Estonia company registration

Estonia company registration

DOING BUSINESS IN ESTONIA

Since 2003, Healy Consultants Group PLC has assisted our Clients with starting their business in Estonia. Our services include i) Estonia business registration ii) regulated industries licensing iii) Estonian corporate bank account opening iv) employee recruitment strategies and v) office rental solutions.

SummaryLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Also known asOsaühingOsaühingVabatsooni firmaAktsiaselts Piiratud vastutusega ühingFiliaalEsindaja
Best use of company?All products and servicesClose a customer deal nowManufacturing and export tradingTo secure public fundingProfessional servicesMarketing & researchSpecific projects
How soon can you invoice Clients/sign sales contracts?2 months3 weeks2 months2 months2 months2 months2 months
How soon can you hire staff?2 months5 weeks2 months2 months2 months2 months2 months
How soon can you sign a lease agreement?1 month1 week1 month1 month1 month1 month1 month
How long to supply corporate bank account numbers?2 months3 weeks2 months2 months2 months2 months2 months
How long to supply company registration/tax numbers?2 months3 weeks2 months2 months2 months2 months2 months
Corporate tax rate on annual distributed business profits?20%20%up to 0%20%0%0%20%
Limited liability entity?YesYesYesYesYesNoNo
Government grants available?YesYesYesYesYesNoYes
Resident director/partner/manager/legal representative required?NoNoYesNoNoYesYes
Minimum paid up share capital? (EUR)2,5002,5002,50025,000NoneNoneNone
Corporate bank account location?BigBankLHV PankSEB bankBigBankSEB bankTallinna ÄripankSwedbank
Can secure trade finance?YesYesYesYesYesNoYes
VAT payable on sales to local customers?20%20%20%20%20%No sales allowed20%
Average total business set up engagement costs? (EUR)8,150Inquire proposalInquire proposal8,500Inquire proposal8,5008,500
Average total engagement period?2 months7 weeks2 months2 months2 months2 months2 months

See full table

Accounting and tax considerationsLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Corporate tax rate on annual distributed profits on business?20%20%up to 0%20%0%0%20%
Legally tax exempt if properly structured?YesYesYesYesYesNoNo
Group HQ tax incentives?YesYesYesYesYesNoYes
Must file an annual tax return?YesYesYesYesNoYesYes
Must file annual financial statements?YesYesYesYesNoYesYes
Must appoint an auditor?NoNoNoYesNoNoNo
Access to double taxation treaties?YesYesYesYesYesYesNo
Withholding tax on payments to foreign shareholders?NoNoNoNoNoNoNo
Company RegistrationLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Resident director/partner/manager/legal representative required?NoNoYesNoNoYesYes
Minimum number of shareholders/partners?11112Parent companyParent company
Minimum statutory paid up share capital? (EUR)2,5002,5002,50025,000NoneNoneNone
Must sign an physical office lease agreement during incorporation?NoNoYesNoNoNoNo
Shelf companies available?YesYesNoNoNoNoNo
Time to incorporate a new entity?1 month1 week1 month1 month1 month1 month1 month
Can easily convert to a PLC?YesYesYesYesNoNoNo
Can have preference shareholders/partners?YesYesYesYesYesNoNo
Business ConsiderationsLLCFast business setup solutionFree zone LLCPublic limited companyLLPRepresentative officeBranch office
Good entity for trademark registration?YesYesYesYesYesNoYes
Can secure an import and export license?YesYesYesYesYesNoYes

Sponsorship by a local citizen required?No
Our Client needs to travel to Estonia for business set up?No
Temporary physical office solutions available?Yes
You need a local resident as bank signatory?No
Can be wholly foreign owned?Yes
The entity will likely be regulated by?Estonian Centre of Registers and Information Systems
Minimum number of directors/managers?1
Monthly VAT reporting to the Government?Yes
Public register of shareholders and directors?Yes
Government approval required for foreign owners?Yes
Shareholders & directors documents to be attested/translated?Yes
Can bid for Government contracts?Yes
Each foreign director needs a personal income tax number?No
Foreign non resident director needs a residence visa?No
Maximum number of staff allowed?No maximum number for any entity
Expatriate to local staff ratio?None
Can secure residence visa for business owner?Yes
Other useful information
What will be included in my customer sales invoice?Click link
This country has signed free trade agreements?Yes
This country is a member of WIPO/TRIPS?Yes
This country is a member of the ICSID?Yes
Average custom duties suffered?1%
Government foreign investment approval required?Yes
Maximum shareholding for foreigners?100%
Average monthly office rental? (EUR per sq m)9
Minimum statutory monthly salary? (EUR)390
Average monthly salary for local skilled employees? (EUR)1149
Security deposit to be kept with Government?No
US$ deposit interest rate? (1 year average)0.4%
Overseas remittance currency controls?No
Banking considerations
Multi-currency bank accounts available?Yes
Corporate visa debit cards available?Yes
Quality of e-banking platform?Moderate
Crowd funding available in this country?Yes

Press the link headings below to read detailed, relevant, up to date information.

  • Advantages and disadvantages

    Advantages of Estonia company registration

    Estonia business registration facts

    1. Registration of a company in Estonia can be completed with only i) one shareholder and ii) one director, who both can be foreigners and reside elsewhere than Estonia. The minimum paid-up capital is €2,500 and the incorporation procedures can be completed within 1 ½ months;
    2. Our Client’s company in Estonia will benefit from low operational costs because:
      • Their company will benefit from labor costs of only €10 per hour, the 10th lowest amongst all European countries;
      • Tallinn, the capital city of Estonia, is the second cheapest capital in the European Union after Zagreb for the cost of renting an office: average rental price for its CBD only amounts to €13 per square meter according to Cushman and Wakefield’s latest research report;
      • Costs to import and export products are much lower than the rest of the European Union. They average €765 per container according to the World Bank, to be compared with close to €1,100 for the global OECD average.
    3. Opening global corporate bank accounts to assist company formation in Estonia is easy. Healy Consultants works with internationally recognized banks to provide corporate bank account services;
    4. Foreign corporations can use Estonia’s free trade zones as a hub to export their products across the globe. According to the Law of Estonian Republic, customs duties, excise taxes nor VAT are not applicable to goods in transit and stored within the Free Zone for up to three years.
    5. Profits realized by an Estonia company are not subject to any income tax in Estonia provided the income is re-invested in the same company or kept in the company’s corporate bank account. This “upside down” tax system allows entrepreneurs and investors to re-invest all their income into the development of their businesses without any deductions by the government;
    6. Corporate income tax in Estonia can be deferred without any time limitations until such a time the company wishes to distribute it’s profits abroad;

    Disadvantages of Estonia company registration

    1. While companies registered in Estonia have access to the whole European Union market without any custom duties, the country’s domestic market offers limited opportunities, due to a population of only i) 1.3 million and ii) and annual purchasing power of less than US$20,000 per person;
    2. Estonian’s taxes higher than one would expect from an Eastern European country: corporate income tax and VAT rates are both fixed at 20%. Employers must also remit social contributions averaging 33% of their employees’ gross salaries;
    3. The English literacy rate in Estonia is below 30%. Consequently, language is a barrier when conducting business and communicating with employees.
  • Best uses for an Estonian company

    1. Estonia is a stable and dynamic location for investing in the EU for the following reasons:
      • Since joining the European Union (EU) in 2004, the Estonian government has maintained liberal policies; foreign investors have equal rights and obligations as local entrepreneurs. All foreign investors may establish a company in Estonia in the same way as local investors, no special restrictions are applied;
      • Estonia’s economy is growing fast, at a rate of 2% in 2015 according to the International Monetary Fund. This rate of growth should also accelerate to 3% per year until at least 2020, according to the same institution;
      • There is no risk of a debt crisis in Estonia. The country’s public debt is only recorded at 11% of its GDP, one of the lowest rates in the European Union and in the world;
      • Estonia is ranked as the 26th least corrupt country in the world, according to Transparency International, a Non-Government Organization producing a corruption index frequently used by experts, public officials and politicians;
      • The Euro is the official currency of Estonia, bringing more stability and ease in cross-border exchanges;
      • For all the reasons listed above, Estonia is ranked as the 29th most competitive country in the world by the World Economic Forum.

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Company registration

  • Time to incorporate: Six weeks
  • Cost to set up: €8,150
  • Minimum capital: €2,500
  • Physical office required: No

Required appointments

  • Shareholders: 1
  • Directors: 1
  • Company secretary: No
  • Resident director: No

Key facts

  • Corporate tax rate: 20%
  • Corporate tax base: Worldwide
  • Shelf companies: Available
  • Main company type: OÜ company

Contact us

For additional information on our company registration services in Estonia, please email us at email@healyconsultants.com. Alternatively please contact our in-house country expert, Mr. Seth Ochieng, directly:
client relationship officer - Seth
estonia-travel estonia-tax estonia-government estonia ministry of economic affairs and communications estonia chamber of commerce estonia-bank estonia-tourism