Company registration in Estonia
Despite its small population, Estonia’s authorities have managed to turn it into one of the largest financial centers in Europe. It has one of the highest levels of digitalization in the EU. The developed digital infrastructure has made this country very popular for various companies in the e-commerce and financial sectors, including cryptocurrencies.
However, there are unique features of company registration in Estonia that are important to be aware of. If you do not prepare the necessary documents or skip any stage, you will face rejection. This will lead to a loss of time. Therefore, entrusting the work to specialists is better. The Lawtter Solutions company offers legal services on company opening in Estonia. We ensure that the procedure is carried out in accordance with all local legal requirements.
1 280 EUR*
5-7 days
0%, 20%
Without personal visit
Benefits
Advantages of Estonia for Doing Business
Registering a company in Estonia is beneficial for many types of business. This solution allows you to get several significant advantages.
Economic and Political Stability
Estonia is a Member of the EU
Transparent Tax System
Electronic Residency
Possibility of Remote Opening of the Company
Before opening a company in Estonia, deciding on the organizational and legal form is necessary. Those wishing to open a business in the country can choose one of the following options.
Sole Proprietorship
An individual entrepreneur is a common form of ownership to open a business in Estonia. This is the best option for opening a small business, for example, in the service sector. However, entrepreneurs are limited in terms of annual turnover and the number of employees that can be hired.
Private Limited Companies
Private limited liability companies are the most popular form of business ownership in Estonia. A limited liability company means that the owner and director of the company can be a citizen of any country.
Public Limited Companies
Joint-stock companies are legal entities in which shares can be distributed without restrictions. The number of shareholders can be any. Such companies have no restrictions on profit or the number of employees, but the tax burden is the highest.
General Partnership
In a general partnership, all partners bear full responsibility for obligations with their . personal property or assets. Such partnerships are completely financially transparent.
Limited Partnership
A limited liability partnership means only one general partner bears full responsibility. Other partners have limited liability only for their contributions.
Before opening a company in Estonia, it is necessary to fulfill several organizational and legal requirements. We describe them further.
Director
A director must be appointed in an Estonian company. They can be a citizen of any country (except those under sanctions) over 18 y.o.. There are no residency requirements for the director. In Estonia, there is also a nuance related to calculating the director’s salary. In Estonian companies, the director’s salary can be absent. There are also no minimum wage requirements.
Shareholder
Estonian companies must have at least one shareholder. They can also be a resident of any country at the age of 18 or older. However, if the owner of the controlling stake (50% + 1 share) is not a resident of Estonia, a resident contact person must be appointed.
Address
Every company must have a legal address in Estonia. The information is indicated in the Register.
Name
Each company must have a unique name. A check is carried out before registration. Each form of ownership has its ending. They are as follows:
- Private Limited Company – OÜ;
- Public Limited Company – AS;
- General Partnership – TÜ;
- Limited Partnership – UÜ.
Share Capital
The authorized capital is obligatory for payment. The size depends on the form of ownership of the enterprise. For OÜ companies, a minimum deposit of EUR 2,500 is required. The minimum authorized capital for organizations of the AS type is EUR 25,000. You need to confirm the payment of the authorized capital only if its amount exceeds EUR 50,000.
Local Account
Businesses are not required to open an account in an Estonian bank. You can work with financial organizations from the European Union.
Registration Agent
Estonia does not require a registration agent.
Reporting
Reporting is a mandatory condition for the work of Estonian companies. Documents must be submitted within the set deadline.
Before opening a company in Estonia, you must know about taxation in this country. In Estonia, the global principle of taxation applies: the profit of resident companies is taxed from the worldwide income, regardless of the place of provision of services, counterparties, and company structure.
Income Tax
Estonia’s income tax is 20%. However, it is not paid until the dividends are distributed. There is also no tax on the profits that the company reinvests.
VAT
The general rules state that the VAT rate is 20%. However, a reduced rate of 9% applies to certain categories of goods and services.
It is also essential to know what kind of reporting companies operating in Estonia have to provide, such as annual reports and audits.
Annual Financial Report
Companies must submit annual financial statements for the reporting calendar year to the Commercial Register no later than June 30 of the year following the reporting year (6 months after the end of the financial year). Reporting is submitted electronically. The company’s financial year lasts 12 months.
Audit
Businesses must undergo an annual audit when 2 of the three conditions are met:
- Annual income – from 4,000,000 EUR and more.
- The total value of assets is 2,000,000 EUR and more.
- The number of full-time employees is 50+ people.
Before opening a company in Estonia, deciding on the organizational and legal form is necessary. Those wishing to open a business in the country can choose one of the following options.
Sole Proprietorship
An individual entrepreneur is a common form of ownership to open a business in Estonia. This is the best option for opening a small business, for example, in the service sector. However, entrepreneurs are limited in terms of annual turnover and the number of employees that can be hired.
Private Limited Companies
Private limited liability companies are the most popular form of business ownership in Estonia. A limited liability company means that the owner and director of the company can be a citizen of any country.
Public Limited Companies
Joint-stock companies are legal entities in which shares can be distributed without restrictions. The number of shareholders can be any. Such companies have no restrictions on profit or the number of employees, but the tax burden is the highest.
General Partnership
In a general partnership, all partners bear full responsibility for obligations with their . personal property or assets. Such partnerships are completely financially transparent.
Limited Partnership
A limited liability partnership means only one general partner bears full responsibility. Other partners have limited liability only for their contributions.
Before opening a company in Estonia, it is necessary to fulfill several organizational and legal requirements. We describe them further.
Director
A director must be appointed in an Estonian company. They can be a citizen of any country (except those under sanctions) over 18 y.o.. There are no residency requirements for the director. In Estonia, there is also a nuance related to calculating the director’s salary. In Estonian companies, the director’s salary can be absent. There are also no minimum wage requirements.
Shareholder
Estonian companies must have at least one shareholder. They can also be a resident of any country at the age of 18 or older. However, if the owner of the controlling stake (50% + 1 share) is not a resident of Estonia, a resident contact person must be appointed.
Address
Every company must have a legal address in Estonia. The information is indicated in the Register.
Name
Each company must have a unique name. A check is carried out before registration. Each form of ownership has its ending. They are as follows:
- Private Limited Company – OÜ;
- Public Limited Company – AS;
- General Partnership – TÜ;
- Limited Partnership – UÜ.
Share Capital
The authorized capital is obligatory for payment. The size depends on the form of ownership of the enterprise. For OÜ companies, a minimum deposit of EUR 2,500 is required. The minimum authorized capital for organizations of the AS type is EUR 25,000. You need to confirm the payment of the authorized capital only if its amount exceeds EUR 50,000.
Local Account
Businesses are not required to open an account in an Estonian bank. You can work with financial organizations from the European Union.
Registration Agent
Estonia does not require a registration agent.
Reporting
Reporting is a mandatory condition for the work of Estonian companies. Documents must be submitted within the set deadline.
Before opening a company in Estonia, you must know about taxation in this country. In Estonia, the global principle of taxation applies: the profit of resident companies is taxed from the worldwide income, regardless of the place of provision of services, counterparties, and company structure.
Income Tax
Estonia’s income tax is 20%. However, it is not paid until the dividends are distributed. There is also no tax on the profits that the company reinvests.
VAT
The general rules state that the VAT rate is 20%. However, a reduced rate of 9% applies to certain categories of goods and services.
It is also essential to know what kind of reporting companies operating in Estonia have to provide, such as annual reports and audits.
Annual Financial Report
Companies must submit annual financial statements for the reporting calendar year to the Commercial Register no later than June 30 of the year following the reporting year (6 months after the end of the financial year). Reporting is submitted electronically. The company’s financial year lasts 12 months.
Audit
Businesses must undergo an annual audit when 2 of the three conditions are met:
- Annual income – from 4,000,000 EUR and more.
- The total value of assets is 2,000,000 EUR and more.
- The number of full-time employees is 50+ people.
Registration companies
Company Registration Process
The procedure for starting a business in Estonia includes five steps. They are as follows.
Due Diligence and KYC verification
Checking the name
Preparation of documentation
Submission of prepared documents
Registration of documents
Documents
Documents Required for Registration
The following package is required for individuals who hold the director position or intend to own shares in the company.
- Identification documents. You must provide a copy of your ID or passport to confirm your identity.
- Address confirmation. You can provide a bank statement, utility bill, etc.