Estonia company registration

DOING BUSINESS IN ESTONIA IN 2023

Since 2003, Healy Consultants Group 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.

Compare different Estonia entities	LLC	Fast business setup solution	Free zone LLC	Public limited company	LLP	Representative office	Branch office
Also known as	Osaühing	Osaühing	Vabatsooni firma	Aktsiaselts	Piiratud vastutusega ühing	Filiaal	Esindaja
Best use of company?	All products and services	Close a customer deal now	Manufacturing and export trading	To secure public funding	Professional services	Marketing & research	Specific projects
How soon can you invoice Clients/sign sales contracts?	1 month	2 weeks	2 months	2 months	2 months	2 months	2 months
How soon can you hire staff?	2 months	5 weeks	2 months	2 months	2 months	2 months	2 months
How soon can you sign a lease agreement?	1 week	1 week	1 week	1 week	1 week	1 week	1 week
How long to supply corporate bank account numbers?	1 month	2 weeks	1 month	1 month	1 month	1 month	1 month
How long to supply company registration/tax numbers?	1 month	2 weeks	2 months	2 months	2 months	2 months	2 months
Corporate tax rate on annual distributed business profits?	20%	20%	up to 0%	20%	0%	0%	20%
Limited liability entity?	Yes	Yes	Yes	Yes	Yes	No	No
Government grants available?	Yes	Yes	Yes	Yes	Yes	No	Yes
Resident director/partner/manager/legal representative required?	No	No	Yes	No	No	Yes	Yes
Minimum paid up share capital? (EUR)	2,500	2,500	2,500	25,000	None	None	None
Corporate bank account location?	BigBank	LHV Pank	SEB bank	BigBank	SEB bank	Tallinna Äripank	Swedbank
Can secure trade finance?	Yes	Yes	Yes	Yes	Yes	No	Yes
VAT payable on sales to local customers?	20%	20%	20%	20%	20%	No sales allowed	20%
Average total business set up engagement costs? (EUR)	10,400	Inquire proposal	14,000	10,500	9,350	10,500	10,500
Average total engagement period?	2 months	2 months	3 months	3 months	3 months	3 months	3 months

See full table

Accounting and tax considerations	LLC	Fast business setup solution	Free zone LLC	Public limited company	LLP	Representative office	Branch 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?	Yes	Yes	Yes	Yes	Yes	No	No
Group HQ tax incentives?	Yes	Yes	Yes	Yes	Yes	No	Yes
Must file an annual tax return?	Yes	Yes	Yes	Yes	No	Yes	Yes
Must file annual financial statements?	Yes	Yes	Yes	Yes	No	Yes	Yes
Must appoint an auditor?	No	No	No	Yes	No	No	No
Access to double taxation treaties?	Yes	Yes	Yes	Yes	Yes	Yes	No
Withholding tax on payments to foreign shareholders?	No	No	No	No	No	No	No
Company Registration	LLC	Fast business setup solution	Free zone LLC	Public limited company	LLP	Representative office	Branch office
Resident director/partner/manager/legal representative required?	No	No	Yes	No	No	Yes	Yes
Minimum number of shareholders/partners?	1	1	1	1	2	Parent company	Parent company
Minimum statutory paid up share capital? (EUR)	2,500	2,500	2,500	25,000	None	None	None
Must sign an physical office lease agreement during incorporation?	No	No	Yes	No	No	No	No
Shelf companies available?	Yes	Yes	No	No	No	No	No
Time to incorporate a new entity?	1 month	2 weeks	2 months	2 months	2 months	2 months	2 months
Can easily convert to a PLC?	Yes	Yes	Yes	Yes	No	No	No
Can have preference shareholders/partners?	Yes	Yes	Yes	Yes	Yes	No	No
Business Considerations	LLC	Fast business setup solution	Free zone LLC	Public limited company	LLP	Representative office	Branch office
Good entity for trademark registration?	Yes	Yes	Yes	Yes	Yes	No	Yes
Can secure an import and export license?	Yes	Yes	Yes	Yes	Yes	No	Yes

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

Estonia business setup summary

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Advantages and disadvantages
Advantages of Estonia company registration
1. Registration of a company in Estonia can be completed with only i) one shareholder and ii) one director, and both can be foreigners and reside overseas. The minimum paid-up capital is €2,500 and the incorporation procedures can be completed within 7 weeks.
2. 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 3.1% in 2016 according to the OECD. This rate of growth should also accelerate to 3% per year until at least 2020, according to the same institution;
  - There are no risks of a debt crisis in Estonia. The country’s public debt is recorded at only 11% of its GDP, one of the lowest rates in the European Union and in the world;
  - Estonia is ranked as the 22^nd least corrupt country in the world, according to Transparency International;
  - For all the reasons listed above, Estonia is ranked as the 29^th most competitive country in the world by the World Economic Forum.
  - Estonia is an excellent cost-efficient base for production and export and is geographically well-placed for access to the affluent markets of the Baltic states and the north-west Europe.
3. 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 10^th lowest amongst all European countries;
  - Profits realized by an Estonian 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;
  - 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 in Estonia 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;
  - Foreign corporations can use Estonia’s free trade zones as a hub to export their products across the globe, while being exempted from customs duties, excise taxes nor VAT.
4. Estonia has a world-class infrastructure for technology.
  - Estonia has heavily invested in its telecommunications infrastructure. As a result, the country is gaining reputation for its expertise in Information Technology, and is gradually becoming a hub for IT-related services;
  - Estonia is the birthplace of the software, Skype- the mother of video conferencing and social networking. The software was created by three Estonians Ahti Heinla, Priit Kasesalu and Jaan Tallin and later was founded in 2003 by a Swedish and a Dane.
Disadvantages of Estonia company registration
1. The domestic market opportunities in Estonia are limited, because:
  - Estonia’s population is relatively small, at only 1.3 million;
  - The annual purchasing power per person is below US$20,000;
  - The country is not a tourism hot-spot, with low numbers of international tourists.
2. Estonia’s taxes are slightly higher than what 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. Estonia has been recently ranked poorly at the 76^th position (out of 190 countries) by the World Bank in terms of the protection given by the nation to its minority investors. This is largely due to a lower extent of rights enjoyed by the shareholders as well as a lower extent of disclosure in Estonian businesses;
4. It is mandatory for the Director of an Estonia-incorporated company to provide an Annual report in Estonian at the end of every business year.
Best uses for an Estonian company
1. Estonia is the optimal destination for registering a new, cost-efficient business in the Baltics and employing quality staff;
2. Research and Development companies focused on reinvestment prefer to register in Estonia, because reinvested profits are exempt from corporate taxation.
3. Estonia is an excellent jurisdiction for trading and manufacturing companies. This is due the presence of the following major free trade zones of i) Paldiski; ii) Muuga; and iii) Sillamae. Foreign entrepreneurs investing in them are provided with attractive incentives, including i) exemption from VAT, excise and customs duties; ii) world-class infrastructural facilities; and iii) excellent access to the consumer markets of Russia and other Nordic countries.

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Company purpose?
Will the LLC be a trading company or a holding company?
Will the entity be a subsidiary of a foreign company?
The LLC will be tax resident? Having local customers and local staff and local suppliers?
The entity will receive investment income or professional services fees or sales from trading with multi-national customers?
Is double taxation treaty access important?
Do you need our help to legally minimize your international tax obligations?
Do you need our help to increase e-commerce sales (click link)?
Company structure?
Will the shareholders be individuals or corporate?

In what country do you require a corporate bank account? Refer to this web page (click link) for ideas

Do you need multi-currency corporate visa debit cards?

Do you need a resident director?

Nationality of shareholders and directors?
Expected annual sales and net profits?
Does the entity need a special regulatory license or import or export license?
Additional comments?
Tell us about your existing business?
Name of your existing company?
Your business web site address?
What products and services does your company supply?
How many years are you operating this business?
Is your Firm regulated by a Government agency?
In what country are the majority of your customers?

In what country are the majority of your suppliers?
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Your name?
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What country are you based in?

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