Company registration in Estonia
- What are the advantages of registering a company in Estonia?
- What types of organizational and legal forms of legal entities exist in Estonia?
- What are the main steps required to open a company in Estonia?
- What documents are required to register a company in Estonia?
- What are the taxes in Estonia?
- How can our company help?
Company registration in Estonia
Estonia is one of the European countries where unique, favorable conditions for doing business have been created, because the country's authorities are interested in constantly attracting foreign investment to the state.
What are the advantages of registering a company in Estonia?
- The favorable geographical location allows you to do business with both Scandinavian and European countries;
- Estonia is the world's first digital country, whose residents can carry out any interaction with government authorities remotely, including registering a company;
- If a person wants to open a company, then he does not necessarily have to have the authorized capital of the enterprise itself. It can simply be declared in the constituent documents of a legal entity and will amount to at least 2500 EUR;
- Estonia is tax-free - in practice, this means that the country offers one of the most favorable taxation systems, which allows for the optimization of tax payments and various fees;
- Estonia is not an offshore country, and therefore has an excellent reputation in the European market;
- EU membership provides access to the European market, forms one currency in the country and makes it possible to attract financial assistance to support the development of the economy as a whole.
What types of organizational and legal forms of legal entities exist in Estonia?
- Limited Liability Company (OÜ) — is the best solution for people who plan to run a small and medium-sized business. The founders can be one individual or legal entity, but no more than 10. The governing body is the board. A board member may not accrue or pay himself a salary. It is not necessary to form an authorized capital upon registration, but it must be declared at least 2500 EUR;
- Joint Stock Company (AS) is a type of organizational and legal form of a legal entity that aims to unite the share capital of all its members (that is, each member of AS has its own corresponding number of shares). Best suited for large businesses as it allows you to have many shareholders. The minimum authorized capital is 25 EUR. Shareholders are not personally liable for any obligations of the joint stock company. Shares must be registered in the Central Register of Securities of Estonia;
- Non-profit association (MTÜ) — intended for non-profit activities and used to create public and charitable organizations, foundations, and associations. Non-profit organizations have the right to engage in entrepreneurial activities only to the extent necessary to fulfill their own statutory goals;
- Private entrepreneur (individual) FIE - is the simplest organizational and legal form, since to register you only need a work permit or permanent residence permit in Estonia;
- General partnership (TÜ) and Limited partnership (UÜ) in practice, they are used quite rarely to open a business in Estonia. However, they are chosen when it is necessary to attract a large number of interested participants in a legal entity or if it is necessary to support the economic activity of the company’s investors. Both of these types of organizational and legal form of a legal entity are characterized by speed of registration and simplicity in carrying out the necessary actions, as well as the absence of any limits on the authorized capital established by Estonian legislation.
What are the main steps required to open a company in Estonia?
- Selecting a suitable organizational and legal form that is most suitable for creating a legal entity;
- Selection of a unique name for a legal entity;
- Creation of a company charter, which should contain information about its owners, commercial activities, etc.;
- Opening a bank account in Estonia and depositing the minimum authorized capital (or declaring it);
- Registration of the physical address of a legal entity;
- Company registration in tax and social authorities;
- Payment of all necessary fees and charges;
- Submitting an application for obtaining relevant licenses and permits to conduct business activities.
What documents are required to register a company in Estonia?
- application for company registration;
- formation of 3 names for the future company, which should be prioritized;
- national and foreign passports of the founders and members of the company’s board;
- confirmation of their registration address (providing payments for utility bills);
- drafted constituent documents (for example, charter);
- a detailed description of the directions of the company’s economic activities;
- a power of attorney, which must be notarized and have an apostille;
- documents confirming payment of all government fees and duties;
- documents confirming the legal address of the company (for example, a lease agreement).
What are the taxes in Estonia?
The general income tax rate in Estonia is 20%. However, this tax is not paid until the dividends are distributed. This means that income tax is paid only on distributed profits.
There is also a reduced rate of 14% for firms that distribute dividends regularly. However, if a company pays dividends to individuals, then in this case a profit tax rate of 7% is applied.
Important ! Dividends received from Estonian companies, EU countries, and Switzerland may be exempt from corporate income tax, provided their shareholding is at least 10%. In this case, the dividend tax in Estonia will be 0%.
VAT: 20% is the standard rate, which is the most common and applies to most goods and services; 9% is a reduced rate that applies to printed or medical products and the like; 0% - products sold in the EU and outside Estonia.
Social tax is paid by the employer monthly in the amount of 33% of each employee's salary for his social and health insurance.
There is no capital gains tax in Estonia as it is treated as part of profits. Therefore, a corporate income tax rate of 20% is applied.
Personal income tax in Estonia - the standard rate is 20%. A reduced rate of 14% applies to resident credit institutions and their branches abroad.
Thus, low taxes in Estonia are what make this jurisdiction quite attractive for starting a business.
How can our company help?
Company registration in Estonia
If you want to register a business in Estonia, but do not know all the legal nuances of carrying out such an operation in practice, then contact reliable specialists - the consulting company Jurisprudential LTD. Our team not only has thorough knowledge of opening a company in different countries of the world, but also has many years of experience in applying it, which allows us to provide only qualified legal assistance to the company’s clients. Contact us!