Open a company in Estonia

Registering a company in Estonia

According to the ranking of the international magazine Doing Business, the country has been in the top 20 for the ease of starting and doing business for years. The favorable business climate is evident in everything, from tax rates to the attitude of state authorities to the activities of Estonian companies.

Estonia company registration is a unique opportunity for non-resident businessmen as there are no taxes on retained earnings. This opens wide opportunities for business development and capital accumulation.

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Basic information on tax rates in Estonia

Estonia business registration is a good option for foreigners as the country has a special attitude toward corporate taxes. According to the current system, there is no corporate income tax. It occurs when dividends are distributed to shareholders. In this case, the tax is 20%.

If you open a company in Estonia as a VAT payer, the tax rate is:

  • 20% — standard
  • 9% — reduced
  • 0% — exemption with the possibility of a credit

There is no taxation on capital gains in the state as they are considered part of the firm's income. They are only subject to tax upon distribution of profits.

Social insurance payments and land tax are also included. For all transactions involving real estate, stamp duty additionally applies.

How a register a business in Estonia: Accounting records

Each Estonian company must submit annual financial statements. In almost all cases firms can prepare them according to international standards — IFRS.

In many cases, the duration of the financial year coincides with the calendar year — 12 months, but if necessary, it can be scheduled differently in the company's charter. Financial statements must be filed with the Trade Register. This must be done no later than six months after the end of the financial year.

The audit is obligatory if you register a company in Estonia and it meets at least two of the following criteria:

  • Net sales profits of 2 million euros or more.
  • The company employs more than 30 people.
  • The balance sheet total is at least €1 million.

How a non-resident can benefit from Estonia company registration

The absence of tax on retained earnings makes registering a business in Estonia the best solution if you will use all the income for the further development of the company.

Estonia company registration has other advantages for non-residents:

  • Paying a salary to a director is not mandatory, so there are no minimum requirements for it either.
  • Any foreigner can open a company in Estonia, whether an individual or a legal entity.
  • The share capital can only be declared, not deposited. Its minimum amount is 2,500 euros.
  • Company registration Estonia, if it conducts real operations, makes it possible to apply for a residence permit.
  • It is possible to purchase real estate under the ownership of an Estonian company. There is no taxation for this procedure.
  • Considering the high image of the country's jurisdiction, starting a business in Estonia allows opening accounts in the European Union.
  • Since 2011, there is no requirement to have a local resident in the company structure. This demand has been removed at the legislative level.
  • If you open business in Estonia, a non-resident who conducts online trade will have access to European domain zones — eu, ee, es, and others.

After company registration in Estonia, the founder can grant it loans unlimited in size and quantity. This allows the shareholder to withdraw part of the profit, which will not be taxed as an annual interest payment.

The disadvantage of Estonia company registration by a non-resident

A company can only open an account within the country if it has a real office, employees, and Estonian counterparties. The account can be closed if the bank does not see the real activity of the company, payments of rent are missing, and so on.

Register a company in Estonia online

You can register a company in Estonia online only if you have Estonian ID card or through virtual residence (e-residency).

There are two options for Estonia company registration: independently and by power of attorney. It is also possible to register online. The remote method is provided by e-Business Register system.

When you successfully register a business in Estonia, any user will be able to find basic and additional data about the company. Among them are name, registration number, date of opening of the company, and so on. You can do this on the website of the Estonian Commercial Register.

Estonia business registration online: Additional services

After determining how to register a company in Estonia on the Internet, you may encounter certain peculiarities of the procedure. For such cases, we provide additional services.

VAT number

If the taxable turnover of a legal entity exceeds 40,000 euros, mandatory registration as a VAT (VAT) payer is required. To obtain a VAT number voluntarily, you have to submit an application to the tax administrator. The document must be supported by one of the proofs:

  • A bank statement or payment document that shows the transaction with the company's partners.
  • A business plan that describes the company's activities in detail.
  • A contractual database with counterparties.
  • A website with a full list of services or goods provided by the company.

How much does it cost to set up a business in Estonia: Accounting services

If you have decided to register a company in Estonia, the price of preparing financial statements will depend on the monthly number of transactions and activities of the enterprise. At the same time, you need to:

  • prepare annual reports
  • submit reports on VIES, VAT, and so on
  • keep accounting records for companies with a VAT number
  • maintain accounting for companies that pay salary to their employees but do not have a VAT number

Economic substance for starting a company in Estonia

Substance is a set of requirements that an Estonian company must meet to be perceived by the state as actually existing in its jurisdiction.

Before you register company online Estonia, you should hire employees and rent an office. As a result, the company will be able to open an account in Estonia, getting a stable firm + account in the same jurisdiction. Estonian banks offer a large number of financial services for such cases at reasonable prices.

Details of opening an account for an Estonian company

To register a company in Estonia online, you need to choose a bank to open an account. The decision is made individually and is influenced by many factors:

  • The peculiarities of the company's activity
  • Geography of contractors
  • Currency of financial transactions
  • Turnovers
  • Number of transactions and so on

If the bank refused to open an account for the company, the same will happen at the second application, even with the help of professionals. This is due to the fact that the European bank has already made a decision and will not change it.

It is possible to open a company in Estonia without a bank, for example, if you open an account in a payment system. It is faster in terms of time and more loyal in terms of rates, but it is not suitable for every business model.

Contact person to register a company in Estonia online

The Estonian Commercial Code obliges all companies to have a legal address and, in some cases, a contact person. It can be either a natural person or a legal entity with Estonian citizenship.

The contact person fulfills two functions:

  • Receiving letters that come to the company
  • Interacting with Estonian officials on behalf of the company if the need arises

How much does Estonia company registration cost?

Knowing how to open a company in Estonia, you should keep in mind that the following factors can affect the cost of the procedure:

  • Paying state fees
  • Renting a legal address
  • Preparing documents
  • Additional services

Our specialists will tell you how to register a business in Estonia online and help you to do it quickly and with maximum profit for your future company.

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