Company registration in Estonia

Estonia can be considered a favorable buffer zone between the CIS and the EU, which provides companies with access to two major markets at once. At the same time, the country is an official member of the European Union, which gives local businesses all the advantages of a highly developed region. Registering a company in Estonia is a chance to utilize the strengths of Europe, but without serious restrictions.

How to register a company in Estonia?

The procedure for registering a company in Estonia is as follows:

Determine the legal form of organization.
Choose a name for the organization.
Familiarize yourself with the peculiarities of taxation.
Prepare the necessary documents.
Submit the documentation to the Register of Economic Activities.

The period of time, during which you can open a company in Estonia, depends entirely on the legal preparation of the applicant. Lawrange law firm significantly reduces and facilitates the registration procedure. You only need a notarized power of attorney for our representative, 3 variants of the name of the future company and a description of its activities.

Advantages and disadvantages of opening a company in Estonia

Compared to other European countries, the Estonian administration is more loyal to foreign businesses and investments. Specific strengths of the Baltic country for those who wish to open a business in Estonia:

cheap registration – you don’t need six-figure sums to open a company in Estonia;
excellent reputation – the country is not an offshore, so all countries of the world willingly cooperate with its residents;
light taxation – zero income tax;
EU membership – access to all the benefits of Europe;
loyal attitude to the management – founders and director can be citizens of any country.

In addition, opening a company in Estonia gives the owner access to the ultra-reliable banking system of the Scandinavian countries. Minimal reporting and bureaucratic red tape – maximum space for development and profit.

Forms of business activity

For many people, entering the Estonian market is considered a rather promising direction of business activity. This jurisdiction attracts with its economic and political stability and gentle tax policy. However, before starting a company in Estonia, it is important to orient yourself in the forms of Estonian entrepreneurship. There are only 6 of them, and each of them has its own peculiarities.

Nuances of forming limited liability partnerships (OÜ)

One of the most popular forms in the Republic of Estonia. It is becoming the number one choice of small and medium-sized businesses. OÜ presupposes the presence of a governing body in the form of a Management Board. If it has more than 3 members, there is a need to create a Council of Board members.

Registration of a company in Estonia in the form of OÜ is carried out quickly and without any difficulties. When establishing such a company, a small rate of authorized capital is used – 2500 euros.

Other features:

Subsidiary liability among shareholders is not practiced.
It is possible to register remotely (for residents of the Republic or e-Resident card holders).
Establishment of the enterprise can be carried out without authorized capital, which depends on the chosen sphere. Its formation occurs at the expense of the obligations of those who create the company.

What you should know about a joint-stock company (AS)

Commercial association with authorized capital from 25 000 euros, which is characterized by the presence of a complex management structure. It is an optimal option for those wishing to open a company in Estonia with a large number of shareholders. In other words, AS is an option for making large companies a reality. The main features are also worth mentioning:

the possibility of admission of securities to stock exchanges;
the shareholders’ lack of personal liability for the company’s obligations;
the need to create bodies important for the operation of the firm, such as the Board of Management.

The Estonian government offers to register a company in Estonia as a joint stock company only with the help of a notary. It takes up to 5 working days for the tax office to consider the application.

Features of general partnership (TÜ) and limited partnership (UÜ)

They are used quite rarely. They are chosen when there is a need to attract a large number of interested participants or if it is necessary to support the economic activity of investors. TÜ and UÜ are characterized by simple and quick registration, as well as the absence of any limits on the authorized capital.

Organizational nuances:

General partnerships (TÜ) – can consist of a minimum of two partners with joint and several liability without restrictions. A partnership agreement is concluded between them. The income is distributed among the partners according to the size of their share.
Limited partnership (UÜ) – such a company in Estonia must have at least one general partner and one limited partner each. The general partner has unlimited liability, while the limited partner has unlimited liability up to the amount of the investment.

TÜ and UÜ can be established online if a digital signature is available or through a notary.

When it is better to prefer entrepreneurship (FIE)

It is an optimal option for running a family business. It is characterized by the ease of opening and freedom in choosing the lower threshold of the authorized capital. In addition, FIE does not need to have a charter. For registration of FIE you will not need to pay attention to the memorandum of association – such necessity has been abolished. The main thing is to open a bank account, without which it will not be possible to conduct entrepreneurial activities. FIE registration involves payment of the state duty in the amount of 13 euros.

Company structure in Estonia

Opening a company in Estonia requires a serious approach to solving a number of issues, including the definition of its structural components. Board members, founder, contact person ensure the functioning of the company in exact accordance with the Estonian legislation. All information about them is specified in the Articles of Association.

Board member

Appointed by the owners of the company. Only a natural person may act as a director. There are no residency requirements, i.e. a foreigner may obtain this position. Estonian legislation does not oblige to pay a board member a salary and deduct interest from it in favor of state funds. This is convenient for non-residents acting as both a founder and a director of a company – you can choose the most suitable option for yourself:

Pay yourself a salary and count on a pension from Estonia in the future.
Invest these funds in business development, i.e. make them working capital.

Founder of a company (shareholder)

There are also no residency requirements. It is allowed to have at least 1 founder, which can be a natural person or a legal entity. It is noteworthy that the possibility to appoint a resident of any country as the founder of the company was approved by the Estonian government in 2011. This contributed to the improvement of business conditions in this country.

Contact Person

In January 2018, a law came into force that requires companies with foreign founders to appoint a contact person and the term of office of the contact person. The main role of the contact person is to mediate between the state authorities and the company’s management. His/her duties include receiving documents from Estonian administrative authorities. It is possible to appoint a contact person with an electronic signature and a notarized agreement.

Documents required to register a company in Estonia

Step-by-step instructions on how to properly register a company in Estonia:

Prepare the necessary package of documents;
Send original powers of attorney and application forms to lawyers in Estonia;
Wait for information about successful company registration.

In order to register a company in Estonia, the following documents will be required:

application form;
certificate of incorporation;
articles of association (or memorandum of association, depending on the chosen legal form);
protocol of appointment of the director.

The documents must be notarized. We help with both the preparation of the necessary documentation and its subsequent certification.

Authorized capital of an Estonian company

Opening a company in Estonia is impossible without determining the authorized capital, the minimum amount of which is equal to 0.01 euros if there is one shareholder or 2500 euros depending on the chosen form of business activity. This amount is intended to ensure the financial stability of the company and protect the creditors of the company. It is also used for the purchase of various assets and financial support of the company.

Shareholders are not obliged to pay the authorized capital immediately upon registration of the company. It will be quite sufficient to declare the necessary amount. Even with its payment, the shareholders remain liable in accordance with the size of their shares in the company.

The authorized capital can be contributed in one of the following ways:

Monetary – transfer to the company’s account or cash.
Non-monetary – transfer of real estate or other property to the company’s balance sheet.

A certificate signed by a bank officer serves as proof that the payment has been made. It is attached to the application for the Commercial Register, which can be submitted through a notary or e-Resident card.

Important! The share capital can also be contributed by means of a stock issue, i.e. the undistributed profit of the company for any accounting period can be transferred to the payment of the share capital.

Cost of company registration in Estonia

Lawrange provides convenient and economical registration of a company in any form for 1650 euros. The cost includes:

Preparation of the package of documents for company registration
Transaction before an Estonian notary public
Standard bilingual company articles of association (Estonian, English)
Translation of the power of attorney from Ukrainian/English* into Estonian by a sworn translator
Payment of state fees and notary costs
Corporate documents of the company on the result of registration (notarized, in electronic form)
Entry of information about the beneficiary of the company in the Estonian Commercial Register
Registration address for 1 year
Contact person for 1 year
Company contact details (Estonian phone number and e-mail)
Postal and secretarial service (includes receipt of courier mail to the Estonian office and emails and their subsequent forwarding; our comments on received requests)
Procurator (representative without power of attorney) for 1 year

Attention! Special price! The cost of company registration with opening of accounts in payment systems WISE, REVOLUT, GENOME or PAYSERA is 2450 euros.

In some cases, additional services may be required when registering a business in Estonia:

obtaining an extract (excerpt) from the Register – 200 euros;
Apostille – 200 euros;
appointment of a nominee director and shareholder from Bulgaria – 1800 euros;
hiring a courier – 100 euros.

Compared to business registration in other European countries, the cost of registration in the Baltic state is much cheaper and more affordable for foreigners.

Is it possible to open an Estonian company online?

The main advantage is the right to register a company in Estonia online and remotely, without the need to visit the country. The Estonian state has developed a quality electronic service that allows you to close any issue with the State Register remotely.

For this purpose, it is required to obtain an e-resident card. As a rule, it is issued in 4-6 weeks from the moment of submitting the relevant application and necessary documentation. In this case, it is possible to declare the beneficiary remotely, and it will not be necessary to collect an additional package of documents.

Among the advantages of such a method it is worth mentioning:

Simplicity – everything can be solved without getting up from your favorite couch.
Affordability – it is much cheaper to register a company in Estonia compared to other options.
Convenience of company management in the future.

Often Estonian regulatory authorities ask clarifying questions on the application for an e-Resident card. The main thing in this case is to answer the questions accurately and competently, otherwise there is a risk of rejection.

Opening a company in Estonia through a power of attorney

This is another method of registration without personal presence, which requires almost the same package of documents as the registration through the e-Resident card. The main thing that is required is a notarized power of attorney. In case it is executed in Ukraine, apostilization will not be required due to the agreement on mutual legal cooperation signed between the countries.

Since 2018 in Estonia it is mandatory to declare the beneficiary within 1 month from the date of incorporation, in addition to the power of attorney it is necessary to prepare a resolution on entering the verified data into the state register. In addition, it should be taken into account that a new power of attorney may be required in the future if there are any changes in the company, e.g. the registered office is changed.

Registering a company in Estonia in person

In addition to the remote opening of a company in Estonia, of course, it is also possible to register a company in person. In this case, a Lawrange AS specialist will accompany you at every stage of the process. You must have your passport with you. In advance you will need to:

Indicate the planned date of the visit.
Submit several alternative company names.
Specify the field of activity of the future company (the choice should be made from the EMTAK classifier).
Prepare the necessary documentation, as well as the data of the owners and directors of the company.

The main advantage of this method is its speed – you can open a business in Estonia within a few days. In addition, this option should be considered as an excellent opportunity to get to know the country and its peculiarities personally. You will be convinced that Estonia with its cool Baltic climate and modern legislation aimed at attracting foreign investment is worthy of your attention.

Important! Since the scope of activity is not prescribed in the Articles of Association, it is quite legal and natural to change or expand the company’s activities in the future.

Open a company in Estonia for a citizen of Ukraine

The Estonian government creates optimal conditions for doing business for residents of Ukraine. Within the framework of the state program e-Resident since 2022 there is an initiative, according to which Ukrainian entrepreneurs are refunded expenses up to 130 euros when registering a company.

In general, it is quite easy for Ukrainians to open a business in Estonia. The procedure is no different from opening a company by a citizen of another jurisdiction. The main thing is to take into account the nuances associated with the rules of controlled foreign companies (CFC). In case of support by the professional lawyers of attorney’s association Lawrange, there will be no obstacles in the registration of the company.

Taxes and reporting

Taxation in Estonia is regulated by the Estonian Tax and Customs Board (EMTA). The tax system consists of state taxes stipulated by the relevant laws and local taxes imposed by the administrations of localities.

When doing business in Estonia, you must pay:

Tax on distributed profits – the size of the basic rate of 20%. The company must pay it on income and payments not related to business.
Dividends – are not subject to income tax if they are paid on the basis of profit distribution or if dividends are withheld abroad.
VAT (VAT) – the rate of 20%, its reduction to 9% applies to businesses dealing with the sale of books, medicines and the provision of certain services. The 0% rate applies to exports of goods and services from Estonia.

Every company established in Estonia is obliged to submit annual accounts in time. Tax returns reflect all information on the company’s operations. The deadline for filing reports is June 30 following the year of the end of the reporting period.

Opening an account in an Estonian bank

Until 2016, this process was considered quite simple, but after the money laundering scandals involving several Estonian banks, everything became much more complicated. Registering a company in Estonia for a non-resident is also somewhat complicated by the fact that the regulator has banned most Estonian banks from cooperating with foreigners if they do not have sufficient economic ties to Estonia. Therefore, opening an account in an Estonian bank is possible if a number of conditions are met:

Having a rented office or legal address in the Republic.
Officially employed local director and staff.
Availability of a competent business plan.
Obtaining an e-Resident card.

Opening an account in a payment system or other foreign bank may be another option.

Residence permit in Estonia when opening a company

A residence permit in this jurisdiction can be obtained at:

Family reunification.
Receiving education.
Conclusion of marriage.
Conclusion of an employment contract.
Engaging in entrepreneurial activity.

We will tell you more about the last two ways.

Residence permit in Estonia under an employment contract

You can count on a residence permit in the presence of an employment contract if the size of the monthly salary for the last 5 months is not less than 1407 euros gross (that is, before taxes are deducted). An additional condition is that your company must have a payroll fund.

Important! If you do not register a company in Estonia as an employer, which is quite difficult from the technical point of view for non-residents, the option of residence permit under an employment contract will be unrealizable.

Residence permit for entrepreneurial activity

You can get it in case:

You are registered as a sole proprietor and have invested at least 16,000 euros in the business.
If you, as a director or shareholder, have invested at least 65,000 euros in your own company in Estonia.

Advantages of working with us

The Lawrange team has been dealing with business registration in the Baltic region for foreigners for many years. Our advantages:

full legal support;
knowledge of the specifics of Estonian legislation;
loyal cost, affordable for the budget of any startup;
option to get a ready-made solution.

Our main advantage is our online service. You will be able to open a business remotely, saving money and time to coordinate issues with the state registrar on site. We will choose the best organizational-legal form for you, collect the necessary documents and save you from red tape.

FAQ

How long does it take to register a company in Estonia?

As a rule, it takes 1 day to process a company registration application submitted through the online portal of the Commercial Register. If the application is submitted through a notary (personal presence or by notarized power of attorney), registration takes 5 days.

Is it possible for a non-resident to register a company in Estonia?

A citizen of any country can be not only the founder but also the director of a company in Estonia.

Does my company need an operating permit?

Some areas of business activity require a permit. These include trade in alcohol, tobacco, fuel, medicines, as well as international transportation, construction, etc.

Where can I get corporate documents for opening a current account?

All necessary documentation is available electronically on the Commercial Register website. To obtain paper versions with apostille certified by a notary, you can contact our company.

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