Company registration in Estonia for Cryptocurrency Related Business. Service offer

• Positive image of a European jurisdiction;
• Not on any offshore blacklists;
• The advantages of the Estonian corporate and tax system can be used in international holdings and trade, financing and investment, royalty payments and property ownership;
• Developed banking system, Internet banking is available in English;
• Estonia is a full member of the EU and OECD, it joined the eurozone in 2011 and applies all EU Directives;
• No profit tax until distribution of dividends is made; when distributing profit from business activities, the profit tax rate is 20% on gross profit;
• Starting from 2018, companies that regularly distribute profit can apply a reduced profit tax rate of 14%; if the recipient of dividends paid out of profit taxed at 14% is an individual, resident or non-resident, the 7% withholding tax rate applies, unless the tax agreement provides for a lower withholding tax rate;
• No withholding tax on outgoing dividends (except the aforementioned 7% tax) or interest, even if paid to offshore companies in zero-tax or low-tax jurisdictions;
• No withholding tax on royalties paid to EU or Swiss companies, when ownership conditions under the EU Directive are met.

Description of an Estonian company incorporation process:

1) You need to select:

• company name to be checked for its availability (at least two names), such name:

• must not be identical or similar to the name of an existing company;

• must contain an indication of the type of entity: for a private limited company it is “osaühing” or “OÜ”;

• company structure (directors, shareholders);
• share capital and distribution of participations between the shareholders (min. EUR 2 500; minimum par value of a share is EUR 1);
• activity and geography of business.

2) Payment of fees.

3) The documents for directors/shareholders/attorneys must be provided:

• Notarized copies of passports (internal and international passports) and utility bills with notarized translation into English;
• Bank reference letter showing residential address – original;
• CV;
• Completed and signed client declaration – original;
• Power of attorney – original with signature certified by a notary.

4) Preparing a package of documents for company registration, having the documents signed by the directors and shareholders.

5) Depositing the initial share capital.

6) Filing an application for registration with the Commercial Register.

The apostilled set of corporate documents of the company includes an extract from the register and the Articles of Association duly translated into English.

There are no such documents as Certificate of Incorporation, or Resolution on appointment of director, or share certificate in Estonia. They are replaced by the following documents:

• Foundation Resolution – shows information about the registration of the company, including appointment of the first director;
• Initial Printout from the Commercial Register – shows initial information about the registration of the company;
• Resolution of Shareholder – shows appointment of the director;
• Register of Shareholders.

Directors can only be individuals; the minimum number of directors is 1. Half of the directors must be residents of EEA (European Economic Area) countries.

If more than half of the directors reside outside Estonia, the company must provide the Commercial Register with a contact in Estonia where necessary documents can be sent.

A foreign business owner is obliged to provide his residential address and email.

The minimum number of shareholders in a company is 1. They can be individuals or legal entities. There are no statutory requirements as to their residency.

The share capital can be denominated in euros only.

The minimum share capital is EUR 2 500. Minimum par value of a share is EUR 1.

If the founders are individuals and the share capital is less than EUR 25 000, the founders are free not pay in the capital after the company is established, but it is necessary to make the relevant provision in the Articles. Until the capital is paid, the founders are personally liable for the company’s obligations to the extent of their unpaid contribution.

Registered office and registered agent services are paid annually.

All Estonian companies are required to annually prepare their financial statements. Almost all Estonian companies can choose to prepare financial statements in accordance with International Financial Reporting Standards (IFRS) or in accordance with Estonian accounting standards.

The financial year lasts 12 months. At the end of each financial year, a private limited company is required to prepare an annual report consisting of financial statements and director’s report. Reports must be submitted to the Commercial Register within 6 months of the end of the financial year.

An audit should only be conducted by companies that meet two of the following conditions:

• net sales exceed EUR 4 million;
• balance sheet total exceeds EUR 2 million;
• average number of employees exceeds 50 people.

An audit is also mandatory for companies that meet one of the following conditions at the balance sheet date:

• net sales exceed EUR 12 million;
• balance sheet total exceeds EUR 6 million;
• average number of employees exceeds 180 people.

Estonian companies are required to keep tax records and file the following tax returns with the Tax and Customs Board:

• Form TSD – if the company has contracted workers and made taxable payments, Declaration of profit and social tax, mandatory pension contributions and unemployment insurance premiums must be submitted monthly; if the company is registered for VAT, the TSD form must be submitted on a monthly basis, even if the company has no contracted workers and made no taxable payments – in the latter case, a nil return is submitted;
• Annex 4 to form TSD – for declaring fringe benefits (for example, if the company gave an employee a car to use free of charge or at a discounted rate, or paid the employee’s holiday or entertainment expenses, etc.);
• Annex 5 to form TSD – for declaring gifts, donations and entertainment expenses, if the company paid for catering and accommodation of business partners;
• VAT return, if the company is registered for VAT.

In addition, dividends and shareholding payments must be declared, as well as excise duties on goods and packaging.

In 2017, Estonia amended its anti-money laundering legislation (Money Laundering and Terrorist Financing Prevention Act, 2017), introducing within its framework the regulation of cryptocurrency exchanges and exchangers. The main regulatory body is Estonia’s Financial Intelligence Unit (FIU).

A licence must be obtained for activities related to:

“Virtual currency”, i.e. a value represented in the digital form, which is digitally transferable, preservable or exchangeable and which individuals or legal entities accept as a payment instrument, but which is not legal tender in any country;

“Virtual currency wallet” service, in the framework of which keys are generated for clients or clients’ keys are stored, which keys can be used to keep, store and transfer virtual currencies.

• The company must have a physical office in Estonia which can be visited by the regulator at any time;
• The director (effective management body) must be a resident of Estonia;
• The company must employ a Compliance / AML Officer (also a resident of Estonia), who can be summoned by the regulator for an interview and who must permanently reside in Estonia;
• The company must also develop and adopt: AML Regulations, Internal Control Rules, and Procedural Rules based on the International Sanctions Act;
• GDPR (General Data Protection Regulation) compliance requirements must be taken into account;
• The minimum share capital is EUR 12 000 which must be fully paid up by the time of filing the licence application (the capital cannot be expressed in cryptocurrency and must be deposited into an account with IBAN held at an European Economic Area financial institution).

*The fees are valid as at March 2024.

**The fee not include certification or translation of copies of passports of directors / shareholders / beneficial owners or of powers of attorney for the making of constitutive documents.