Business entities in Estonia in 2021
Since 2003, Healy Consultants Group PLC provides our Clients with the best corporate vehicles for doing business in Estonia. There are several ways to start a business in Estonia, the most common being through the establishment of a limited liability company (Osaühing or OÜ). Entrepreneurs who wish 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 profit-making operations in this country.
The Estonian limited liability company (Osaühing or OÜ)
- The Estonian private limited liability company (LLC, also known as OÜ) is the legal entity most commonly preferred by entrepreneurs for Estonian company setup. A limited liability company in Estonia 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;
- Best uses of Estonian company registration:
- The best business to start in Estonia is in the IT or the fintech sector considering it’s a northern European hub in terms of technological advancement;
- As Estonian legislation recognized the cryptocurrency business, it is the ideal jurisdiction to incorporate such a business and trade on the EU and EAEU markets.
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 need 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.
- Best uses of an Estonian PLC: Company formation support services in Estonia are top notch. The openness to international start-ups and increasing investments make Estonia the most optimistic country in Europe in terms of having a publicly-listed company in the EU.
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.
- Best uses: The advantage of having a registered branch office of a foreign company in Estonia is that it allows the parent company to expand its operations and hold on to the popularity of its established popularity, without having to set up and run an Estonian company from scratch.
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.
- Best uses: The representative office is an ideal solution for companies which want to test the market before they formally start an Estonian business.
The Estonia limited partnership
- The Estonian limited partnerships are required to appoint at least two members, who 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 their contribution to the partnership and will not have managerial rights, unless specifically described in the partnership agreement;
- Best uses for an Estonian limited 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 the three free trade zones in Estonia. Any imports brought in these free zones can benefit from these privileges i) no import VAT; ii) 0 % excise duties; iii) 0% corporate income tax duties; and iv) 0% import/export duties, as per the Estonian Tax and Customs Board.
- See also our country-comparison 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 Baltic region will find Estonia free zone companies ideal to optimize their operational costs significantly.
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?||3 weeks||6 weeks||6 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||€10,400||€10,500||€10,500||€10,500|
|Subsequent annual costs (incl. accounting and tax fee)||€5,350||€7,900||€5,250||€5,250|
|Sample engagement invoice||View invoice PDF||View invoice PDF||View invoice PDF||View invoice PDF|