The bank account for an Estonian company
The introduction of e-Residency and a favorable tax climate encourage foreign businessmen to come to Estonia. The country has earned the status of a “forge of start-ups” in the international arena.
However, the banking scandal of 2018 became a fly in the ointment. A number of banks declared themselves bankrupt or lost their license due to unreliable clients and non-compliance with international anti-money laundering requirements. As a result, Estonian banking institutions that remained afloat have extremely tightened the conditions for cooperation with foreigners.
For the information! Registering a company in Estonia is as easy as before, including the remote way. But opening an account in an Estonian bank is more difficult, so it is better to use alternative options. Fortunately, there are such options.
Lawrange law firm offers services for opening accounts for Estonian companies in foreign banks or payment systems. Thanks to the constant updating of information, we have in stock several options for opening accounts for a particular type of client’s business activity. With our assistance, solving the problem with an account for a company in Estonia is no longer a problem!
Opening bank account for an Estonian company – basic information
Since the unfavorable conditions for opening and servicing accounts of e-residents in Estonian banks could lead to a general decrease in the popularity of Estonia for doing international business, the country’s parliamentarians changed the procedure for registering legal entities. Specifically: it became possible to replenish the authorized capital of an Estonian company through foreign financial institutions – through banks and through fintech providers (payment systems).
So, the required solution may be an Estonian company with a current account in Europe or any country in the world. With this combination, it is possible to combine the advantages of two jurisdictions – the jurisdiction where the company is registered, and the financial jurisdiction.
***Note: Companies in the form of Osaühing (OÜ) – a limited liability partnership (in English – private limited company) can open a bank account in any country in the world without a separate notification from the Estonian regulatory authorities.
Are you opening an account for Estonian ICOs and blockchain projects? Yes.
How long does it take to open an account in the payment system? From 1-3 business days.
Can I order the opening of several accounts for the company at once? Yes.
Why is Estonia a profitable option for business development, despite the difficulties with opening an account in an Estonian bank?
Among the advantages of registering an Estonian company by foreigners is zero income tax until the profit is distributed among the participants of the company. At the same time, Estonia has signed agreements on the prevention of double taxation with more than 50 countries (including Ukraine, Belarus, the Russian Federation and Kazakhstan).
Estonia has a friendly attitude towards cryptocurrency projects. The country has developed electronic services, including business registration and reporting. Foreigners can manage registered companies completely remotely. In the eyes of the world community, this is a respected state of the European Union, without a touch of “offshore reputation”.
Principles for selecting a foreign bank for an Estonian company
At one time, the banking crisis affected the so-called “Shelf companies” – companies that operate without a real office and employees, do not submit reports, do not pay taxes. First of all, these are business entities engaged in cross-border trade (export-import operations), various IT areas, as well as High-Risk activities.
Important! The concept of substance has entered the international financial circulation, which implies that the company has a set of signs of a real presence and activity in the country of registration. Respectable banks in any financial jurisdiction now require confirmation of substance and conduct thorough due diligence of their potential clients. You can and should be prepared for this.
When selecting a banking institution, the general features of financial jurisdictions are taken into account:
- European banks are conservative, but ready to negotiate if the client is ready to make an impressive investment in the bank’s products or provide a large minimum account balance;
- Asian banks are characterized by complex approaches to communications with clients, but with experience they can also be negotiated with;
- offshore banks offer the most favorable conditions for opening and servicing accounts with a minimum compliance procedure, but cannot guarantee such stability and reliability as European banks.
***Note: Banks of the CIS countries (Belarus, Armenia and Kyrgyzstan) are also considered among the options. However, the decision to choose in their favor is based on the individual characteristics of the client’s business.
The list of financial jurisdictions and banks with which Lawrange law firm works:
- Switzerland: MBAER Bank, CIM Bank
- Liechtenstein: Bank Alpinum
- Luxembourg: East-West United Bank S.A.
- Montenegro: Adriatic Bank
- Serbia: API Bank
- USA: FV Bank International Inc. (F.V. Bank)
- Saint Kitts and Nevis: Nevis International Bank & Trust
- Belize: Caye International Bank
- Dominica: Migom Bank
- Belarus: BPS-Sberbank, Paritetbank, Zepterbank
- Armenia: Unibank Armenia
- Kyrgyzstan: KSB Kyrgyz Swiss Bank
- Portugal: Santander, Novo Banco, Millennium BPC, Abanca, Banco Montepio, Caixa Geral de Depositos
- Hong Kong: HSBC, Hang Seng Bank, BOC, Dah Sing Bank or OCBC
- China: OCBC
- Singapore: DBS Bank, OCBC Bank, RHB Bank, UOB Bank
*The list of banks is not final and may change
How to prove the real presence of a company in Estonia?
In order to reach an understanding with representatives of banks, it is worth taking care to provide evidence of the real presence (substance) of the company in the country of registration – in Estonia. Among such evidence:
- the presence of counterparties in Estonia (partners, customers, suppliers, and ect);
- citizenship or residence permit of a board member;
- a lease agreement for a real office, a warehouse, as well as the presence of a local employee in the company’s staff with whom an employment contract has been concluded;
- availability of a VAT number ;
- money turnover in Estonia from which taxes are paid;
- a functioning website adapted for Estonia, with content in Estonian;
- transportation of goods through the territory of Estonia;
- some other aspects.
For the information! The real presence is proved by confirming several of the specified points. Representatives of Lawrange law firm have the necessary experience in passing this procedure.
To reduce the risk for business when interacting with banks, we recommend that you use the following solutions:
- Pre-approval – a service of preliminary approval of the client by a banking institution, thanks to which you can find out whether the bank will consider a package of client documents for the subsequent opening of an account. Now this service is offered by many foreign banks.
- Two (three) accounts in different jurisdictions – separation of payments into several streams to minimize the risk due to problems with one account. Blocking a bank account is fraught with the loss of lucrative contracts and reputational consequences.
Features of opening an account for an Estonian company in the payment system
For some projects, especially for the High-Risk direction, it is better to immediately select not a bank, but a payment system. Among the main advantages of such fintech providers:
- the ability to open an account from anywhere in the world;
- receiving a payment instrument for the company in just 1-3 business days;
- European IBAN account;
- the ability to make and accept regular bank payments, in particular in SEPA;
- the possibility of issuing a business card linked to the account.
***Note: SEPA is the Single Euro Payments Area, which completely eliminates the distinction between domestic and international payments. SEPA countries: Austria, Belgium, Bulgaria, Estonia, Spain, Netherlands, Ireland, Italy, Greece, Cyprus, Lithuania, Luxembourg, Latvia, Malta, Poland, Portugal, France, Sweden, Romania, Germany, Slovakia, Slovenia, Finland, UK , Denmark, Czech Republic, Hungary, Norway, Iceland, Liechtenstein, Switzerland.
In the list of payment systems with which Lawrange law firm works:
- UK: Wise, Bilderlings, Paystree, Emerald24, DynaPay, PayDo
- Netherlands: Bitsafe Payments
- Cyprus: Unlimitt (only for IT activities)
- Malta: Hawex PLC
- Lithuania: Paysera, Genome, PayApp UAB, GlobalnetInt, PayPugs
- Hong Kong: Sterling Payment Services
- USA: Payoneer (IT and e-commerce only)
Notice! When choosing, the special advantages of a particular payment system are taken into account. For example: a vast geography of countries with which you can make payments (Wise), the ability to work with cryptocurrencies (Bilderlings), specialization in online business and IT startups (Payoneer).
Features of opening an account
The standard package of documents, both for banks and for payment systems, includes foreign passports and proof of the place of residence of the founders, a copy of the registration certificate and the company’s charter, a description of the company’s business model, evidence of doing business (optionally – real presence in the country of registration).
Important! In the process of making a decision by a financial institution to open an account, additional documents may be requested at any time, both for the company and for members of the board. This is a common practice that should be taken into account.
For any additional questions regarding opening an account, you can always get advice from us!