Business entities in Estonia
Since 2003, Healy Consultants provides our Clients with the best corporate vehicles for doing business in Estonia. There are several ways of starting a company in Estonia, the most common being through the establishment of a limited liability company (Osaühing or OÜ). Entrepreneurs who wishes to raise capital may alternatively establish a public limited liability company (Aktsiaselts or AS). Overseas companies are also allowed to set up branch offices in Estonia, or representative offices if they do not plan to run any commercial and productive operations in this country.
The Estonian limited liability company (Osaühing or OÜ)
- The Estonia limited liability company (LLC, also known as OÜ) is the legal entity most commonly preferred by entrepreneurs for Estonia business setup. An Estonia LLC requires at least 1 shareholder, who can either be an individual or a corporate of any nationality. This entity must appoint at least 1 director who must be an individual but does not need to be resident in Estonia. A minimum paid-up share capital of €2,500 is also required to complete the incorporation process;
- All Estonia limited liability companies must appoint a statutory auditor, if their registered share capital exceeds €25,000 or if the company meets two of the following conditions i) an annual turnover above €650,000 ii) total assets exceeding €330,000 and iii) more than 10 employees.
The Estonian public limited company (Aktsiaselts or AS)
The Estonia AS requires at least 1 shareholder who can either be an individual or a legal entity to be incorporated. An AS must also appoint at least 1 director who must be an individual and must not be a shareholder of the company. The director and shareholder can be of any nationality and must not be resident in Estonia. The AS requires a minimum paid up share capital of €25,000 when being incorporated. This entity must also appoint a statutory auditor.
The Estonian branch (filiaal)
The Estonia Companies Code allows foreign legal entities looking to setup permanent establishments in Estonia to set up branch offices in Estonia. This entity is not considered a separate legal entity and therefore its parent company will be responsible for its obligations and activities. The branch bust appoint at least 1 director who must be an individual and must be resident of either Estonia, the EEA or the Swiss Confederation.
The Estonian representative office (esindaja)
An Estonian representative office is not considered a legal entity separate from its parent company and is not allowed to conduct any profit making activities in Estonia. A rep office may only carry out market research and promote products and services of the parent company in Estonia. This entity must register with the Estonian Tax and Customs Board as a permanent establishment in Estonia.
The Estonia limited liability partnership
- The Estonian limited liability partnerships are required to appoint at least two members, which are not required to be resident in the country. At least one of the partners needs to be appointed as general partner, and is personally liable for the obligations of the establishment;
- Limited partners are liable only to the extent of his contribution to the partnership and will not have managerial rights, unless specifically described in the partnership agreement;
- Best uses for an Estonian limited liability partnership: This structure is reserved for small business operations and specialized professions.
The Estonia free zone company
- International investors are welcomed to incorporate a new business in one of Estonia’s four free trade zones. Any imports brought in these free zones are then fully exempt from i) VAT ii) excise and iii) custom duties;
- See also this page for alternative low cost manufacturing locations in Eastern Europe;
- Best uses for a new Estonia free zone company: export oriented or manufacturing industries looking to do business in the Baltics region will find Estonia free zone companies to optimize significantly their operational costs.
Comparison table between Estonia business entities
|LLC||PLC||Branch office||Rep office|
|Also known as||Osaühing||Aktsiaselts||filiaal||esindaja|
|How long to set the company up?||6 weeks||7 weeks||7 weeks||6 weeks|
|How long to open company bank account?||4 weeks||4 weeks||4 weeks||4 weeks|
|Wholly foreign owned?||Yes||Yes||Yes||Yes|
|Minimum share capital?||€2,500||€25,000||€1||€1|
|File annual tax return?||Yes||Yes||Yes||No|
|Tax registration certificate required?||Yes||Yes||Yes||No|
|Recommended corporate bank account?||Danske Bank||Nordea Bank||Swedbank||Citadele Bank|
|Does our Client need to travel?||No||No||No||No|
|Resident director required?||No||No||No||No|
|Resident shareholder required?||No||No||No||No|
|Minimum directors allowed?||1||1||1||1|
|Tax identification code (TIN) needed?||Yes||Yes||Yes||No|
|Estonia resident company secretary required?||No||No||No||No|
|Corporate shareholders allowed?||Yes||Yes||Yes||Yes|
|Corporate director(s) allowed?||No||No||No||No|
|Estonia corporate tax rate?||20%||20%||20%||N/A|
|Annual financial statements required?||Yes||Yes||Yes||No|
|Statutory audit required?||No||Yes||No||No|
|Regulated by?||Estonian Ministry of Finance||Estonian Ministry of Finance||Estonian Ministry of Finance||Estonian Ministry of Finance|
|Allowed to issue sales invoices?||Yes||Yes||Yes||No|
|Allowed to sign contracts?||Yes||Yes||Yes||No|
|Allowed to import and export goods?||Yes||Yes||Yes||No|
|Can rent an office space in Estonia?||Yes||Yes||Yes||Yes|
|Can buy Estonia property?||Yes||Yes||Yes||No|
|Can own equity in other Estonia companies?||Yes||Yes||Yes||No|
|Total Estonia business setup costs in Yr. 1||€8,150||€8,500||€8,500||€8,500|
|Subsequent annual costs (incl. accounting and tax fee)||€5,100||€7,900||€5,250||€5,250|
|Sample engagement invoice|