Cyprus is currently facing economic challenges. Cyprus has borrowed 10 billion euros from an international loan, mainly to recapitalize its banks, which are paralyzed by exposure to crisis-hit Greece.

The Cyprus government has passed a law that will tax existing bank deposits over EUR 100,000 with a one-off tax. Such a step for Cyprus threatens an outflow of funds from the state.

From the point of view of experts, this situation is beneficial for Latvian credit institutions, especially those working with clients from Russia and the CIS. Latvian banks are currently characterized by an influx of depositors.

Depositors and investors choose Latvia for its tax policy, favorable tax system, high level of confidentiality and flexible attitude to the transit of financial resources. Latvian banks are a safe alternative to offshore money storage.

The advantages of the Latvian business environment are open markets, resources not available elsewhere (land, wood, low labor costs), as well as a business culture and mentality close to the European dimension.

Foreign investors also evaluate the experience and note a number of benefits, as business projects that had made good progress before attracting investment would have made good progress. They point out that Latvia has a long tradition of production.

Latvia or Cyprus?
The main differences, important for any entrepreneur, who has not decided yet – Latvia or Cyprus.

Latvia is located in Europe, Cyprus is located in Asia. Latvia has an advantageous geographic location close to the former Soviet markets, such as Russia and Ukraine, at the same time- it is part of the European market.
Cyprus is a member of Eurozone, Latvia will join Eurozone in 2014.
Latvian financial sector does not constitute a basic profit of GDP, as opposed to Cyprus. It points that Latvia is economically more stable.
Latvia has a high level of Russian language. The Latvian banking sector has experience working with clients from the former Soviet Union, and the banks are willing to work using Russian language.
Starting of 1st January 2013, the dividends are not taxable income in Latvia, if the company – Latvian resident pay out dividends to the non-resident unless it is located, established or founded in low tax or no-tax states or territories. Also, dividends received from the non-resident are not taxable unless it is located, established or founded in low tax or no-tax states or territories.
Latvia has concluded a convention with Russia of double non-taxation. This convention significantly reduces the tax burden for entrepreneurs based on Latvia or Russia.
Latvia increased its attractiveness for foreign depositors by passing a law in 2009 allowing anyone who invests 100,000 lats (€144,150, or in other specific cases €70,000) to get a residency permit. Residency permit allows them to move more freely around the EU.
While Cyprus has professional bankers as well as Latvia has, in Latvia bank services are more cheaply and also companies can be purchased cheaply.
Latvia is ranked as 25 in Doingbusiness. Cyprus is ranked as 36 in Doingbusiness. This survey points out that in Latvia is more easy deal with issues such as- Registering Property, Getting Electricity, Getting Credit, Enforcing Contracts and Resolving Insolvency, also Trading Across Borders.
Latvia is in upper middle income category. Cyprus is in high income category. That points out lower labour costs in Latvia.