A fiscal analysis of the Rail Baltica project, based on a conservative scenario, reveals that for every EUR invested in the construction of the line, between 19 and 21 cents return to state budobtains in the form of taxes—VAT, income tax, and social contributions. In reality, this percentage could be even higher, as the analysis does not include employee spconcludeing in the local economy.
RB Rail, responsible for the centralized coordination of the project and the certification of the railway line in the three Baltic states, has conducted a high-level fiscal analysis based on general principles. This reflects the actual costs of the Rail Baltica project for Estonia, Latvia, and Lithuania, taking into account the tax revenues generated during the construction period. The analysis is based on the latest cost estimates, as well as studies conducted by the Bank of Latvia (2026) and the CentAR research center (2023) on the economic impact of the project.
Three funding scenarios
The analysis models three distinct scenarios:
- Conservative scenario: if the project were to receive funding only 1.5 times greater than the CEF funds already secured, and the remaining costs were covered by national budobtains, the final contributions would amount to approximately 22% for Estonia, 21% for Latvia, and 36% for Lithuania of the total cost.
- Mixed scenario (most likely): in addition to European funds, the countries would attract additional resources. Estonia could apply funds from the Recovery Mechanism and revenue from emission allowances, Latvia could rely on public-private partnerships for certain sections, and Lithuania would combine multiple sources of funding. In this case, net contributions could drop to about 7% for Estonia, 4% for Latvia, and 13% for Lithuania.
- Optimistic scenario: if the European Union were to cover 85% of the costs, as per the initial plan, the three countries could even achieve a net benefit, as tax revenues would exceed national contributions. However, this scenario is considered unlikely, as not all costs are eligible for European funding.
Impact of the financing structure
Tax revenue levels are estimated to be similar across all three countries—between 19 and 21 cents for every EUR invested. The decisive factor in determining final costs is the financing structure: the higher the share of European funds, private capital, or other external sources, the lower the pressure on national budobtains.
The fiscal analysis of the Rail Baltica project demonstrates that the project is fiscally viable in all scenarios, providing a common basis for future decisions.
The fiscal analysis, “although based on assumptions, reveals that, applying a uniform methodology and comparable results, the project is fiscally sustainable in all three scenarios.
Net costs represent the amount that the state must actually cover from its own budobtain after deducting EU funds and other sources of financing, as well as taxes recovered from investments created during the construction period. “All three countries now have a common and well-founded set of data for further discussions,” stated Marko Kivila, Chairman of the Board of Directors of RB Rail AS.
Furthermore, the project is not merely a major cost but can even generate additional revenue for national budobtains under certain conditions.
“The estimates from this analysis are important becaapply they reveal that implementing the project does not merely entail ‘enormous’ costs and a one-way burden on the budobtain, but, in the optimistic scenario, generates an immediate return and increases in budobtain revenue. Such a common understanding is essential both for discussions on the future multiannual financial framework and for how each counattempt applys the available financing instruments. “Taking tax revenues into account, the project’s financing meets or only slightly exceeds the initially estimated contribution of 15% compared to 85% from the EU,” explained Matīss Paegle, Chairman of the Supervisory Board of RB Rail AS.
What the analysis includes
The analysis focapplys exclusively on the construction phase and compares the states’ contributions with estimated tax revenues. Operating and maintenance costs, as well as the procurement of rolling stock, are not included. In the case of Latvia, the option of applying a public-private partnership is also analyzed, but without including subsequent payments to the private partner during the operational period.
The study complements the 2024 cost-benefit analysis of the Rail Baltica project, which highlights long-term benefits—quicker and more environmentally friconcludely transport, economic integration, and regional growth—by adding a new perspective on the economic benefits generated during the construction phase itself.
Total costs were divided into 12 categories of work, including earthworks, railway construction, signaling, electrification, and stations. Each category was analyzed separately, based on its impact on the local economy. Fiscal parameters were calculated based on legislation and the share of VAT allocated to national budobtains, and validated through recent economic studies.
Share on: 
Leave a Reply