Company Registration in Estonia
Estonia, a country in Northern Europe, borders the Baltic Sea and the Gulf of Finland. Including more than 1,500 islands, its diverse terrain spans rocky beaches, old-growth forests, and many lakes. Formerly part of the Soviet Union, it's dotted with castles, churches, and hilltop fortresses. The capital, Tallinn, is known for its preserved Old Town, museums, and the 314m-high Tallinn TV Tower, which has an observation deck.
Estonia is a developed country, with a high-income advanced economy; ranking very high in the Human Development Index. The sovereign state is a democratic unitary parliamentary republic divided into fifteen counties. It has a population of 1.3 million and is one of the least populous members of the European Union, the Eurozone, the OECD, the Schengen Area, NATO, and the United Nations Security Council. Estonia has consistently ranked highly in international rankings for quality of life, education, digitalization of public services, and the prevalence of technology companies
Estonian business strategy is based on a well-developed digital infrastructure and the belief that almost everything can be done online with minimal funds and time waste. To date, some of the established startups are companies run by digital nomads, entrepreneurs, freelancers, and self-employed. The e-Residency program was created for them, aimed at opening access to the Estonian business environment to entrepreneurs from all over the world and simplifying the processes of the business sector. Thanks to Estonia’s membership in the EU, e-Residents have the right to use e-services on an equal basis with Estonian residents and manage their company fully remotely, while their business is based in the European Single Market.
Location-independent lifestyle is made possible by e-Residency: low-cost administration, ease of doing business, and preferential taxation. Company in Estonia OÜ will help you set up a startup in Estonia and manage your business wherever you are.
BENEFITS OF COMPANY REGISTRATION IN ESTONIA
Estonia is one of the digitized countries offering cutting-edge opportunities and favorable conditions for starting a business. This is well tracked by the average number of startups in Europe – 5 per 100,000 people, while in Estonia this mark is 6 times higher. Thus, Estonia ranks third in the ranking of European countries for the establishment of start-ups due to a number of advantages of launching an Estonian company:
- 0% company income tax (tax on retained earnings).
- Founders and Board members may be non-residents of Estonia (there is no need to have a local Director).
- There is no mandatory condition to pay a salary to the company’s director and there are no salary requirements.
- There is no need to contribute the authorized capital when establishing a company.
- Possibility of fully remote management of the company if the owner has an e-Resident card.
- In the case of doing business in Estonia, a Board member has the right to apply for a residence permit for up to 5 years.
- Possibility to purchase transport and real estate in the ownership of an Estonian company without taxes.
- Estonia has entered into the Convention for the Avoidance of Double Taxation with 59 countries
- Estonia has a transparent and clear tax system without progressive taxes
Table of Contents
The first step is checking the name of your company is not already registered, or there’s no European trademark with a similar name.
The name of your company should be unique and distinctive from other company names. It should also be different from any registered European or Estonian trademark unless you get explicit and notarized consent from the owner.
In this step, you need to specify the activity of your company, and also its means of communication (such as email and phone number)
First, you need to add information about the members of the company. For each person you add, you decide if it’s going to be a shareholder, member of the board, or both. You can also specify that this person will be the representative of the company (for accountancy and business-related subjects).
It may happen that you need to delete a member and add it again if, for example, you forget to specify that this person is a board member, or a shareholder, or the number of shares is incorrect.
Before the payment, you will be taken to a screen to verify that all the information is correct. Make sure to check everything, because the price of the company registration will be different under certain circumstances, such as multiple members, or in the case of crypto companies.
If you need to change anything, you will be able to do so by clicking on any of the previous steps. If, on the contrary, everything looks fine to you, just proceed to payment by clicking on Next.
When all the members have their e-Residency cards, they will be able to digitally sign the company registration and services contract. This step is important to guarantee the consent of all the members and the fact that they have their e-Residency IDs.
You can go directly to the official e-Residency application website and register as an e-Resident in a few clicks. You will need to fill in some information about you, your citizenship, date of birth, personal data, and upload some pictures of your ID or passport and your face.
Once the last member has signed the contract, we have now verified all the signatures, so we will proceed to create the application to register your company in the e-Business registry. To do that, we start by adding all the information about the company and all its members.
Once you have received that email and followed the confirmation link, click on “Done” or send us a message to let us know, so we can proceed to the next stage.
Now all the members need to sign the company registration application in the registry. This is a way of agreeing to become members of the company.
All members need to add their signatures. Once done, please click on “Done” or send us a message to let us know, so we can proceed to the next stage.
Once the company is registered, you will receive a document with the entry in the registry of your company. That document contains the registration code of your company, the number that univocally identifies it.
This registration code, alongside the name and address of your company, should be included it on every invoice you issue to your customers.
There are three steps that are usually required to do it:
- You need to open a bank account for your company.
- Then, you need to give us permission for doing your accounting and optionally requesting a VAT number. for your business
- Finally, you need to give us some information if you want us to request this VAT number for your company.
What must be done after founding a company
First, you will have to open a bank account.
Depending on the company’s area of activity and size, a varying number of additional steps must be taken.
- If the area of activity is subject to special requirements, a license has to be acquired. Information on the areas of activity and electronic registration
- For the use of e-services Estonian Tax and Customs Board, you will have to conclude a contract for the use of e-Tax/e-Customs.
- If needed, register the company as a VAT payer on the website of the Tax and Customs Board.
- If your company has employees, register the employees in the employment register on the website of the Tax and Customs Board
FORMS OF BUSINESS IN ESTONIA
According to the Commercial Code, there are 6 forms of business in Estonia:
- Limited Liability Partnership or Private Limited Company (OÜ)
A Limited Liability Partnership (Osaühing or OÜ) is the most common form of business in Estonia. Holders of an Estonian ID card or e-resident card can set up a private limited company and manage it online.
The advantage of an LLP is simple and quick registration, as well as a relatively small share capital rate (2,500 EUR). Among the advantages is the fact that shareholders are not personally liable for the obligations of such a company.
The Foundation of an LLP costs 145 EUR. When established electronically in an expedited manner, the state fee will be 190 EUR. Subsequently, the state fee is recognized as the commercial expenses for setting up a private limited company.
Public Limited Company (AS)
The advantages of a Public Limited Company:
- Possibility of listing the company on the stock exchange
- Ability to attract a wide range of shareholders
- Suitable for the implementation of large projects
- Shareholders are not personally liable for the obligations of a PLC
One or more natural or legal persons, with or without a subscription to shares, can establish a PLC in Estonia. The company is responsible for the fulfillment of its obligations with all of its property. The shareholder is not personally liable for the obligations of the Public Limited Company. Compared to a private company, a member of the Board of a PLC must be registered with the Estonian Central Register of Securities, and the rights related to registered shares will belong to the person who is indicated as a shareholder.
General Partnership (TÜ)
A General Partnership (Täisühing or TÜ) and a Limited Partnership (Usaldusühing or UÜ) are relatively rare business forms in Estonia. They are suitable for starting a business when a larger number of stakeholders are involved or to support the economic activity of shareholders.
Limited Partnership (UÜ)
An Estonian Limited Partnership must consist of at least one general shareholder and one limited shareholder operating under a common commercial name. At least one of the members is the general partner with unlimited liability for the obligations of the partnership, and one of them is a limited shareholder who has limited liability in the amount of his contribution. The general partner will be solely responsible for the legal obligations of the company, while the limited partner is liable for up to the amount of the investment.
FREQUENTLY ASKED QUESTIONS
- What are the advantages of establishing a company in Estonia?
Please read our article Advantages of establishing a company in Estonia.
- How much does it cost to register a company in Estonia?
The cost of a company registration depends on the type of incorporation. For more information, please see the prices listed above.
- How long does it take to register a company in Estonia?
The company will be registered during 5 business days after signing the company registration application.
- What activities can an Estonian company carry on?
An Estonian company is allowed to carry on any authorized activity. A company can perform several different types of activities at the same time.
- Can a foreigner be the owner and director of an Estonian company?
Yes, a foreigner can be the owner and director of an Estonian company.
- How many owners and directors should an Estonian company have?
At least one owner from among Board members.
- What is the minimum share capital of an Estonian company?
The minimum share capital is 2,500 EUR, which can be contributed within 10 years. In Estonia, a company can be established without making a share capital contribution.
- Is it possible to get a VAT number for an Estonian company?
Yes, a VAT number can be obtained before the company starts to operate.
- How to open a bank account for an Estonian company?
After the company is established, all Company in Estonia OÜ customers gets assistance and detailed information, free of charge, on how to open an account. See Open a bank account in Estonia.
- Should an Estonian company have employees?
An Estonian company may have no employees.
- What are the annual costs for maintaining a company in Estonia?
As prescribed by law, an Estonian company owned by a foreigner shall have a contact person (200 EUR/year) and a legal address in Estonia (200 EUR/year).
- What taxes are charged when doing business on behalf of an Estonian company?
In Estonia, there is no income or turnover tax, and therefore there is no pre-distribution tax. Salaries of non-residents of Estonia living outside the country are subject to a 20% income tax. Dividends are taxed at 25%. Read more Taxes levied upon Estonian companies.
- Can I apply for the Estonian Schengen Visa?
Upon setting up a company in Estonia, you have every reason to apply for a visa to visit Estonia. We will help prepare an invitation for all company-related persons.
- A visa application shall be submitted personally at an Estonian representation office or at an office of a Schengen country representing Estonia.
- At what point must the share capital be paid?
The company can be created without an initial contribution to the authorized capital. The Estonian Entrepreneurship Law stipulates that the contribution of the share capital is made during the establishment of the company or later.
All shareholders of the company are personally liable for the full payment of the corresponding share in the share capital within one year, but no later than after the payment of dividends. If the share capital is not paid, the possibility of paying dividends will not arise.
- How to name a company?
The name of the company must be limited to the Estonian alphabet and the use of any symbols is not permitted. The name must be unique and clearly distinguishable from the names of other companies and brands previously registered in Estonia. It is important to ensure that your unique company name has not been previously trademarked.
When establishing a company with Company in Estonia OÜ, consultation on a suitable and relevant name is included in the price ordering company registration in Estonia. Our specialists individually check the availability of the name chosen by the client in the Commercial Register.
- Can my company be involved in more than one field of business activity?
Yes, it is not prohibited in Estonia to work in more than one field of business activity, unless it requires additional notification or licensing. However, it should be noted that the EMTAK code, which is assigned to the company when choosing the scope of your business, after the submission of the annual report, will not be changed.
EMTAK is the basis for defining the field of private business, which, in turn, is an important source of statistics. Classification by code improves international comparability within a category.
- Can there be multiple founders?
Yes, all founders must enter the Estonian Commercial Register with an e-resident card and provide their digital signature.
Conclusion
In this article, we describe the steps to launch and run your European business with us, completely online. Powered by the e-Residency program, our services allow you to run a hassle-free business that grants you location independence. Without red tape, without worries, and without even having to visit Estonia!