The top of the ITCI-2025 ranking is once again dominated by countries with the most “neutral” tax structures: Estonia is in first place, Latvia is in second, and Lithuania is in fifth (plus Hungary in ninth and the Czech Republic in tenth).
The Tax Foundation notes that Estonia’s leadership is supported by four elements: a 20% corporate tax levied only on distributed profits; a flat income tax of 20% (without taxation of personal dividends in the same format); a property tax focused on land value; the territorial principle of taxation of foreign income applies.
Latvia has “caught up” thanks to the introduction of a corporate income tax model similar to Estonia’s and relatively effective labor taxation. Lithuania stands out with its low corporate tax rate (17%) and strong capital cost recovery rules.
