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Successfully investing in Latvia

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last updated on 10 October 2025 | reading time approx. 4 minutes

 

 

 

How do you assess the current economic situation in Latvia?

Latvia’s economy is expected to grow between 1 percent and 2.6 percent in 2025, supported by a recovery in exports, increased investments from European Union funds, and more favourable financial conditions. The government is introducing reforms aimed at improving business competitiveness, such as lowering labour taxes, promoting digitalization, and supporting high-value-added industries. Reflecting the effectiveness of its tax policies, Latvia ranks 2nd overall on the 2024 International Tax Competitiveness Index, maintaining the same position as in 2023.

Inflation is projected to stabilize at around 2.2 percent, while unemployment is expected to decline slightly, indicating a resilient labour market. Latvia is focusing on innovation, renewable energy, and the green economy to attract foreign investment. The Ministry of Economics is prioritizing infrastructure development and the expansion of industrial zones to support high-value projects.

With a stable macroeconomic environment, favourable tax regime, a skilled workforce, and access to the broader European Union market, Latvia is positioning itself as a competitive and innovation-driven destination for global investors.

How would you describe the investment climate in Latvia? Which sectors offer the largest potential?

Latvia offers a dynamic and investor-friendly environment, supported by macroeconomic stability and a skilled workforce. In 2024, foreign direct investment (FDI) reached 655 million euros, with a target of 790 million euros in 2025. While the number of foreign investment projects in Europe is declining, Latvia has achieved its best results in three years. Specifically, 33 new projects were launched in 2024, creating 1,937 new jobs – a 50 percent increase from 2023. In contrast, the number of new foreign investment projects in Europe decreased by 7 percent compared to 2023. These are the best figures for Latvia in terms of both new projects and jobs created in the last three years.

The government supports investors with incentives like 0 percent tax on reinvested profits, special economic zones offering up to 80 percent tax rebates, and the Green Corridor for fast-tracking projects in construction, planning, and migration. The state-owned ALTUM fund also provides loans, guarantees, and venture capital for innovative and sustainable projects.

Key growth sectors include ICT, green energy, biomedicine, smart materials, and the bioeconomy. The ICT sector benefits from a strong startup scene and educated talent. In green energy, major investments are going into solar and wind projects. The bioeconomy is export-driven, with the forest sector alone making up 17 percent of exports or 3.3 billion euros in 2023. FDI in this sector exceeded 1.8 billion euros by the end of 2023.

Latvia’s supportive policies, strategic location, and focus on innovation make it a top choice for investors in emerging European markets.

What challenges do German companies face during their business ventures into Latvia?

German companies entering the Latvian market benefit from a favourable business environment but face several mild challenges. Bureaucratic procedures might be complex and time-consuming, especially when applying for permits, licenses, or residence permits for third-country employees. Yet these procedures are usually less time-consuming than in most comparable jurisdictions with EU and EEZ and can be addressed by securing a safe-digital signature instrument and considering the Green Corridor (available for specific industries and processes).

English is widely spoken, but German is not commonly used, which might lead to some language and interpretation issues. Finally, to benefit most from the systems in place, adapting to the local tax and legal systems require careful planning and trustworthy local partners who can effectively navigate and support German businesses.

Can foreign investors manage a business in Latvia without being physically present or becoming residents?​

Yes – they can. Investors can fully manage their Latvian companies digitally and remotely from anywhere in the world. Latvia’s national e-signature enables secure and legally recognized operations across the European Union. With this tool, investors can open and manage bank accounts, submit documents to public institutions, sign contracts, and even attend notary appointments – all online. This digital infrastructure makes Latvia a highly accessible and efficient environment for international business operations​

 

In your opinion, how will Latvia develop?

Latvia is on track to become a more innovative and sustainable economy over the next decade. The country is focusing on digitalization, green energy, and high-value industries to drive growth. The government is investing in infrastructure, education, and technology to boost productivity and attract foreign investment. In addition, there are multiple programs that allow the investors to benefit at different stages of their company life cycle. Latvia’s strategic location adds to its appeal for international business.

Reforms in taxation, labour market flexibility, and startup support are making the business environment more competitive. With stable macroeconomic fundamentals and a clear long-term vision, Latvia is an ideal destination for investors seeking growth and stability.​

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