Is there an EU member state that allows freely cooperating with European partners, avoiding bureaucracy, legally reducing the tax burden, and managing the company from any place in the world – all at the same time? The Baltic state of Estonia will provide all the above-mentioned benefits.
The advantages of registering a company in Estonia
A business company registered in Estonia will bring the following main benefits:
- Tax burden reduction. The main advantage of having a company registered in Estonia is a zero tax on undistributed profit. The tax on distributed profit is 20%. Please bear in mind that Estonia is not considered an offshore jurisdiction nor a tax haven so your Estonian company will be a reputable one.
- More opportunities for reinvestment. As you do not have to pay any tax on undistributed profit, you are going to have more money remaining for reinvestment into the company development. This will give your Estonian-domiciled company a serious competitive advantage.
- The possibility to work in the European market. Estonia is a member of the European Union. European people and companies are inclined to purchase products and services from European-based partners rather than from residents of other countries.
- Ease of doing business. You can acquire an electronic resident card in Estonia and this will give you an opportunity to control your company from any place in the world. All the contracts and other documents are signed electronically and the annual reporting is also submitted via electronic venues. Audit is mandatory only for large companies.
For your information: Electronic residency in Estonia (e-residency) is a unique program launched by the Estonian Government. Foreign entrepreneurs who hold an e-resident card obtain access to all services available in the country: they can manage their companies online, sing contracts and even pay taxes via online applications. Please mind, however, that an e-resident card is not like an Estonian passport: it does not grant the holder the right to live in Estonia nor does it make him or her a tax resident of Estonia.
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oinformation from an expert on taxes and possible tax benefits of the jurisdiction appropriate to the company's structure.
Who should be interested in registering a company in Estonia?
Registering a company in Estonia is an ideal solution for a startup or for a small business that is not tied to a particular place. This includes all companies living in the digital world developing computer software, engaged in IT consulting, online teaching, design, marketing, and so on. The taxation system in Estonia when the profit is taxed only when it is distributed is going to be a major competitive advantage for such companies.
You should know that in some European countries startups do not register as business companies at the initial stages of business operations. This happens because they cannot afford to incur the related costs until they have customers and a stable income.
In Estonia, any money that you invest into business is not taxed. Office rent, office equipment, transportation costs, board and lodging during business trips – all of these are justifiable business costs that are untaxable in Estonia.
This is very helpful for startups indeed. Only when the company grows larger, hires personnel, and receives a stable income, will it start paying taxes in Estonia.
There are some tax incentives for large business companies in Estonia too. Please tell our experts what kind of business activities you are engaged in and we will tell you if you should consider registering a subsidiary or a new company in Estonia.
Company ownership forms in Estonia
The following types of company ownership are available in Estonia:
- Stock company (AS);
- Not-for-profit organization (MTÜ);
- Limited liability private company (OÜ);
- Sole proprietorship (FIE);
- General partnership (TÜ).
Foreign nationals registering companies in Estonia will benefit from the Estonian tax system if they register an OÜ or an AS if they have a large business.
With an OÜ, the stockholders are not liable for their company obligations by their personal assets. The minimum required charter capital is 2,500 euros. If all the company founders are private individuals and if the amount of charter capital does not exceed 25,000 euros, it does not have to be deposited at the moment of company registration. It has to be deposited only when dividends are distributed to the stockholders.
Minimum one stockholder and one director (a natural person) is needed to from a company in Estonia. The company can be owned by foreigners 100%. If the company directors do not reside in Estonia, the owner shall supply to the Commercial Register the name of a contact person in the country who is responsible for interacting with the state authorities.
All companies shall submit annual financial reports to the Commercial Register. Large companies shall have audits. The size of the company is determined by the amount of its assets, annual turnover, and number of employees.
How can you register a company in Estonia?
You do not have to travel to Estonia in order to register a company there. Once you become an electronic resident of the country, you can form a company via the Internet. You ca issue a Power of Attorney to us and we will acquire an e-residency card in your name in Estonia. You can also pay a personal visit to the country and our agents there will accompany you all throughout the registration process.
You will have to invent a unique company name though. Please suggest at least two variants in case one of them is already used. You should choose a company name that is easy to read and that reflects the business activity type.
When registering a company in Estonia, you have to deposit the charter capital – at least 2,500 euros. You can postpone depositing the charter capital but it has to be deposited when profits are distributed to the company stockholders.
When applying for company registration, you will also have to specify the business area that the company is going to work in. You have to specify the main area only while your company will be able to engage in other types of business activities too.
Documents and data required for registering a company in Estonia:
- A notarized copy of your foreign passport;
- A proof of residential address (a utility bill);
- A business plan;
- Company owner’s electronic address and the company’s public electronic address;
- Company director’s personal data.
When we obtain these documents from you, we will be able to register a company in Estonia for you. However, in addition to company registration services, we provide other services as well.
Here are some of the services connected with company registration in Estonia:
- Assistance with selecting the company ownership form;
- Consultations on company structure and business process organization;
- Consultations on corporate tax management;
- Assistance with selecting the company name and drawing up the company By-laws;
- Provision of a legal address and a company representative in Estonia;
- Acquisition of the VAT number and EORI code (for trading companies);
- Opening a corporate account with a bank or a payment system in Estonia or in another country;
- Full range of ongoing documentation support: accounting services, audit, submission of annual reports, and so on;
- Consultations on, and assistance with, acquiring licenses.
Please contact us to find out about the cost of our services and ask any other questions related to registering a company in Estonia. You are welcome to send us an email, call us at +37254952639, or use the live chat.
How many directors and stockholders should an Estonian company have?
The company shall have minimum one director and one stockholder. One person can combine the two roles. The company can entirely belong to a foreign national in Estonia.
What are the goals of registering a company in Estonia?
An Estonian-registered company can service many different purposes: trade in the European market, import/ export operations, logistic services, and so on. However, first and foremost, companies formed in Estonia will suit online business that is not tied to a particular place.
Can I open a corporate bank account in Estonia and an Estonian company?
You can open an account with an Estonian bank on the condition that your company has close ties with Estonia: a real office, local personnel, Estonian clients and partners, etc. Otherwise, you can open an account with a foreign bank or an international payment system.