Having a business in Estonia is prestigious and simple at the same time. The jurisdiction have clear rules for registering and doing business, and the country is not listed in any blacklist. Prifinance lawyers, whose head office is located in Estonia, will share their experiences on why you should register a company in Tallinn or any other city in the country, including the following advantages.
Advantages of сompany registration in Estonia
The option of opening a company in Estonia should be evaluated along with the following advantages of this jurisdiction:
- advantageous location;
- ease of registration, accounting, and auditing for new legal entities (simple and clear rules without unnecessary bureaucracy);
- signed double taxation agreements with many countries;
- the ability to register a company online;
- favorable taxation terms considering rates and tax exemptions;
- access to European markets and absence of exchange control;
- a deficient level of corruption.
Doing business in specific industries promises additional benefits. The exact list depends on the specifics of your case.
Business and legal presence forms
You can register a company in Estonia or otherwise make your presence known in the following forms:
- A private limited liability company is the most popular option for doing business in Estonia because of the ease of registration and the limited liability of the participants (only to the extent of their contributions). Even one person, including a non-resident, can establish and be a member of this type of company. It can be a natural person or a legal entity. The company must have one director, preferably a resident. The minimum share capital is 2,500 euros, but it does not have to be paid in cash at the time of registration. Nevertheless, the share capital has to be paid in before the distribution of profits. Simple accounting rules apply to the company. Meetings must be held annually. However, it is possible to hold them remotely.
- A joint-stock company is designed to raise external capital by entering the stock market. This business can exist in two formats: (1) a private JSC, where shares are distributed only among the participants, and (2) an open JSC, where shares are freely offered to third parties. The participants’ liability is always limited to the amounts of their contributions (the value of the shares). The number of participants - from 1. JSC must have at least one director, preferably a resident. Authorized capital must be 25,000 euros. A company must hire an auditor to evaluate accounting. JSC has more stringent requirements for accounting and reporting. A company must engage an auditor to assess compliance.
There are also many other forms of business in Estonia (sole proprietorship, general partnership, limited partnership, branch, etc.). Provide Prifinance lawyers with more information about your case to find the most suitable form of business in your case.
Legal entity registration procedure
The process of company registration in Estonia includes the following steps:
- Selection of the fields of activity in which you plan to realize your business interests.
- Selection and verification of commercial names for the future Estonian legal entity.
- Search for managers and legal addresses for the company—registration of all related documents.
- Registration of ID-card and installation of electronic signature software (or power of attorney for remote company registration).
- Gathering information about the participants, beneficiaries, and management of the future Estonian company.
- Drawing up and executing founding and registration documents for the Estonian company. Submitting the registration package to the registrar for review.
- Registration to pay taxes and mandatory social payments.
- Opening bank or EMI accounts.
- Obtaining licenses and additional permits.
Legislation and regulatory environment
Estonian legislation is entirely based on European standards with an emphasis on innovation and the need for compliance. As a result, jurisdiction is considered highly favorable to launching and supporting e-commerce projects. Until recently, the jurisdiction was seen as #1 on the list of countries for cryptocurrency. But after introducing stricter crypto-asset regulations, the jurisdiction lost its leading position in the ranking of European jurisdictions for crypto-businesses.
Estonian tax system
Any option of opening a company in Estonia must be evaluated along with the following nuances of taxation:
- Corporate tax - 20%*
- Income tax - 20%
- VAT - 20%
- Withholding tax - (1) corporate: (a) dividends - 0% (b) interest - 0% (c) royalties - 10% (2) individual: (a) dividends - 0% or 7% (b) interest - 0% (c) royalties - 10%
- Capital Gains Tax - (1) corporate - not applicable (2) individual - see personal income tax
*Profits that are not distributed to shareholders are not taxed in full.
How Prifinance lawyers can help
- assess the initial information of your particular case and offer several not less favorable options for registration of legal entities in other regions, which, as the experience of Prifinance lawyers shows, is possible in almost any case;
- provide a list of ready-made companies in Estonia;
- to collect information about beneficiaries and founders of the business, as well as other aspects that are important for the registration of a new business in Estonia;
- find and draw up an official address for the future company;
- draw up and execute the registration and foundation documents for the prospective Estonian company properly;
- to undertake negotiations with representatives of local authorities in the process of registration of a new legal entity, as well as its further operation;
- support the process of opening accounts for the new Estonian company with banks and EMI;
- provide comprehensive legal support for your business after company registration in Estonia
Send an inquiry - get individual consultations and legal solutions that benefit your case.