Estonia | Interstatus - Group of Companies Estonia – Interstatus – Group of Companies

General jurisdiction information:

Officially known as The Republic of Estonia, it is a state in the northern part of Eastern Europe, neighbouring Latvia and Russia and adjoining the Baltic Sea to the north and west. To the north of the country, the Gulf of Finland separates it from Finland. Estonia is the northernmost Baltic state and is also the smallest, with a total area of just over 45,000 sq km of which around 10% is made up of multiple islets (approximately 1,500). Concentrated mostly in the western part of the country, the largest of the isles form West Estonian Archipelago. The marine area between the islands and the mainland is called the Väinameri Sea (or the Sea of Straits).

Estonia is renowned for its picturesque coast and its numerous lakes (over 1,000) that offer perfect conditions for water sports, diving and sailing. The most prominent lakes are the largest and the most breathtaking – Chud and Võrtsjärv. Almost half of the country is covered by pine forests that majestically rise from the beaches of the lakes and the country is abundant with historical sights including medieval castles, forts, fortified monasteries and churches and the remains of ancient towns.

Estonia joined the Council of Europe in 1993 and in 2004 it became a full member of the EU and the Schengen Area. In 2011 the country adopted the Euro.

According to figures collated in 2015 the population was over 1,300,000. The capital city of Estonia is Tallinn, the national language is Estonian and the official currency is the Euro (EUR).

Estonia attracts foreign investors with its rapidly developing and advanced national economy with the perfect environment for competitive business. For many years the Republic of Estonia has retained top positions in the economic freedom world rankings and continues to demonstrate sustained improvement of its business environment that beats average EU values. Economic sustainability, an advanced financial sector and a high level of hi-tech and infrastructure development contribute to the main advantages of the economy.

The investment process in Estonia is stimulated by the four existing free economic zones. Estonian attractiveness for foreign investors is further improved by the comfortable tax regime within the jurisdiction as well as a simple and cost-effective company incorporation and administration procedure.

Advantages of Estonian companies:                                      

  • A widely recognised reputation as the European jurisdiction with EU and WTO membership and participation in the Schengen Treaty.
  • The advanced and sustainable economy.
  • A stable currency rate of exchange and a simple tax system – tax on retained profit is 0%. Some transactions are VAT exempt and there is no additional tax at the source of payment of the dividends.
  • There are no restrictions on the residency of shareholders and directors. Nominee services are available (director and shareholder).
  • There are minimum requirements for financial reporting.
  • Companies can be managed remotely without the need to visit the jurisdiction, including financial transactions, bank account management, submission of accounts and tax declarations, change of name, activities and members of the company, execution of contracts, etc.
  • The availability of Double Tax Treaties with over 50 countries.
  • The protection of foreign investment by local laws and international treaties with the USA, Germany, Finland, France, Norway, Switzerland, Sweden and other countries.
  • An advanced and rigid banking system with high standards of service (most Estonian banks are part of Scandinavian banking groups).
  • There are no exchange controls.
  • The granting of residence permits for 2-5 years in exchange for business investments.

Estonian company registration process:

The most common form of business presence in Estonia is a limited liability company [OÜ].

The structure of Estonian companies:

Director (s):

There are no requirements for the mandatory appointment of a director. For administration purposes the company and the management may hire a director with an employment contract.

Secretary:

A secretary is not required.

Shareholder (s):

Shareholder (s) of the company may be natural persons or corporations including non-residents of Estonia. The company may be incorporated by just one or several shareholders.

Registered office:

The registered office of the company must be within the Republic of Estonia.

Share capital:

The minimum share capital for a limited liability company is €2,500 which shall be paid by shareholders with a monetary or non-monetary contribution before a company registration with the Commercial register when the company bank account is opened.

Since January 2011 it has been possible to establish a company without contribution. The decided share capital (at least 2500 EUR) may be contributed later, after the period stipulated by the shareholders in the Articles of Association. OÜ without contribution is not a new form of limited liability company and the regulation for general OÜ will apply. The Commercial Register will make a notice in the company’s official extract, that the company is established without contribution.

Requirements for OÜ without contribution:

1. Shareholders may be natural persons only;

2. Articles of Association shall include the term during which the share capital is covered;

3. Until the contribution is made – the shareholders are personally liable for the company’s activities;

4. Until the contribution is made – is not possible to distribute dividends;

5. The maximum share capital of OÜ without contribution is 25 000 EUR.

Registration period:

2-3 weeks. Shelf companies are available.

Accounting and auditing:

Each corporation must maintain accounting according to the International Financial Reporting Standards or the General Accounting Principles.

Statutory audited financial statements must be submitted by a company limited by shares and limited partnerships with a share capital in excess of €25,000. However, the law also provides additional conditions whereby a company may be obliged to submit statutory audited financial statements to the Commercial Registrar even if the capital is less than €25,000. Such additional conditions are applied to the companies with an annual turnover, total assets and average number of employees exceeding the fixed limits. Financial statements for the previous year must be submitted to the Estonian Commercial Registrar before 30th June of each year.

Monthly tax reports are subject to the following conditions:

  • if the annual turnover of the company exceeds €16,000 then the company must pay tax on turnover;
  • the company must carry out operations within the EU with a unique VAT registration number;
  • the company must employ staff.

In addition, at the request of the national authorities, selected companies must submit quarterly operations reports to the Department of Statistics and a foreign business report to the Central Bank of Estonia.

Open information in the registries:

Information kept by the Estonian Company Registrar is open to the public and is freely accessible. The information available for inspection contains details of the shareholders, members of the board and financial statements of the companies. Confidentiality of the beneficial owners is preserved through the use of nominee services.

Taxation provisions in Estonia:

The tax regime applied to Estonian companies is much more liberal compared to other Eastern European and Scandinavian countries. The main taxes paid by companies incorporated in the Republic of Estonia are corporate income tax, value added tax (VAT), dividend tax, personal income tax, social security contributions and land tax.

VAT:

Tax on a company’s turnover is registered within the European VAT system. VAT registered tax payers are companies with an annual turnover in excess of €16,000. The standard turnover tax rate is 20% but, in some cases, reduced rates of 0% and 9% are applicable. Zero tax is extended to the export of goods within the EU and transportation services related to the export and import.

Corporate income tax:

In January 2010, Estonia passed a law that exempted from taxation any profit reinvested into a company to facilitate growth of foreign investment. As a result, companies are obliged to pay tax only on the distributed profit (i.e. dividends). The rate of corporate tax is 25% of the dividends paid before tax. 25% is applied mostly on dividend payments, but also on gifts, donations, fringe benefits and royalties, what the company makes from the company account. The tax is covered in company level.

Social security contributions:
Social tax is levied with the view to provide for retirement benefits and social insurance in Estonia. This tax is applied to the income of all residents and non-residents with a constant source of income. The rate of tax is 33% of the taxable income of the corporate and physical persons. The assessment and payment of tax is made on a monthly basis.

Personal income tax:
Income tax is levied on the income of private resident individuals from their employment and business operations as well as income on property and from investment (e.g. rent, licence payments and interest). The personal income tax rate is 20%. In 2015 non-taxable income is €1,848 (€154 per month).

Double Tax Treaties:

Estonia maintains Double Tax Treaties with many countries including Belarus, Latvia, Poland, Serbia, Ukraine, the UK, Singapore, Cyprus and others. With the extensive network of Double Tax Treaties, Estonia is the country of choice for the incorporation of a parent holding company.

For more detailed information on the incorporation and administration of Estonian companies or companies in any other jurisdiction please contact us.

1st year

BASIC
2250
  • Company Incorporation [OÜ]
  • Registered Office
  • Company Stamp
  • Courier
STANDARD
4550
  • Company Incorporation [OÜ]
  • Registered Office
  • Corporate Documents with Apostille
  • Corporate documents translation
  • Company Stamp
  • Courier
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder
  • VAT registration
PREMIUM
5000
  • Company Incorporation [OÜ]
  • Registered Office
  • Corporate Documents with Apostille
  • Corporate documents translation
  • Company Stamp
  • Courier
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder
  • VAT registration
  • Bank Account Opening

2nd year

BASIC
480
  • Registered Office Fees
STANDARD/PREMIUM
1500
  • Registered Office Fees
  • Nominee Director
  • Power Of Attorney with Apostille
  • Nominee Shareholder

*Please contact us for a detailed price list and additional information.