Company in Estonia

General information

Tax rate

Time of establishment of the company

Minimum capital

Company incorporation in Estonia

Estonia, former Soviet Republic, has been a member of the European Union since 2004. Estonia has one of the most liberal economies of Central and Eastern Europe. This, combined with low taxes and payroll social contributions, make this country very attractive for foreign investors.

Types of companies

There are several types of businesses for foreign investors:

  • Private limited company (Osaühing, OÜ)
  • Public limited company (Aktsiaselts, AS)
  • Partnership (TU/UU)
  • Individual operator (FIE)

Private Limited Company (OÜs) are the most common corporate status of medium and large businesses. It is usually used by foreign companies to become established in the country.

Tax system

Taxation in Estonia is divided into direct and indirect taxation. The first is the corporate tax and the tax on personal income, as well as a tax on gambling. Indirect taxes include VAT, excise taxes, and customs. In 2008, tax revenues account for about 83% of national income.

Under EU law, the free movement of capital is the rule. Estonia has no exchange controls or restrictions on foreign investment. There is no limit on the amount of foreign capital that can be invested in an Estonian company, and foreign shareholders may be the majority in a company. Foreign investors are offered no financial incentives in Estonia during the creation of a company. However, Estonia has a liberal business policy and labor costs are low.

Accounting

In accordance with standard practices in the EU, companies must register and submit annual accounts to regulatory authorities. Annual audits are required for larger companies.

Tax rate

• Distribution tax (income tax): 21% • Tax on capital gains: 21% • Tax on royalties: 10% • Tax on interest: 21% • Income of foreign companies: 21% • Tax on dividends: 21% • VAT: 20%

Minimum capital

40,000 EEK (2,500 € )

Shareholders

A minimum of two partners

Foreign shareholders

Yes. Half of the board of directors must be permanent residents of the European Union

Foreign holding

Yes

Legal obligations

– Statutory auditor mandatory if the capital exceeds 400,000 EEK (25,824 € ). – Oversight Committee of three members required if the capital exceeds 400,000 EEK

Creation of the company, opening a bank account, domiciliation service (first year), VAT registration

Business plan for submission to the VAT office, accompanied by copies of all contracts and invoices showing that you make or will make transactions within the European Union or Estonia.

Deadline

3 weeks from the receipt of all documents

Headquarters

Business address, telephone transfer, fax, and mail Possibility to have a physical office (prices vary depending on demand)

Accounting

Annual financial report, the summary of results and the cash flow status, based on an estimated number of monthly bills and a forecast of annual turnover.

Company registration procedure

Taxes and finances

Local labor law

Other information