Company registration in Estonia
If you’re looking to venture into a European country and leverage its strategic placement, Estonia is the perfect choice for many business owners looking to expand.
Known for its entrepreneurial prowess, many of the world’s renowned start-ups have emerged from this small northern European country. You can set up a lucrative Estonian company with the help of CompyCo’s experts and enjoy the various benefits this sparsely populated country has to offer.
Estonia is at the forefront of cyber security, cryptocurrency businesses, digital capability, and global business services, made possible by its innovative digital infrastructure and minimal bureaucratic structures. Known for the ease of doing business and its expertise in foreign activity, Estonia is a unique and lucrative market for international investors to tap into.
Conveniently located within reach of Russia, Scandinavia, and Central Europe, Estonia’s competitive economy supports many successful start-ups and multinational companies with its information technology advancements.
Digitization is the way forward for Estonia, with its unique approach to citizen medical records that are digitalized using blockchain and opens an entire market for innovation in preventive medicine and cryptocurrency trading.
Forms Of Companies In Estonia
- OÜ “osaühing”—private limited liability company
- AS “aktsiaselts”—public limited company
- Branch “esindaja”—large company branch
- Representative Office “filiaal”—office of representation
- Free Zone LLC “vabatsooni firma” —Free Zone limited liability company
What is the difference between OÜ and AS companies in Estonia?
In Estonia, the two most common types of companies are private and public limited companies. The main differences between the two are explained below.
An Estonian private limited company itself, and not the shareholder, is liable for the fulfilment of the company’s obligations with the entirety of its assets. The share value must be at least 2,500 EUR. Unlike the AS company, where both types of boards must be established, the OÜ should have a management board and may have a supervisory board. It must have at lest one Board member and one shareholder. In case there is no Estonian Board member, the contact person must be appointed. Also, registered office address in Estonia is mandatory.
The public limited company must also have share capital of at least 2,500 EUR like their private limited company counterparts. This amount needs to be deposited in your company’s registered business bank account supervised by the Estonia Register for Securities. Every public limited company is obliged to have a management and supervisory board of at least one member. However, the members of the supervisory board can’t simultaneously be members of the management board.
Fundamentals Of Limited Liability Companies
Corporate Tax in Estonia
VAT in Estonia
Fundamentals of limited liability companies in the Estonia
|Limited liability company|
OÜ private limited company
|Minimum Share capital||min 2500 EUR|
|Registered office required||Yes|
|Physical office required||No|
|Min. number of Shareholders||1|
|Min. number of Directors||1|
|Local Director required||No|
if you are a non-Estonian company your company, is required to appoint a local contact person
|Bank signatory must travel||In most cases no|
|Timescale for company formation||3 days|
|Timescale for bank account opening||7 days|
|Timescale for obtaining VAT number||7 days|
|Statutory audit requirements||No|
|Shelf companies available||No|
How can I set up my company in Estonia?
Regardless of where you live, establishing a business in Estonia is a fairly straightforward and simple process. With CompyCo, you’ll receive all the support and guidance you need to establish yourself remotely as a business owner in the country.
In 2014, Estonia established a unique program of e-residency which allows non-Estonians to enter the market as an electronic entity. Making the process easy for people looking to expand outside their jurisdiction, the e-residency can be acquired in a few simple steps.
The first step is applying for your digital ID, acquiring a legal address in Estonia, and if all the Board members are foreign, we will appoint our Estonian contact person.
The next part of the process is paying the state fee of EUR 190 and registering a legal e-company in Estonia. And, finally, the last step to setting up your company is opening a business account which doesnt necessarily need to be in Estonia. This makes things easier because we can choose the best online bank for your business within EU or in UK.
Apart from the ease of trading and starting a business, the e-residency option offers access to networking and business support that’ll help you get your business off the ground.
Estonia’s e-residency option allows you access their vast digital infrastructure and helps you gain the same business rights as the country’s citizens.
CompyCo can help you establish your Estonian e-residency and set up your company within a few weeks, so you can commence your location-independent business operations. Ease of doing business, low costs of administration, and simple taxation make Estonia a lucrative business venture for you.
Utilize the strong relationships we’ve established with banking, administration, and HR professionals in the region to get the assistance you need along the way. From licensing to employment and documentation, we’ll help you get your company up and running just the way you want it!
Bank Account Opening
For a country that prides itself on an advanced digital society, Estonia’s banking services are efficient and exceptional. With a range of international and local banks, we can connect you with a financial institution that’ll cater to your business’s needs and activities.
Registering your business as a foreign investor in the country requires the opening of a bank account, whether you opt for an online alternative or an otherwise. To gain approval for your bank account, some of the required documents are:
- Proof of office address
- Proof of your ties to the country. This could include your e-residency ID or an article of incorporation.
- Proof of identity. You may provide a copy of your passport, driver’s license, or identity card.
For more information about opening a bank account, head over here.
Accounting & Taxation
The accounting and taxation related requirements to bear in mind are:
- In Estonia, the rate for corporate income tax on reinvested and retained profits is 0%. What does this mean? It means that all companies established and registered in Estonia are subject to no corporate income tax.
- There is, however, an exception to the no-tax rule. Profits that are distributed by the company are liable to a 20% income tax. In certain cases, this may be lowered to as little as 14%. Distributed profits are gifts and donations, expenses unrelated to business, or profits distributed during the tax period.
- Financial statements, including a profit and loss account, an annex, and a balance sheet must be submitted to the Estonian company register every year.
- The standard VAT (käibemaks) rate in Estonia is 20%, but it can be 15% or 0% based on the type of product or service the taxpayer offers. Estonian companies are issued VAT numbers with the format of the country code ES followed by a 9-digit number, which ends with a letter.
How can you employ staff in Estonia?
Affordable business services, competitive markets, and unparalleled prowess in digitization make Estonia a viable option for business expansion. This doesn’t just apply to the infrastructure, but the people you hire to work for your organization too.
We want you to direct all your energy to your business venture and leave the employee management to us. With a creative and highly-educated workforce to recruit from, onboarding and retaining the top talent for your company is made easier with CompyCo.
We manage each aspect of the process, from ensuring the eligibility of workers and abiding with employment compliance laws to contracts and employee agreements. CompyCo can provide all the services related to employing and payroll in Estonia.
If your foreign company only needs to employ a person in Estonia to work from home, we’ll help you avoid local company registration and set your non-resident company as an employer. It’s in our best interest to save your costs wherever it’s possible, and we’re dedicated to guaranteeing the best, cost-efficient, and value-adding solutions.
Do you have any queries? Take a look at our HR services page for more information about our International HR services!