and qualified startups. If you are a typical entrepreneur (e-commerce, consulting, SaaS), you are not eligible. Portugal has lost its differentiating advantage.
Cost of living in Lisbon has exploded
Lisbon is no longer affordable Southern Europe. Rents have doubled in 5 years, increasing 15-20% per year. The city is now comparable to Barcelona or Milan. Porto follows the same trajectory. Riga offers a cost of living 30-40% below Paris, with modern infrastructure and a high quality of life.
Social charges among Europe's highest
Combined social charges in Portugal reach approximately 34.75% (23.75% employer + 11% employee), comparable to France. For a director drawing a salary, the total bill (CIT + charges + dividends) quickly becomes prohibitive. In Latvia, charges are similar (~34%), but the 0% on reinvested profits more than compensates.
Notoriously slow bureaucracy
The Financas, Seguranca Social, and AT are known for being slow. Company formation takes 4 to 8 weeks. Administrative procedures are complex and often in Portuguese only. In Latvia, a SIA is formed in 2 days, and administration is largely digitalised.
Proven tax instability
Portugal abolished its flagship NHR programme after promising 10 years of stability. Entrepreneurs who relocated to Portugal based on that promise now face rule changes. The Golden Visa was also restricted in 2023. When you invest your future in a country, predictability is essential. Latvia's system has been in place since 2018 without modifications.
Why Latvia?
0% on reinvested profits
As long as your profits stay in the company, you pay zero tax. This is the Estonian model applied in Latvia since 2018. You only pay the 20% CIT when you distribute dividends. Portugal taxes every euro of profit at 21% minimum, even if you reinvest.
Proven tax stability
The 0% reinvested profits system has been in place since 2018 without any changes. No surprises, no programme abolitions. Portugal demonstrated the opposite by killing NHR and restricting the Golden Visa. In Latvia, the rules are clear and predictable.
Zero tax stigma
An invoice from Riga raises no flags with your clients or banks. Latvia is on no grey or blacklist. Portugal's reputation has been tarnished by NHR and Golden Visa controversies. A Latvian SIA (EU, Eurozone, OECD) is perceived as perfectly normal.
Full multilingual support
Balt Partners supports you in English (and French) at every step: company formation, residence, accounting, tax, banking. In Portugal, expat services exist but the ecosystem is saturated and costs have increased with demand. Our clients handle zero paperwork in Latvian.
Genuinely low cost of living
Riga offers a cost of living 30-40% below Paris, with modern infrastructure: fibre optics, transport, healthcare. Unlike Lisbon where prices have exploded, Riga remains accessible. Riga airport connects directly to 80+ European destinations.
Yes, Portugal has real strengths
We won't hide it: Portugal offers exceptional climate, enviable quality of life, and full EU/euro/Schengen/OECD access. But the tax advantages have disappeared. Here is what changes the calculation.
Lifestyle does not compensate for taxation
Portugal offers a pleasant lifestyle. But a CIT of 21-31.5% on all profits, combined with 28% on dividends and ~35% social charges, erodes your investment capacity. In Latvia, the 0% reinvested rate lets you capitalise massively before distributing.
A country that changes the rules
Portugal promised 10 years of stability with NHR, then abolished it. The Golden Visa was restricted. Thousands of entrepreneurs who chose Portugal based on these programmes now face a different reality. Latvia has not modified its system since 2018.
Lisbon is no longer affordable
The cost of living in Lisbon has caught up with cities like Barcelona and Milan. Rents increase 15-20% per year. For a starting entrepreneur, every euro counts. Riga offers the same EU single market access at costs 30-40% below Paris.
Portugal is not a bad choice. Latvia is simply better for your business.
Portugal is in the EU, Eurozone, Schengen, and OECD. But for an entrepreneur who wants to maximise growth, Latvia's combination of 0% reinvested + tax stability + low cost of living offers a structural advantage that Portugal can no longer match.
A beautiful lifestyle does not compensate for an unstable tax regime and constantly rising costs. Predictability is the entrepreneur's best ally.
The final score
Portugal and Latvia share EU, euro, Schengen, and OECD access. But Latvia wins on the criteria that matter for growth: 0% reinvested, tax stability, low cost of living, and fast company formation.
Frequently asked questions
Is the NHR regime still available?
No. The NHR (Non-Habitual Resident) regime was abolished at the end of 2024. It was replaced by the IFICI programme in 2025, but this is much more restrictive: it is reserved for qualified professionals in R&D, technology, and startups. General entrepreneurs (e-commerce, consulting, SaaS) are not eligible. In Latvia, the 0% tax on reinvested profits has been in place since 2018 without changes.
Is Portugal still affordable?
Not really. Lisbon is now comparable to Barcelona or Milan in terms of cost of living. Rents have increased 15-20% per year in recent years, doubling in some areas over 5 years. Portugal is no longer the affordable Southern Europe it once was. Riga offers a cost of living 30-40% below Paris with modern infrastructure.
What is the real tax rate?
Portugal taxes all profits at 21% minimum (up to 31.5% with surcharges). Dividends are taxed at 28%. Combined social charges reach approximately 34.75%. In Latvia, reinvested profits are taxed at 0%, and only distributed profits are subject to the 20% CIT. For a growing entrepreneur, the difference is substantial.
Is Portugal more tax-stable?
No. Portugal abolished its flagship NHR programme after promising 10 years of stability to tax residents. Entrepreneurs who relocated to Portugal based on that promise now face rule changes. The Golden Visa was also restricted in 2023. Latvia's 0% reinvested profits system has been in place since 2018 without any modifications.
Which is better for e-commerce?
Both countries are in the EU and Schengen, with single market access. But Latvia offers significantly lower costs: 0% on reinvested profits vs 21%+ in Portugal, company formation in 2 days vs 4-8 weeks, and lower operating costs. Portugal adds heavy bureaucracy (Financas, Seguranca Social, AT) that slows daily operations.
Does Portugal have better banking than Latvia?
Portugal has adequate banking (CGD, BCP, Novobanco) but KYC processes are notoriously slow. Latvia offers Swedbank, SEB, Citadele, plus fintech options (Wise, Revolut). Both countries are in the Eurozone, so SEPA transfers are native in both cases. Latvia's banking ecosystem is more entrepreneur-friendly.
Portugal or Latvia? Let's talk.
30 minutes, free, no commitment. We compare both options based on your specific situation.