Company Formation in Estonia – Private Financial Services is a Licensed Service Provider Since 1997
At present, we are providing support to more than 500 Estonian companies and can help you with the following issues:
Company formation in Estonia
Legal address and a contact person service for your company
Translation and attestation of documents
Assistance in preparing contracts and agreements
Assistance in obtaining licenses
Assistance in obtaining residence permits and work visas
Support at government agencies
Registering trademarks and patents
Mergers and acquisitions, restructuring
CFC notifications for Estonian companies in other countries
Support in purchase and sale transactions
And much more
We prepared the following useful information, recommended for you to read before you start with company formation in Estonia, and which may provide answers to all your questions.
If you want to open a company in Estonia right now, please leave your request or contact anyone of our specialists.
When you order a service from Private Financial Services, you get not only your company registered, but also acquire the personal “concierge service”, a specialist who will always be in touch with you, and able to answer your questions, inform you about the most important changes in legislation, remind you about deadlines, advise you the best places where you can open an account and, if necessary, accompany you to any authority in Estonia.
Company Formation in Estonia – Table of Contents
1. Advantages of a Company Formation in Estonia
2. Fields of Activities Preferable for a Company in Estonia
3. Corporate Forms in Estonia
4. Company Taxation in Estonia
5. Company Formation in Estonia – Procedure
6. Company Formation in Estonia – Cost
7. Opening an Account for an Estonian Company
8. Service and Support for a Company in Estonia
9. Accounting for a Company in Estonia
10. Licenses for a Company in Estonia
11. Company Formation in Estonia – Tips and Recommendations
Company Formation in Estonia – Main Advantages
There are 6 unicorn companies (companies with a capitalization of more than $1 billion) in small Estonia with a population of about 1.2 million people. How can this be explained? There are several major factors.
No corporate income tax. When an Estonian company earns profits that are then reinvested in further development, expansion or increasing the company’s assets, it is exempt from the tax. In other words, as long as you do not distribute the company’s profits to stockholders, you will be completely exempt from the tax.
Ease of company formation in Estonia. You can register a company in Estonia in just 30 minutes. We will discuss the details of registration procedure in the corresponding section.
No Red Tape. After registering your company in Estonia you do not need to notify or submit any documents, fill out various forms and applications for different departments. Estonian Business Register is integrated with all departments and authorities. Information about a registered company is automatically forwarded to all government agencies. You can interact with state authorities and services using your e-residency card or ID-card. 95% of all actions can be performed online: whether it is changing your company’s name, filing annual reports or dealing with customs.
Possibility to Obtain a Residence Permit. An entrepreneur setting up a business in Estonia can obtain a residence permit following a simplified procedure. We have a separate article dedicated to the issue.
Multicultural and Multilingual Environment. Despite its small size, the Republic of Estonia is home to representatives of 194 nationalities. Estonian, Russian and English are spoken. The official language is Estonian, but nearly all government portals have English and Russian versions as well, and you may receive help and support in either English or Russian. About 35% of the population consider Russian to be their native language and English is the language of communication in many commercial companies. Most Estonian professionals are fluent in two or three foreign languages, which has encouraged many British and American businessmen to open their companies or representative offices in Estonia.
Well-Developed Economy and Stable Political Regime. Year by year, Estonia ranks highest in terms of the ease of doing business, and the level of corruption is among the lowest in the world. Estonia was the first country in the world to hold an Internet election, as far back as 2005. Estonia is famous for its technological startups and solutions that are used in many countries around the world. There are lots of highly qualified and well-educated professionals. Numerous international business accelerators and incubators are located in Tallinn, and business angels from the USA, UK, Singapore, and China are frequenters at Estonian forums and conferences. Estonian legal entities are understandable and popular for venture capital financing.
Geographical Location. Estonia has been considered a “logistic hub” since olden times. Deep-water ports, well-developed railway system and proximity to St. Petersburg, Riga, Stockholm and Helsinki make Estonia attractive in terms of location. Many European capitals are just 1-2 hours away. And it only takes 4.5 hours to get to St. Petersburg by car.
E-Residency and a Company in Estonia. E-residency is a plastic card that allows you to manage your company in Estonia, online, from anywhere in the world. We have prepared a special article detailing the benefits of e-residency. Furthermore, we would like to note that our support in obtaining e-residency and the card is absolutely free for our Clients!
Cost and Timescales of Company Formation in Estonia. Compared with other European and world countries, the cost of company registration in Estonia is one of the lowest. For reference, the cost of company registration in Poland starts from €800, in Lithuania – from €900, in Malta – from €1500, in Cyprus – from €1900. In Estonia, an e-resident can register a company on his or her own for €190, provided that he or she has a legal address and understanding of the Estonian law and commercial code. Our registration prices start from €400 (including government fees and charges), depending on how the registration will be performed and what tasks have to be accomplished. Considering that you may need a legal address and our comprehensive support, the average cost of the service can be €700. As already mentioned, a company in Estonia can be registered in 30 minutes either online or in person or by power of attorney. It means that you become the owner of a European legal entity after just 30 minutes. Please note that in accordance with the law, the Estonian court enters a legal entity into the register within 5 working days after the company is founded, though in practice it often happens within 1 working day.
Regulation for Cryptocurrency Business and Blockchain. In 2017, Estonia became one of the first countries in the world to introduce a definition and a law regulating cryptocurrency and blockchain transactions. Today, more than 2000 companies from all over the world engaged in cryptocurrency-related activities are registered in Estonia. We have a separate article on this topic: Cryptolicense Saga in Estonia. This is just a small part of the main advantages that stimulate entrepreneurs from all over the world to open their companies in Estonia. If you still have any questions, please feel free to contact our specialists, who will be happy to help you.
Fields of Activities Preferable for a Company in Estonia
A company in Estonia is suitable for any kind of activity. Moreover, according to the Estonian legislation, a company can engage in all types of activities, and there is no need to notify the state authorities every time you change your business profile. Simply put, your Estonian company can be engaged in IT development today, fruit and vegetables tomorrow, and construction the day after tomorrow. The only thing to watch out for is that this activity is not subject to licensing, in which case you need to get a license. If we analyze the overall situation, most companies are registered by foreign entrepreneurs in the following areas:
IT and Dev
Corporate Forms in Estonia
There are six corporate forms in Estonia. The most frequently used are OÜ (osaühing – private limited company), an equivalent to LLC/LTD, and AS (aktsiaselts – public limited company). In Estonia, a private limited company LLC/LTD may be founded without contribution of its share capital. It means that you can register a company with a share capital of €2500, but it will be marked as not paid. You may contribute it at any time but remember that without contributed share capital, dividends distribution is impossible, and either contractors or banks might be wary of you.
Company Taxation in Estonia in 2021 and VAT Number
As mentioned earlier, the profit tax in Estonia is 0%, which makes it a low tax jurisdiction. Moreover, in Estonia, unlike many other countries, there is no requirement to pay a salary to the company’s Board Member (Director). If your taxable company does not provide any services or sell any goods in Estonia or to individuals in the EU, the VAT rate is also 0% in most cases.
If you nevertheless decide to distribute dividends to shareholders or stockholders of an Estonian company, the rate on dividends is 20/80 if a shareholder is a private person, and 14/86 if a shareholder is a legal entity. For more information about other taxes and excise rates, see the website of the Estonian Tax and Customs Board.
Company Formation in Estonia – The Procedure
A company in Estonia can be registered either in person with a notary, or remotely. Before you proceed with company formation in Estonia, the following preparatory steps should be taken.
Company name check. Check your chosen company’s name for similarity with other names in Estonia and EU trademarks to make sure it is unique and different from other names.
Decide on the corporate form (CF). Some types of activities in Estonia are only possible via certain types of CF.
Decide on the EMTAK code (the equivalent to the SIC code – Standard Industrial Classification) and choose the one which is most suitable for your activity. This code is considered by credit institutions when opening an account.
Decide on the legal address and a contact person. A legal entity registered in Estonia must have an Estonian address. If the company’s board does not have any residents of Estonia, you also have to have a contact person (you can read about the contact person in this article).
Decide on the amount of the share capital.
Decide on the financial reporting period.
Prepare Articles of Association, a Memorandum, resolutions and decisions for your Estonian company.
The list is quite extensive, but you should not worry: we will take care of everything.
After completing the preparatory steps, you can start registering an Estonian company.
Company registration can be carried out either through electronic residency (online), or with a personal visit to a notary or by power of attorney.
Online Company Formation in Estonia – from €300
If you choose this option, we will perform all preliminary procedures and help you to complete the online registration process properly. We recommend allowing 1-2 workdays for the preparatory procedures.
Registration of Estonia company itself only takes 20-30 minutes.
You will need: a card reader (a device supplied with the e-residency card), preinstalled and adjusted software (for the card reader), and Internet access.
Registering a Company in Person – from €400
If you want to proceed with company formation in Estonia during a personal visit, we advise that you notify us 2-5 business days before your arrival for us to make all necessary preparations described in items 1-7. Company formation in Estonia with a notary will take only 20-30 minutes.
You will need: Your passport and a document confirming your residence.
Registering a Company in Estonia by Power of Attorney – from €600
If you want to have a company registered in Estonia by power of attorney, you will need to have the power of attorney prepared, notarized and apostilled beforehand. Please note that not all countries’ notarizations are accepted in Estonia and some countries are not members of the Hague Apostille Convention, which will require an additional legalization procedure. The notarization and apostille procedure varies from country to country, so we recommend that you contact our specialists in advance to clarify the timeframe for registering by power of attorney.
After receipt of the power of attorney the registration takes 1-2 working days.
You will need: A notarized copy of your passport, a notarized copy of a document confirming your residence, and a notarized and apostilled power of attorney.
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Company Formation in Estonia and Opening Bank Account in 2021
According to Estonian law, an Estonian company may have a bank account in any country. Unfortunately, currently as a rule, banks in Estonia do not open accounts for Estonian companies without a substantial presence in Estonia. We will be happy to assist you in opening an account for an Estonian company in one of many other countries (Switzerland, UK, Liechtenstein, Luxembourg, Austria, Cyprus, Russia, Portugal, UAE and many more).
Remote account opening is also possible. You can use our application to open a bank account or you can contact one of our specialists in dealing with banks.
Company in Estonia: Accounting and Auditing
Unlike many European jurisdictions, most companies in Estonia are exempt from auditing. All legal entities are obliged to keep accounting records. We have a separate article on accounting and auditing for Estonian companies.
What about after the Registration? Service and Support in Estonia
After your Estonian company is registered, we recommend the following steps
Appoint an accountant and start doing accounting from the first day of incorporation
Prepare a package of corporate documents in English (you will need it for opening a bank account and for contractors)
Order a seal. Although the legal obligation to have a seal was abolished long ago in Estonia, contractors from some jurisdictions demand one
Open a bank account
Obtain VAT and EORI number (if required)
Register your trademark (if required)
Register your employees (if you have some) in the Tax and Customs Department
Submit your financial statements within 6 months after the end of the fiscal year
As a rule, you need to renew your legal address and contact person service once a year
We will be happy to help you with these issues.
Licenses for Companies in Estonia
In Estonia some kinds of activities must be licensed. Before you start with company formation in Estonia, be sure to check whether your activity is subject to licensing.
Main types of services subject to licensing in Estonia:
- Financial and credit institutions;
- Services related to medicine and pharmaceuticals;
- Transportation services;
- Communications including telecommunications;
- Security services;
- Activities associated with energy resources.
The list is not exhaustive. Please check with our specialists about possible licensing of your activities.
In case you do need a license in Estonia, we will be happy to help you obtain one. We have assisted in obtaining more than 300 licenses in Estonia during our business activities.
Company in Estonia: Tips and Recommendations
In order to find out whether a company in Estonia is what you need for the purpose of tax and cost optimization, the issue has to be considered comprehensively. The 0% profit tax rate does not always mean that you are optimizing your taxes and expenses.
The following aspects should be also taken into consideration before you start with company formation in Estonia:
– Structure of the company (shareholders, directors, beneficiaries)
– The company’s business profile
– Corporate form
– Tax residence country
– Countries of residence, citizenship/registration
– Contractors’ countries
These are the main but not all of the issues to be discussed with a specialist in order to answer the question of whether Estonia is suitable for you.
Specialists of Private Financial Services, register companies in more than 100 countries; our skills and experience will help you find the most appropriate jurisdiction.
When you decide to go with company formation in Estonia yourself, through your e-residency card, you can save your time and money in most cases, but some additional issues and difficulties may arise in the future. Lack of understanding of the local law will not allow you to draw up a charter that will protect you and make your life easier. Besides, in most cases, you will not have a personal, well-qualified legal advisor who can answer an urgent question. You will have to seek outside help. You will have to monitor all regulatory and legal changes in Estonia and keep an eye on all deadlines yourself. You can find out about other “pitfalls” from our specialists.
Private Financial Services will assist you if you decide to register you company online.
Information on Your Website in the Estonian Language. Many organizations are unpleasantly surprised when they are notified by the Language Inspectorate that the information on their website should be provided in Estonian as well. Companies that ignore the regulation are at risk of being fined. But do not worry, you do not need to translate your entire website into Estonian, a small page describing your activities in Estonian is enough.
Private Financial Services will assist you to translate your webpage.
Interaction with state authorities and departments. In most cases, communication with state authorities takes place online. Official notifications and requests are sent to the e-mail address indicated during registration of the legal entity, therefore this e-mail address should be available and under your control at any time. As a rule, the messages are also duplicated by sending letters to the company’s legal address or the contact person’s address. The contact person must accept the notification and forward it properly to the company’s representative.
Private Financial Services recommends responding to inquiries and notices as soon as possible.
Tips on Selecting Corporate Service Provider
A registration agent is your “doctor in the business world”. Your Estonian company’s “health” depends on his or her qualification and reliability.
When choosing a registration agent, we advise that you pay attention to the following:
License – Registration agents (corporate service providers) in Estonia are to be licensed and supervised by the Estonian Financial Intelligence Unit.
Our license number is available in About Us section.
The language of communication – We recommend communicating with the registration agent in your native language to avoid misunderstandings, because the legal language is specific. We speak English, Estonian, Chinese, Russian, German, Spanish, Arabic, Latvian and Polish languages.
Accessibility – Very often a telephone conversation or e-mail correspondence is not enough and all details have to be discussed in person. Our group of companies is represented in different countries and you can have a personal consultation with our specialists in the following cities: Tallinn, London, Dubai, Moscow, St. Petersburg, Riga, Helsinki, Warsaw and Hong Kong.
Professionalism, competence and qualification – A registration agent must understand your business, structure and geography in order to build the right structure.
Private Financial Services group of companies employs lawyers, consultants, accountants, translators, analysts and banking specialists with years of experience. We work with virtually all types of legal systems.
For more than 20 years of experience we have managed to provide support to almost all types of businesses, from agriculture to FinTech.
Reputation – Companies in group of Private Financial Services are regularly awarded the highest credit ratings. We are members of many local and international chambers, associations and working groups, and our specialists are represented at major specialized forums and conferences.
We, at Private Financial Services, take care of you and your business!