ESTONIA - COMPANY FORMATION IN ESTONIA
In classical concept, Estonia is not associated with offshore, but it is for the Eurozone only. If you start-up there, you will enjoy it.
This country is the real offshore zone due to the reduction of profit tax to zero.
The country is the part of the European Union since 2004.
This jurisdiction is not in the "black lists".
Thus, by starting-up in Estonia, an entrepreneur bear a minimum tax burden; he/she may avoid negotiants when selling his/her goods in EU member countries.
COMPANY FORMATION IN ESTONIA – LOCAL LEGISLATION
The local legislation does not involve the use of restrictions on minimum and maximum amounts of capital when registering a business.
It is formed within a range of a year and longer – up to the uncertain period. The founder of the company will be held liable within the declared amount of money.
In here, the Board member may register a company and maintain it and there are no requirements for residency. The powers of the employed manager are stipulated by the Labor Contract Law. Once again, there is no such thing as the offshore zone in Estonia. The country may act like this if certain conditions occur.
The country does not set out requirements to get work permits unless it refers to the visa Category D. For instance, a CIS country resident may get a work permit in 3 to 6 months. This issue is very quickly settled if an employee is recruited by assigning a Board member.
The company management does not predetermine the unconditional right to a presence in the country or within the territory of the Schengen zone.
An individual is required to open the visa Category C for this purpose which is the ground to stay within Estonia for 180 days within a year.
A business trip with “business” mark should be specified as the goal of the visit.
PECULIARITIES OF TAXATION
Company formation in Estonia and income tax.
In fact, there is no income tax in Estonia. When settling payments, the basis is the amount of net profit in view of dividends.
With this amount in view, 25% is paid over. The VAT amount for non-exempt companies is 20%.
When products are sold outside the Eurozone, the tax is not paid. If the company personnel includes Estonia residents, the social tax that is 33% is deducted when the wage is distributed.
If an Estonia-based company employee is non-resident and operates outside Estonia, the tax is not collected.
There are additional taxes collected under different conditions.
They include the land tax, customs duty, taxes on vehicles, excises, and gambling tax.
PECULIARITIES OF TAX OBLIGATIONS
A zero rate for income tax applicable for legal entities is available since 2000. A zero rate is valid until the profit distribution between founders or shareholders.
The corporate tax and income tax remain zero where the profit is not distributed in the end of the fiscal period. In this case, assets may be safely accumulated on the company’s settlement account. Reinvestment within the tax-free regime is possible.
If there are external credit obligations, only interest amount is taxed, but not the principal of the borrower.
To prevent that a businessman spends his time to study legal bases in Estonia regarding the business registration, the Private Financial Services Company is willing to provide the qualified consulting to choose the best effective option.
We render assistance in a new company registration as a VAT taxpayer and we are ready to further report with declarations with no company owner involved.
This does not require personal visit of the tax service of the Board member. Our company acts as per the proxy signed by the owner of the company.
A business will be quickly registered in Estonia with no excess bureaucracy.
COMPANY REPORTING IN ESTONIA
A business registered in Estonia and its management require report submission to three authorities at any time:
- Tax department. The company submits reports on a monthly basis provided that the special VAT payer number is available. If the business is done in the European Union countries, the report on product turnover in the European Union is also required.
- Commercial Registry – a declaration is submitted on financial activities for the previous year.
- Department of Statistics. Companies submit statistical reports on a provided quarterly basis. The documents contain information on the type of activities carried out by the company, remuneration for managers and employees.
ADVANTAGES OF OFFSHORE IN ESTONIA
- Zero taxation. Zero rate is valid until the company starts profit distribution for shareholders, for example, dividends.
- No audit. Auditing is required only if certain conditions arise *.
- No need for monthly reporting. If a business is not considered taxable, it reports annually.
- Double tax agreements are concluded with Poland, Latvia, Lithuania, China, Turkey, Hungary, Romania, Slovenia, Slovakia, Belorussia, Ukraine, Armenia, Moldova, Great Britain, Kazakhstan, Croatia, Canada, USA, Malta, Germany, Netherlands, Portugal, Italy, Switzerland, Spain, Austria, France, Denmark, Belgium, Czech Republic, Luxembourg, Sweden, Iceland, Norway, Ireland, Finland, Isle of Man, and Jersey.
*If any criterion arises:
- The balance-sheet is equal or more than 3.5 million Euro.
- Staff number is 90 and over.
- The Profit is 6 million Euro and higher.
Or, if two of the following three criteria occur:
- The balance-sheet is equal or more than 1 million Euro.
- The staff number of the company is equal to or more than 30 people.
- The profit or sales amount is equal to 2 million Euro and higher.
COMPANY FORMATION IN ESTONIA
- Making an advance payment at the rate of 50 percent.
- Choosing the existing company or registration of a new one.
- Specifying of information on the owner and authorized representatives.
- Delivering of existing documentation by DHL mail to any destination.
- Stock capital is 2500 EUR.
- Type of company — OÜ/AS
- Tax rate – from zero percent.
- Membership – one director and more.
Company formation in Estonia is very simple and fast process.
The offshore zone in Estonia does not set requirements for work permits, but this does not apply to the procedure for visa Category D.