Features of company registration in Estonia
- One of the most popular forms of companies in Estonia is the Limited Liability Company (OU). Such Estonian companies have the right not to form a fixed capital at the time of registration of the company. But at the same time, the company’s fixed capital in Estonia must be declared at least 2500 euros. Further, in the next three years after the registration of the company, the founders of the Estonian Company must form the declared capital. The advantage of this form of company is also that the founders of the company are not liable for personal property debts of the company, and their liability is limited to property and assets of the company in Estonia.
- Estonian legislation does not impose requirements on the number or residence of founders and board members. The founders of the Estonian company invest their funds in the company’s fixed capital and receive dividends according to the amount of capital shares they own. The members of the board of the Estonian company are not entitled to receive dividends of the company, but are chosen by the founders to manage the Estonian company.
- The main characteristic of Estonian companies is their taxation. Provided that the profit is not distributed in favor of the founders, the Estonian company is completely exempt from the need to pay income tax, and its owners are taxed on dividends. Also, an Estonian company is entitled to receive the VAT payer status if its turnover in transactions in Estonia exceeded 16,000 euros in the last year, or on request. If the Estonian company receives VAT status, its 0% EU rate and VAT does not apply if the transaction is concluded with the company outside the EU. Thus, the Estonian company gets the features of a classic offshore jurisdiction, but registered in a European country.
Procedure for opening an Estonian company
- Estonian company register from scratch is suitable for those who have a digital ID card in Estonia, and these are mostly citizens or residents of Estonia. With the help of the card, the founder of the Estonian company without coming to Estonia signs the registration documents of the Estonian company and sends them to us. A non-citizen and a non-resident of Estonia may also be able to sign documents electronically by requesting the Estonian Embassy in their country to provide an Estonian electronic signature. Those who do not have an Estonian ID may sign the constituent documents of the Estonian Company in the presence of a notary in Estonia or in any other country.
- The second method, designed more for non-residents, involves the purchase of a ready-made Estonian company with already deposited capital of 2500 euros. This method makes it possible to remotely open a company in Estonia. Ready-made Estonian companies, which we offer for sale, have not previously conducted activities. With the change of the director and shareholder of the Estonian company, you can change its name, increase its fixed capital, or make other changes.
What is required to register a company in Estonia?
- Desired company name or name from the list of ready-made companies
- Main activity of the company
- Scan copy of the passport of the founder and director
- Home address of founder and director
- E-mail and mobile phone number of founder and director
Familiarization with tax rates
- Three types of contributions must be paid if staff are available: 20 per cent income tax, 33 per cent social tax and 2.4 per cent unemployment insurance.
- If the annual turnover of business in Estonia exceeds 16,000 EUR, the company is assigned a VAT number and a tax payment of 20%is required.
- If employees are present, three types of contributions are paid: income tax or income tax (only if the company decides to pay dividends) of 25%, social tax of 33% and unemployment insurance at 2.4%.