Estonia


The first Finno-Ugric tribes appeared here in the 3rd century BC. The territories remained independent up until the 13th century. From 1220 through 1918 Estonia was under a foreign rule. The southern part was occupied by the Livonian Order, and the northern part by Denmark. After the breakup of the Livonian Order, the northern part was conquered by the Swedish people and the southern part by the Polish-Lithuanian Commonwealth. In 1645 Sweden acquired control over all the territories of Estonia. Following the end of the Great Northern War (1700 – 1721), Russia annexed the territories of Estonia and Latvia. Estonia declared its independence in 1918, but later was occupied by Germany and fought against the Soviet Union in 1918 - 1920. The first constitution established the parliamentary system of government. In 1934 K. Päts, Head of the Government, made a coup d’état and established a conservative dictatorship. The second constitution restored the parliamentarianism. In 1940 Estonia was occupied and annexed by the Soviet Union. The Popular Front of Estonia and some other organizations demanded the separation from the Soviet Union. The Declaration of Sovereignty was adopted in 1988. In 1991 Estonia declared its independence. Later that year Estonia became a member of the United Nations and joined the European Union in 2004.

Service packages

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Service item Express Standard Optimum
Company registration
Legal address per year
Secretarial services for the first year
Fees and duties for the first year
Apostilled bound set of incorporation documents
Compliance fee
Nominee service per year
Bank Account Pre-approval
Price

6 520 USD

9 840 USD

10 340 USD

I want to order «»

Contact method: and / or

Core Services

5 400 EUR

— Incorporation

including incorporation tax, state registry fee, including Compliance fee

Included

— Annual government fees

Stamp Duty and Commercial Register incorporation fee

2 420 EUR

— Corporate legal services

including registered address and registered agent, NOT including Compliance fee

125 EUR

—Delivery of documents by courier mail

DHL or TNT, at cost of a Courier Service

675 EUR

— Apostilled set of Statutory documents

Optional services

2 750 EUR

Nominee Director (EU resident)

Paid-up “nominee director” set includes the following documents

Nominee Director (Estonian resident)

Related services

Tax Certificate

Company’s tax residence certificate for access to double tax treaties network

Certificate of Good Standing

Document issued by a state agency in some countries (Registrar of companies) to confirm a current status of a body corporate. A company with such certificate is proved to be active and operating.

Compliance fee

Compliance fee is payable in the cases of: renewal of a company, liquidation of a company, transfer out of a company, issue of a power of attorney to a new attorney, change of director / shareholder / BO (except the change to a nominee director / shareholder)

250 USD

Basic

simple company structure with only 1 physical person

50 USD

For legal entity in structure under GSL administration

additional compliance fee for legal entity in structure under GSL administration (per 1 entity)

100 USD

For legal entity in structure not under GSL administration

additional compliance fee for legal entity in structure NOT under GSL administration (per 1 entity)

350 USD

For client with high risk Status

Cost of incorporation, including first year servicing 6520
Cost of nominee director services per year, including an apostilled set of documents 3320
Cost of annual service, starting from the second year 2920
Open account in 26780
Incorporation timescale for a turnkey company 5-10 days
Country 26745

General information shortly

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Total area Population Capital Unemployment Corruption perceptions index rank
45.227 sq. km 1.286.540 (2013) Tallinn 8.4% (2013) 28 (2013)
Location Northern Europe
National currency Euro
Conditional reduction of currency EUR
Against USD 0.73
Climate, average max and min t° maritime; wet, moderate winters, cool summers; avg. maximum temperature +30°; avg. minimum temperature -8°
Time difference from Moscow - 1 hour
Dialing code +372
State language Estonian
Ethnic groups Estonians 68.7%, Russians 24.8%, Ukrainians 1.7%, Belarusians 1%, Finns 0.6%, others 3.2%
Literacy rate 99.8%
Credit rating AA-
Government type Parliamentary republic
Executive branch President, Government: Prime Minister and Cabinet
Legislative branch unicameral Parliament (101 seats)
Judicial branch Supreme Court (Riigikohus), magistrate courts (courts of appeal), land courts (courts of first instance), State Attorney’s Office and district attorney’s office
GDP per capita rank 45 (2013)

Corporate info

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Shelf companies permitted Legal system Incorporation timescale for a turnkey company Cyrillic alphabet permitted in company name Local registered office
Yes civil law 5-10 days No Yes
Types of entity sole proprietorship; general partnership; limited partnership; private limited company; public limited company; commercial association; branch of a foreign company
Incorporation timescale for a new company 3 days
Company suffix osaühing or OÜ
Sensitive words word “Eesti” [Estonia] in all expressions and foreign language equivalents; geographic indicators; trade marks; “riigi” [state], “linna” [city] and “valla” [rural municipality]
Local registered agent No
Information to be kept at the registered office No requirements
Seal required, type of seal not required
Redomiciliation (to, from) permitted permitted within the territory of the EU

Director and secretary

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Minimum number of directors Residency requirements for directors Corporate directors permitted Disclosure to local agent Disclosure to public
1 Yes (at least half of directors must be EEA member country or Switzerland resident) No Yes Yes
Directors’ meetings/frequency/location No requirements
Company secretary required No
Residency requirements for a secretary No
Qualified secretary required No
Corporate secretary permitted No

Shareholder and beneficiary

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Minimum number of shareholders Residency requirements for shareholders Corporate shareholder permitted Disclosure to local agent Disclosure to public
1 No Yes Yes Yes
Meetings/frequency/location Yes / annually / no requirements
Beneficiary info disclosure to No

Shares and share capital

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Minimum authorized share capital Minimum issued share capital Minimum paid share capital Authorized capital payment deadlines Bearer shares permitted
2500 1 share No requirements Before registration No
Issued capital payment deadlines Before registration
Standard currency EUR
Standard authorized share capital 2500
Standard par value of shares 1
Shares with no par value permitted No

Taxes

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Min. rate for corporate tax Capital gains tax VAT Withholding tax Exchange control
20% Regular rate 20% 0%/0%/10% No
Personal tax 20%
Corporate tax (in detail) Income tax rate is 20%
VAT. Details The standard VAT rate is 20%. A reduced rate of 9% applies to certain goods and services
Other taxes Social contributions, Land tax
Government fee No
Stamp duty 0.1-2.5% (real estate transactions)

Accounts

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Requirement to file accounts Publicly accessible accounts Audit required Requirement to file Annual Return Publicly accessible Annual Return
Yes Yes No Yes Yes
Requirement to prepare accounts Yes
Double tax treaties network 61
OECD member Yes
Offshore/onshore status according to the RF laws No

GENERAL INFORMATION

General info

Estonia is a country in the Baltic region of Northern Europe. It is bordered to the north by the Gulf of Finland, to the west by the Baltic Sea, to the south by Latvia, and to the east by Lake Peipus and Russia. Estonia is a member of the European Union, Eurozone, NATO and Schengen Agreement.
Total area of the country is 45.227 sq. km. The population is 1.286.540 people (2013). Among ethnic groups are Estonians (68.7%), Russians (24.8%), Ukrainians (1.7%), Belarusians (1%), Finns (0.6%), others (3.2%).
The capital is Tallinn.
The official language is Estonian.
The currency is Euro (EUR). 1 USD is equal to 0.73 EUR.
Climate of Estonia is maritime; wet, moderate winters, cool summers; avg. maximum temperature +30°; avg. minimum temperature -8°.
Time difference with Moscow is -1 hour.
Literacy rate is 99.8%.
Calling code is +372.

History

The first Finno-Ugric tribes appeared here in the 3rd century BC. The territories remained independent up until the 13th century.
From 1220 through 1918 Estonia was under a foreign rule. The southern part was occupied by the Livonian Order, and the northern part by Denmark. After the breakup of the Livonian Order, the northern part was conquered by the Swedish people and the southern part by the Polish-Lithuanian Commonwealth. In 1645 Sweden acquired control over all the territories of Estonia.
Following the end of the Great Northern War (1700 – 1721), Russia annexed the territories of Estonia and Latvia.
Estonia declared its independence in 1918, but later was occupied by Germany and fought against the Soviet Union in 1918 - 1920.
The first constitution established the parliamentary system of government. In 1934 K. Päts, Head of the Government, made a coup d’état and established a conservative dictatorship.
The second constitution restored the parliamentarianism.
In 1940 Estonia was occupied and annexed by the Soviet Union. The Popular Front of Estonia and some other organizations demanded the separation from the Soviet Union. The Declaration of Sovereignty was adopted in 1988.
In 1991 Estonia declared its independence.
Later that year Estonia became a member of the United Nations and joined the European Union in 2004.

Government Type

Estonia is a parliamentary democratic republic with a multi-party system.
The head of state is the President, elected by direct popular vote for a five-year term but for no more than two consecutive terms. The president is elected by Riigikogu, with two-thirds of the votes required. If the candidate does not gain the amount of votes required, the right to elect the president goes over to an electoral body, consisting of the 101 members of Riigikogu and representatives from local councils.
Executive power belongs to the government headed by the prime minister. The cabinet is approved by the president and Parliament.
Legislative power is formed by the unicameral Parliament (Riigikogu) which is elected by people for a four-year term by proportional representation. The Estonian parliament has 101 members.
Judicial power comprises the Supreme Court (Riigikohus), magistrate courts (courts of appeal), land courts (courts of first instance), State Attorney’s Office and district attorney’s office.

Economy

As a member of the European Union, Estonia is considered a high-income economy by the World Bank. The GDP (PPP) per capita of the country, a good indicator of wealth, was in 2013 $23,144 according to the IMF, between that of Slovak Republic and Latvia, but below that of other long-time EU members such as Greece or Spain. The country is ranked 11th in the 2014 Index of Economic Freedom, and the 4th freest economy in Europe. Because of its rapid growth, Estonia has often been described as a Baltic Tiger beside Lithuania and Latvia. Beginning 1 January 2011, Estonia adopted the euro and became the 17th eurozone member state.
According to Eurostat, Estonia had the lowest ratio of government debt to GDP among EU countries at 6.7% at the end of 2010.
A balanced budget, almost non-existent public debt, flat-rate income tax, free trade regime, competitive commercial banking sector, innovative e-Services and even mobile-based services are all hallmarks of Estonia's market economy.
Estonia produces about 75% of its consumed electricity. Estonia imports petroleum products from western Europe and Russia. Oil shale energy, telecommunications, textiles, chemical products, banking, services, food and fishing, timber, shipbuilding, electronics, and transportation are key sectors of the economy.
Estonia today is mainly influenced by developments in Finland, Sweden and Germany, its three largest trade partners.

CORPORATE INFORMATION

Legal system

The legal system of Estonia belongs to civil law family. Today’s legal system of Estonia has been formed for 150 years on the basis of the interaction of various legal cultures, mainly German, pre-revolutionary Russian and Soviet.

Types of entity

The principal forms of business organization in Estonia are:

  • sole proprietorship;
  • general partnership;
  • limited partnership;
  • private limited company;
  • public limited company;
  • commercial association;
  • branch of a foreign company.

The most common structure is the private limited company.

REGISTRATION

Company name

There is a range of requirements to the company name in Estonia:

  • A company may only have one business name.
  • The business name of a private limited company shall contain the appendage “osaühing”. Instead of the appendage a private limited company can use the abbreviation “OÜ”. The appendages and abbreviations may only be used at the beginning or end of the business name.
  • The business name of a company shall be clearly distinguishable from other business names entered in the commercial register in Estonia.
  • A business name shall not be misleading with regard to the legal form, area of activity or scope of activity of the undertaking.
  • A business name shall not be contrary to good morals.
  • A sign or combination of signs which consists of letters, words or numerals and is protected as a trade mark in Estonia shall not be used in a business name without the notarised consent of the owner of the trade mark, unless the undertaking is engaged in an area of activity in respect of which the trade mark is not protected.
  • A person who does not have the right to use a geographical indication is prohibited from using a registered geographical indication in the business name, except if the person operates in the area of activity concerning which the geographical indication is not protected.
  • The Government of the Republic may establish restrictions on the use of the word “Eesti” [Estonia] in a business name in all expressions and foreign language equivalents, except in the business name of the branch of a foreign company.
  • If a business name contains the name of a state or administrative unit or other place-name in addition to the appendage referring to the company, the business name shall contain an appendage which distinguishes it from the name of the state or administrative unit or other place-name.
  • The names of state and local government bodies and agencies shall not be used in a business name.
  • The words “riigi” [state], “linna” [city] and “valla” [rural municipality], and other words which refer to the participation of a local government may be used in the business name of a company only if the state or local government holds more than one-half of the shares of the company.
  • A business name shall be written in the Estonian-Latin alphabet.

Registration

The following steps are required to incorporate a Limited liability company in Estonia:
1. Check online the uniqueness of the proposed company name – less than 1 day : The Commercial Register refuses to register a company if the name resembles an existing company name or registered trade mark. The entrepreneur can check proposed names online at www.rik.ee.
2. Deposit the initial capital in a bank – 1 day : If the share capital is higher than EUR 25,000 the entrepreneur needs to deposit it in a bank. However, if the decided share capital is not over EUR 25,000, it can be established at the memorandum of association that the shareholders are not obliged to make pre-payments for the shares. In that case a shareholder does not make a payment for the share, it will be personally liable to the company in the amount of his/her unpaid share contribution.
3. Submit the registration application to the Commercial Register – 1 day : The costs of registration into the Commercial Register are EUR 140.60 for regular registration or EUR 185.34 for expedited registration. A separate registration with the National Social Insurance Board, which gets its information from the Estonian Tax and Customs Board, is not required. Electronic filing request to the Commercial Register is possible for the holders of Estonian, Portuguese, Finnish and Belgian ID-card. OR verification of foundation documents by the notary who will present those to the Commercial Register. The following documents should be enclosed with the application:

  • the Memorandum of Association;
  • the Articles of Association;
  • a bank notice concerning the payment of share capital if the share capital must be paid before the entry in Commercial Register;
  • the names, personal identification codes and addresses of the founders and the amount of their contributions;
  • upon payment by a non-monetary contribution, the agreement concerning the transfer of the contribution to the private limited company, documents certifying the value of the contribution and an opinion on the valuation of the non-monetary contribution signed by the auditor;
  • a notarized expression of consent of every member of the board to act as a member of the board and the confirmation of the absence of circumstances that would rule that out;
  • the names, personal identification codes and residences of the members of the management board, the supervisory board, and the auditors;
  • information on the planned principal activity;
  • telecommunication numbers (telephone, fax, etc.);
  • other documents provided by law.

4. Register for VAT at the Estonian National Tax Board – 3 days : The company must register itself as VAT payer if the taxable turnover of the company, excluding imports of goods, exceeds EUR 16,000, as calculated from the beginning of the calendar year. The company’s management board must file an application for company registration, making the company liable for VAT with the Tax and Customs Board, within 3 days as of the date on which the taxable turnover of the company. Registration shall be completed by the Tax and Customs Board within 3 days of filing the application. Registration may be (and in the practice, often is) effected immediately after establishment. Starting January 1, 2009 the application for registration of the company as a taxable person can also be submitted electronically via the electronic system of the Commercial Register.
5. Register with the Central Sick Fund of Estonia – 1 day: In Estonia, health insurance is provided through a compulsory scheme under which employers are obliged by law to pay social tax (the source of revenue for health insurance) for their employees. The employer is obliged to register all new employees, contractual workers and board members with the Health Insurance Fund within 7 days from their recruitment date.

If registered electronically, a company can be established in just a few hours. Registering through a notary will take up to 3 days.

Public Access to the Company’s Details

The following information shall be entered in the Commercial Register:

  • the business name of the private limited company;
  • the seat and address of the private limited company;
  • the amount of share capital;
  • the foundation of the company without making the contributions;
  • the date of conclusion of the Memorandum of Association;
  • the names and personal identification codes of the members of the management board;
  • the members of the management board entitled to represent the private limited company differently than provided for in subsection 181 (1) of the Commercial Code;
  • the beginning and end of the financial year of the private limited company;
  • other information provided by law.

Local registered office

Each company in Estonia must have a registered office.
It is not obligatory to keep any documents at the registered office of the Estonian company.

Seal

There are no statutory requirements for a company in Estonia to have a seal.

Redomicile

The redomiciliation of companies to or from Estonia is permitted within the territory of the EU.

COMPANY STRUCTURE

Directors

A private limited company must have a management board. The management board is a directing body of the private limited company that represents and directs the private limited company. The management board may have one member (director) or several members. A member of the management board need not be a shareholder. A member of the management board must be a natural person with active legal capacity. If more than half of board members are not residing in Estonia then the company must give the Commercial Register a contact in Estonia where necessary documents can be sent. The foreign owner must give the Commercial Register his/her address and e-mail address.

Supervisory Board

A private limited company can have a supervisory board if prescribed by the Articles of Association. But it is not mandatory by the law.

Auditor

A private limited company must have an auditor if prescribed by law or the Articles of Association. An auditor is also mandatory when the company surpasses certain threshold values in terms of turnover, number of employees and asset value.

Secretary

Estonian companies are not required to appoint a company secretary.

Shareholders

A private limited company may be founded by one or several persons. A founder may be a natural person or a legal person, a resident or non-resident of Estonia.
Shareholders' details appear on public profile.
Shareholders should hold general meeting at least once a year.

Beneficiary

Despite the fact that many jurisdictions are discussing an issue of introducing an open register of beneficiaries, there is no such a register yet, including Estonia. This means that beneficiaries’ details do not appear on a public profile. Generally, service providers including firm specializing in company formation, trust managers, lawyers, and accountants, keep beneficiaries’ information in strict confidentiality. It can only be disclosed to regulatory authorities (e.g. during examinations for its existence) or in compliance with a court order.

Share Capital and Shares

The share capital must be a minimum of EUR 2,500. The minimum nominal value of a share is EUR 1. Shares may have the same or different nominal values. The shares of a private limited company may be entered in the Estonian Central Register of Securities.
If the founders are private persons and the share capital is less than EUR 25,000 then the founders can decide that the contribution must not be paid upon the establishing of the company. Until the whole sum has been paid, the founders are personally liable for the obligations of the company within the amount of the missing contribution.
Share capital shall be denominated in euros.

DISSOLUTION AND LIQUIDATION OF A PRIVATE LIMITED COMPANY

Dissolution

Bases for dissolution of private limited company
A private limited company shall be dissolved:

  1. by a resolution of the shareholders;
  2. by a court decision;
  3. by declaration of bankruptcy of the private limited company;
  4. by abatement of the bankruptcy proceeding of the private limited company without a declaration of bankruptcy

Adoption of dissolution resolution of private limited company
A dissolution resolution shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting, unless the articles of association prescribe a greater majority requirement.
The management board shall present the preceding annual report and an overview of the economic activities of the private limited company for the current year to the shareholders. The overview of economic activities shall indicate the term during which the private limited company is able to satisfy the claims of creditors.

Compulsory dissolution
A private limited company shall be dissolved by a court ruling if:

  • the shareholders do not adopt a dissolution resolution if its adoption is obligatory pursuant to law or the articles of association, or if no meeting of shareholders is called to adopt a resolution specified;
  • the term of office of the management board expired more than two years previously and a new management board has not been elected


Petition for dissolution of private limited company
The management board shall submit a petition for entry of the dissolution resolution of the private limited company in the commercial register. The resolution of the shareholders and the minutes of the meeting of shareholders or the record of voting shall be appended to the petition.
If a private limited company is dissolved on the basis of a court decision, the court shall send the decision to the commercial register for entry.
A private limited company is deemed to be dissolved as of the making of the entry on dissolution in the commercial register. Compulsory dissolution enters into force as of the entry into force of the court decision.

Liquidation

A private limited company shall be liquidated (liquidation proceeding) upon dissolution unless otherwise provided by law.

Appointment of liquidators
The liquidators of a private limited company shall be members of the management board unless the articles of association, a resolution of the shareholders or a court ruling prescribes otherwise. A natural person who is prohibited from acting as a member of the management board shall not be a liquidator.
The residence of at least one liquidator must be in Estonia.
A court shall appoint the liquidators in a compulsory dissolution or if this is requested by shareholders whose shares represent at least one-tenth of the share capital. The court shall also specify the procedure for and amount of remuneration for the liquidators.

Removal of liquidators
A liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the shareholders can be recalled at any time by a resolution of the shareholders. In order to adopt such resolution, a majority of votes equal to the majority of votes necessary for appointment of a liquidator is needed.
A court may recall a liquidator appointed by the court, and to appoint a new liquidator. At the request of the shareholders whose shares represent at least one tenth of the share capital, a court may also recall, for a good reason, a liquidator who is a member of the management board, or who has been appointed in accordance with the articles of association or by a resolution of the shareholders, and to appoint a new liquidator.
A liquidator may resign for the same reasons and pursuant to the same procedure as a member of the management board.

Entry of liquidator
The management board shall submit a petition for entry of the first liquidators in the commercial register. A petition for entry in the commercial register of a change of liquidator or the right of representation of a liquidator shall be submitted by the liquidators.
If a liquidator is appointed by a court decision, the court shall send the decision to the commercial register for entry.
The names and personal identification codes of the liquidators shall be entered in the commercial register.

Rights and obligations of liquidators
Liquidators have the rights and obligations of the management board which are not contrary to the nature of liquidation. Liquidation does not affect the legal relationships between the shareholders or between the shareholders and the private limited company, or the rights of the supervisory board.
The liquidators shall terminate the activities of the private limited company, collect debts, sell assets and satisfy the claims of creditors.
The liquidators may only conclude transactions which are necessary for liquidation of the private limited company. The right of representation of liquidators is unrestricted with regard to third persons.
The right of representation of liquidators who are members of the management board does not change upon liquidation unless the articles of association, a resolution of the shareholders or a court decision prescribes the changing of the right of representation into joint representation or sole representation. Liquidators appointed by a resolution of the shareholders or a court decision may represent the private limited company only jointly.
During a liquidation proceeding, the notation “likvideerimisel” [in liquidation] shall be appended to the business name of the private limited company.

Continuation of Activities of Dissolved Company

If dissolution of a private limited company is prescribed by the articles of association or is decided by the shareholders, the shareholders may, until commencement of the distribution of assets among the shareholders, decide on continuation of the activities of the private limited company or on merger, division or transformation of the private limited company. A resolution on continuation of activities shall be adopted if at least two-thirds of the votes of the shareholders who participate in the meeting, unless the articles of association prescribe a greater majority requirement.
If continuation of activities is decided, the same resolution shall designate the new management board and supervisory board, and shall reduce the share capital to the value of the remaining assets.
The liquidators shall submit a petition for entry of the continuation of activities in the commercial register. The resolution on continuation shall enter into force as of its entry in the commercial register.

Deletion from Commercial Register and Supplementary Liquidation

Liquidators shall submit a petition for deletion of a private limited company from the commercial register after the conclusion of the liquidation, however not earlier than six months after the entry of the liquidation of the private limited company in the commercial register and publication of the liquidation notice and after three months of the date on which the shareholders were informed that the final balance sheet and asset distribution plan are presented to the shareholders for examination, provided that the private limited company is not a party to any court proceedings currently conducted in Estonia. The final balance sheet and asset distribution plan shall be appended to the petition. The petition shall include a confirmation by all the liquidators that the final balance sheet and asset distribution plan have not been contested in court, or the action has been not been heard or has not been satisfied, or that the proceeding in the matter has been terminated and the claims of the creditors of the private limited company have been satisfied or that the assets necessary to satisfy the claims have been deposited and that the private limited company is not a party to any court proceedings currently conducted in Estonia.
If, after the private limited company has been deleted from the register, it becomes evident that the private limited company has assets which were not distributed and that supplementary liquidation measures are necessary, a court may, at the request of an interested person, order a supplementary liquidation and restore the rights of the former liquidators or appoint new liquidators.

TAXATION

Personal Income Tax

Tax residents of Estonia pay tax on their worldwide income, non-residents – on income from sources in Estonia.
The income tax rate is 20%.
Gains from the sale of assets are taxed at the ordinary tax rate. Profits from the sale of own dwelling are tax exempt.
Investment income is generally taxed at the ordinary tax rate. Under certain conditions, it is possible to reinvest the investment income tax-free.
Dividends from foreign companies are tax exempt if they are paid out of profits taxed with corporate income tax or if the dividends were taxed with withholding tax.
Dividends paid out of profits of an Estonian company that have been taxed at 14% are subject to personal income tax at the rate of 7% (withheld by the Estonian company). If an Estonian company has paid corporate income tax at the rate of 20%, no personal income tax is charged on the dividends.
Tax is also paid on non-distributed profit of controlled foreign companies from low-tax jurisdictions.

Corporate Income Tax

The corporate income tax rate is 20%.
No corporate income tax is paid until dividends are distributed. For this purpose, deemed distribution of dividends includes non-business expenses, transfer pricing adjustments, gifts, etc.
The corporate income tax rate is reduced to 14% for companies that regularly distribute dividends (the payment of dividends does not exceed the average amount of dividends for the previous three years). In this case, dividend payments to individuals are subject to 7% personal income tax.
Dividends received from Estonian companies and companies from EU/EEA countries and Switzerland are exempt from tax, provided that the participation is at least 10%.
Dividends received from other countries (excluding tax havens) are also exempt from tax provided that the participation is at least 10% and the profit from which the dividends are paid was taxed with corporate income tax or the dividends were taxed with withholding tax.

CFC Rules

A foreign company is considered a controlled foreign company (CFC) if the Estonian company, directly or indirectly, solely or jointly with related parties, owns more than 50% of the capital, voting rights or rights to profit in it.
Estonian tax obligations arise if the CFC’s profit is generated by artificial arrangements aimed at tax evasion and the significant profit-generating functions are performed in Estonia.
CFC’s profit is exempt from Estonian tax if its accounting profit does not exceed EUR 750,000 and its passive income does not exceed EUR 75,000.

Withholding Tax

Dividend payments are exempt from withholding tax, except for certain dividend payments to individuals.
No withholding tax is levied on interest payments.
Payment of royalties is subject to 10% withholding tax.
The tax rate can be reduced under double tax treaties and EU directives.

VAT

The standard VAT rate is 20%.
Some goods and services are subject to the reduced rate of 9%.

Social Security Contributions

Employers pay social security contributions at the rate of 33% of the employee remuneration (20% for pension insurance and 13% for health insurance). Employers also pay unemployment insurance contributions at the rate of 0.8%, employees at the rate of 1.6%.
Employees born in 1983 and later pay mandatory pension scheme contributions at the rate of 2%. Such contributions are voluntary for more senior employees.

Land Tax

Land tax is paid at the rates ranging from 0.1% to 2.5% depending on the municipality.

Stamp Duty

Some transactions are subject to minor stamp duties.

Double Tax Agreements

60 DTCs: Albania, Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Georgia, Germany, Greece, Guernsey, Hong Kong, Нungary, Iceland, India, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Moldova (Republic of), Netherlands, Norway, Poland, Portugal, Romania, Serbia, Singapore, Slovakia, Slovenia, South-Korea, Spain, Sweden, Switzerland, Thailand, Turkey, Turkmenistan, Viet Namм, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan.

Exchange Control

Foreign exchange transactions can generally be made without restrictions.

Audit

An audit is only obligatory for companies that meet two of the following conditions:
  • net sales of EUR 2 million and more
  • balance sheet volume of EUR 1 million and more
  • average number of employees is 30.

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

ACCOUNTS

  • Financial Statements

  • All Estonian companies should prepare accounts.
  • Almost all Estonian companies can choose whether to prepare their consolidated and annual accounts in accordance with International Financial Reporting Standards (IFRS) or in accordance with the Estonian accounting standards ("Estonian GAAP").
  • The length of a financial year is 12 months. At the end of each financial year, a private limited company is required to prepare an annual report that consists of the annual accounts and the management report.
  • Annual report should be filed at the Commercial Register during six months after the end of the financial year.
  • Audit

  • An auditor’s report must be appended to the annual report, if your company was required to undergo an audit. An auditor’s report must be appended to the annual report of an organisation subject to accounting requirements who meets at least two of the following three conditions:
  • annual net sales of 2 000 000 euros and more;
  • balance sheet volume of 1 000 000 euros and more;
  • average number of employees is at least 30.

  • The auditor review is also obligatory for organizations subject to accounting requirements who meet at least one of the following three conditions as of the balance sheet date:

    • annual net sales of 6 000 000 euros and more;
    • balance sheet volume more than 3 000 000 euros,
    • average number of employees is at least 90.

    Annual Return

    Generally speaking, Annual Return is a short review on the current state of the company, which is prepared by the company secretary annually. As a rule it includes the following information:

    • Incorporation information (registration date, registered address);
    • Information about directors and their resignation;
    • Information about secretaries and their resignation;
    • Information about registered capital, nominal value of shares and amount of issued shares;
    • Information about shareholders and share transfer.

    Estonian companies are required to prepare and file annual return with Commercial Register.

    Tax Returns

    The tax period for corporate income tax is generally one month. For some objects of taxation – a calendar year.
    The tax return must be filed by the 10th day of the month following the profit distribution month.
    Tax must be paid before the same date.

    International law relations

    Двигайте таблицу
    Party to the Hague Convention (Apostille) Legal system Double tax treaties network OECD member Offshore/onshore status according to the RF laws
    Yes civil law 61 Yes No

    Public authorities and legal acts

    Двигайте таблицу
    List of laws and regulations
    Act name Scope of law
    Commercial Code companies
    Accounting Act accounting
    Auditors Activities Act auditors
    Taxation Act taxation
    Income Tax Act income tax
    Value-Added Tax Act VAT
    Tax treaties entered Albania, Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, Czech Republic, Denmark, Finland, France, Georgia, Germany, Greece, Guernsey, Hong Kong, Нungary, Iceland, India, Ireland, Isle of Man, Israel, Italy, Japan, Jersey, Kazakhstan, Kyrgyzstan, Latvia, Lithuania, Luxembourg, Macedonia, Malta, Mexico, Moldova (Republic of), Netherlands, Norway, Poland, Portugal, Romania, Serbia, Singapore, Slovakia, Slovenia, South-Korea, Spain, Sweden, Switzerland, Thailand, Turkey, Turkmenistan, Viet Namм, Ukraine, United Arab Emirates, United Kingdom, United States, Uzbekistan
    List of state regulatory authorities
    Republic of Estonia Government https://valitsus.ee/ru
    Estonian Investment Agency http://www.investinestonia.com/en/
    Estonian Tax and Customs Board http://www.emta.ee/?lang=ru
    Register of Economic Activities https://mtr.mkm.ee/
    Gateway to Estonia https://www.eesti.ee/eng/start
    Company Registration Portal http://www.rik.ee/en/company-registration-portal
    State Gazette https://www.riigiteataja.ee/
    Board of Auditors http://www.audiitorkogu.ee/eng/?sd=fc5df92c24c300df8b72ae5e93afe965
    Accounting Standards Board http://www.easb.ee/?lang=en

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