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Latvia – The High-Performance Gateway to Northern Europe

Executive Summary

Latvia is the primary strategic choice for enterprises requiring a cost-effective, high-uptime presence to serve the Baltic States and Northern Europe. With a power grid heavily weighted for renewables and a tax structure that rewards infrastructure reinvestment, it provides a stable environment for high-density compute workloads. This market allows organizations to secure low-latency regional access without the premium overhead typical of Western European Tier 1 markets.

Latvia: At A Glance

FactorRating / DataNotes
Global Connectivity GradeBReliable regional hub with strong fiber density.
Direct Cloud On-Ramps0 – as of December 2025Hyperscale access is typically via Stockholm hubs.
Power CostUS$0.09/kWh – as of December 2025Highly competitive rates with 69% renewable generation.
Disaster RiskLow (2.6) – as of December 2025Geologically stable with minimal seismic activity.
Tax IncentivesYesAvailable via SEZs and distributed profit tax models.
Sales Tax21% VAT – as of December 2025Standard European Union consumption tax rate.

Network & Connectivity Ecosystem

Latvia functions as a mature digital crossroads for the Baltic region. The infrastructure is built for high availability and low-latency transit to neighboring Nordic and Eastern European markets.

Carrier Density & Carrier Neutrality: Carrier count: over 10 as of December 2025. The ecosystem is a mix of local incumbents and international providers. This diversity ensures path redundancy and competitive pricing for transport and IP transit services across the region.

Direct Cloud On-Ramps: Over 0, enabling access to 0 cloud regions. As of December 2025, native on-ramps for AWS, Google Cloud (GCP), or Microsoft Azure are not physically located within Latvia. Enterprises achieve high-speed connectivity to these platforms via private waves or PNI to the Stockholm hub, which serves as the regional cloud gateway.

Internet Exchange Points (IXPs): The market relies on LIX and SMILE. These exchanges are critical for keeping local traffic within the national borders, reducing hop counts and ensuring millisecond-level latency for domestic users.

Bare Metal: High-performance bare metal is readily available for workloads that require dedicated resources. Providers such as Hivelocity maintain a presence here, offering a reliable alternative for users who want to avoid the performance variance of virtualized public clouds.

Power Analysis

Energy costs and sustainability are the standout features of the Latvian infrastructure landscape.

Average Cost Of Power: Industrial electricity rates are approximately US$0.09/kWh as of December 2025. This pricing is among the most competitive in Northern Europe, providing a significant runway for high-density AI clusters or large-scale storage deployments.

Power Grid Reliability: The Latvian grid is well-engineered and utilizes a diversified generation mix of hydro, biomass, and wind. Data center clusters in Riga benefit from redundant, multi-substation support, ensuring the physical infrastructure meets the high availability requirements of modern enterprise IT.

Market Access, Business & Tax Climate

Latvia offers a unique fiscal environment that favors long-term capital investment in hardware and facility expansion.

Proximity To Key Business Districts: Data centers are concentrated in Riga, the nation’s financial and technological heart. This physical proximity ensures single-digit millisecond latency for the country’s core economic sectors and corporate headquarters.

Regional Market Reach: Latvia serves as the central link in the Baltic region. From a Riga deployment, businesses can effectively reach Estonia and Lithuania, as well as Nordic markets, with lower transit costs than deployments in more distant European hubs.

Tax Advantage For Data Centers: The local tax regime supports long-term infrastructure growth through Special Economic Zones and a unique distributed profit tax model. By only taxing profits when they are paid out, the government allows operators to reinvest capital into hardware and facility upgrades without immediate tax hits.

Natural Disaster Risk

The natural disaster risk for Latvia is Low (2.6) as of December 2025. This makes the geography one of the safest physical locations in Europe for sensitive hardware assets.

  • River Flood (6.6): This is the most significant localized risk, primarily near the Daugava River. Top-tier providers manage this through site selection on elevated terrain.
  • Coastal Flood (3.6): This is a regional risk for coastal facilities; most Riga-based inland sites are not materially affected.
  • Drought (2.6): A minor risk that can occasionally impact hydroelectric generation or specific water-based cooling requirements.
  • Earthquake (0.1): Seismic activity is practically non-existent, ensuring the long-term safety of data center structures.

Other hazards such as tropical cyclones and tsunamis are not material risks for this geography.

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