Establishing a Company in Estonia is becoming increasingly attractive to entrepreneurs worldwide thanks to its unique digital ecosystem and favorable Tax Policy. This country offers one of the most advanced and innovative economies in Europe, making it an ideal location for launching and growing a new business, especially in rapidly growing sectors such as IT, fintech, and digital services.
Estonia – Your Gateway to Digital Business
Estonia offers an incredibly simple and understandable company establishment procedure, which can be completed entirely online through e-Residency. This convenience attracts entrepreneurs eager to quickly enter the European market without the need for a physical presence in the country. The ability to use electronic residency to manage a business from anywhere in the world makes Estonia particularly appealing for international investors looking to globalize their operations and explore new markets.
Opening a Company in Estonia: Fast, Easy, Effective
This article discusses 30 key questions most frequently asked by entrepreneurs when incorporating and managing a company in Estonia. The answers will provide you with a deep understanding of all aspects of doing business in Estonia, from the basics of legal structure to the details of tax legislation.
Why Estonia?
Discover the advantages that Estonia can offer, including a rapid online company opening process, a transparent tax system, and opportunities for international collaboration. We will also look at the types of companies that can be registered, the documents required, and the steps necessary to keep your company operational.
Less Taxes, More Opportunities
Furthermore, we will discuss opportunities and requirements for banking services, the importance of maintaining accurate Accounting, and the specifics of tax reporting. Special attention will be given to issues related to e-Residency—a unique program that allows foreign entrepreneurs to manage their business entirely online.
Where Innovation Creates Opportunities
We will also address potential challenges and problems that foreign entrepreneurs may encounter and offer recommendations for overcoming them. Understanding these aspects will help you make the most of the opportunities that Estonia offers for international business. Finally, we will provide tips on how to avoid common mistakes when establishing an Estonian company, as well as how to establish a successful and stable business in this progressive European country.
FAQ | Setting Up a Business in Estonia
Below you will find a detailed list of Frequently Asked Questions, which contains answers to the 30 most common queries about company registration and business operation in Estonia. This section is designed to provide entrepreneurs with all the necessary information for successfully launching and managing an enterprise in the European Union.
Top 30 Frequently Asked Questions
Here you will find information about legal procedures, tax obligations, e-Residency, and much more, which will help you avoid common pitfalls and make the process of establishing your company as transparent and understandable as possible.
- How Attractive is Estonia for Business?
Estonia is recognized as one of the top countries for business, consistently ranking in the top 20 on the World Bank’s Ease of Doing Business Index. Furthermore, its unique tax policy places it high on the International Tax Competitiveness Index for commercial profit taxation. These factors, along with the e-Residency program for remote business management, make this country an ideal choice for entrepreneurs looking to grow globally.
- What Are the Benefits of Registering a Company in Estonia?
Estonia offers the possibility of remote company registration and online business management, a zero corporate tax rate on undistributed profits, and full access to the European Union market.
- What Types of Companies Can I Register in Estonia?
Popular enterprise forms in Estonia include the private limited company (Osaühing, OÜ), public limited company (Aktsiaselts, AS), and sole proprietorship (Füüsilisest isikust ettevõtja, FIE).
- What is the Most Popular Legal Form for Starting a Business?
The most popular type of business entity is the Private Limited Company (Osaühing, OÜ), akin to the Limited Liability Company (LLC). This form is preferred for its ease of management and limited liability for the founders. Over 95% of legal entities registered in Estonia are OÜs.
- How Long Does It Take to Register a Company in Estonia?
Company formation in Estonia typically takes from 1 to 5 working days, depending on the method. Online registration via e-Residency card takes about one day, while going through a notary or by proxy can take up to five working days.
- What is the Cost of Setting Up an Undertaking in Estonia?
The cost of establishing a company in Estonia can vary from 365 euros to 1200 euros. The final cost depends on the chosen registration method and additional services like legal support, a registered address, a contact person, or accounting services.
- What is the Minimum Capital Required to Incorporate a Company?
The minimum capital requirement for establishing a company in Estonia is just 0.01 euro (one euro cent), making it accessible to a broad range of entrepreneurs.
- Do I Need to be Physically Present in Estonia to Register a Company?
No, you can start your undertaking remotely by granting a notarized power of attorney to our law firm’s lawyers, or incorporate the company online through the Commercial Registry’s internet portal if you have an e-Residency.
- Can I Use a Virtual Office as the Company's Legal Address?
Yes, you can use a virtual office as the registered address for your Estonian entity.
- Is Information About Directors and UBOs of the Company Public?
Yes, the Commercial Registry of Estonia is open and accessible to the public. Anyone can review the list of directors, shareholders, and ultimate beneficial owners (UBOs), as well as the annual reports and other corporate information filed in the registry.
- Can a Foreigner Be a Founder of an Estonian Company?
Yes, foreign nationals can be founders of companies registered in Estonia without any restrictions.
- Is a Local Director Required?
No, a local director is not required. The undertaking can be managed by a director from any country.
- Is It Mandatory to Hire Local Employees?
No, there is no obligation to hire local employees.
- Can I Establish a Company in Estonia Online?
Yes, if you have e-Residency, you can register your company entirely online from anywhere in the world.
- What is e-Residency?
e-Residency is a unique program offered by the Estonian government that allows foreign nationals to obtain a digital identity and standard EIDAS electronic signature. E-residents of Estonia can register companies, open bank accounts, and manage their business remotely using a digital signature for contract signing and document submission.
- How Do I Obtain e-Residency?
To obtain Estonian e-Residency, you need to submit an online application on the official e-Residency program site. During the application process, you must provide personal data and an identity verification document. After your application is reviewed and the state fee is paid, you can pick up your e-Residency starter kit at the Estonian embassy or consulate of your choice.
- What is the Corporate Tax Rate in Estonia?
Estonia has a unique corporate tax system where tax is not paid on profits earned by the company but on profits distributed as dividends. As long as the profit is reinvested in the business or remains undistributed, corporate tax is not due. The income tax rate on distributed profits is 20%.
- Is Accounting Required?
Yes, maintaining accounting records is mandatory for all Estonian legal entities, regardless of their size or ownership structure. Accounting is necessary for proper financial activity representation and compliance with local legislative requirements.
- Are Estonian Companies Required to Submit Annual Reports?
Yes, all legal entities registered in Estonia must submit annual reports to the Commercial Registry. The annual report must include a balance sheet, a profit and loss statement, and other reporting depending on the company’s size and business nature. Annual reports must be submitted by the set deadlines (usually by June 30) to avoid fines and other penalties.
- Is an Audit Mandatory?
No, an audit is only required if the company’s turnover, balance size, or number of employees exceeds certain thresholds.
- Is It Necessary to Open an Account in a Local Bank?
Estonian entities can open bank accounts in both local and foreign banks and payment institutions, providing flexibility in financial planning and access to international markets. This is particularly advantageous for businesses aiming for global growth and seeking the best conditions for their operations.
- Where is the Easiest and Quickest Place to Open a Business Account for My Company?
Opening an account with payment systems like Paysera, Wise, Revolut, or Airwallex may be a simpler and more convenient solution for Estonian entities than traditional bank accounts due to less bureaucracy and a faster process. These platforms offer flexible services, such as multi-currency accounts and low fees, making them a preferred choice for entrepreneurs looking for efficiency in international payments.
- Can I Invest My Undertaking's Funds in Crypto?
Yes, you are allowed to invest your company’s funds in any investment instruments of your choice, including crypto.
- Can I Receive Payments in Crypto?
Yes, legal entities are free to receive payment for goods or services in cryptocurrency and other virtual assets.
- What Types of Business are Popular for Incorporation in Estonia?
Among foreign entrepreneurs and investors, creating IT companies, fintech projects, e-commerce, and startups in various sectors are particularly popular due to Estonia’s advanced digital ecosystem and attractive tax policy.
- Is Estonia Suitable for Setting Up an IT Company?
Yes, Estonia is ideally suited for IT companies, providing powerful digital infrastructure, simple registration procedures, and targeted programs to support technology startups.
- Can I Create a Fintech Company in Estonia?
Yes, Estonia actively supports the development of the fintech sector and offers favorable conditions for registering and operating fintech companies, including innovative solutions in electronic payments and blockchain.
- Can I Open a Startup in Estonia?
Certainly, Estonia attracts numerous international startups due to its open economy, tax incentives, and government support programs for innovative projects.
- Is Estonia Suitable for Internet Commerce?
Estonia is well-suited for internet commerce and online trading, including platforms such as eBay, Amazon, or AliExpress (Alibaba), providing stable access to European Union markets and high-tech solutions for e-commerce.
- How Do I Dissolve My Company?
If the undertaking has not started any commercial activity, its liquidation is merely a formality, which can be completed without significant difficulties in a relatively short period. Liquidating companies that have had business activities requires a more thorough approach and takes 6-9 months. In this case, the liquidation process includes not only registration actions but also the preparation and submission of financial statements, settling tax obligations, and other legal formalities. Additionally, the entity must also notify all creditors of its intention to liquidate and provide them with an opportunity to present their claims within a specified period.
Thus, setting up and managing a company in Estonia opens up numerous opportunities thanks to its unique digital ecosystem and attractive tax policy. This European country not only supports innovation and entrepreneurship but also offers an efficient, transparent, and accessible platform for international business.
Invest in the Future of Your Enterprise
Using the information from our guide, you can simplify the process of starting and managing your company, minimize potential risks, and optimize business processes. With the right approach and understanding of local laws and regulations, your business can achieve significant growth and success.
Start a New Chapter: Your Business in Estonia
We hope the answers to frequently asked questions have given you a clear understanding of what is needed for a successful start and operation of a business. Your decision to start a business here could mark the beginning of a new chapter full of innovation and prosperity.
CONTACT US
From Idea to Implementation: Start Your Business in Estonia with Confidence
If you have additional questions or need help with registering a company in Estonia, feel free to reach out to us. We are always ready to offer professional support and consultation to ensure your business project gets the best possible start.
Eesti Firma – Your Reliable Partner in Estonia
We also invite you to visit our office in Tallinn for a personal meeting to discuss all aspects of your business. Our experts will help you navigate the entire process of establishing an enterprise in the EU and answer all your questions.
