Estonia is an EU member since 2004. Estonia is located in Eastern Europe and has a land area of 45,000 sq km. The country borders the Baltic Sea and the Gulf of Finland, between Latvia to the south and Russia to the east. The population is around 1.3m. The official language is Estonian but almost everyone speaks English.
Estonia has many advantages to choose it for your business location. Estonia is the leading country in the field of information technology in the European Union. Estonia is demonstrating outstanding results in most macroeconomic categories.
2. Working in Estonia?
There is no such thing in Estonia as a special “work permit”.You can work here if your short‐term employment is registered by your employer and your stay here is legal (e.g. you have a D-visa) or when you have a valid (temporary) residence permit for working.
If you want to work in Estonia for more than 3 months, you just need to register as an Estonian resident in the Population Register of Estonia during the first 3 months of your stay.
If you are a citizen of a non-EU country and would like to work in Estonia for a short time (up to 6 months in a year), you should apply for a D-visa. Before applying for a D-visa, your employer should register your short-term employment with the Estonian Police and Border Guard Board.
If you are a citizen of a non-EU country and want to work in Estonia for a longer time (longer than 6 months), you need to apply for a residence permit. At first, you have to apply for a temporary residence permit (for work up to 2 years with your first permit). After having lived in Estonia for 5 years on a temporary residence permit, you can then apply for a long-term residence permit.
All registration is done in the Population Register of Estonia.
Things to bring when registering your place of residence:
- A residence notice (filled before or on the spot). The document is only available in Estonian, but have a look at a translated example.
- Your personal ID or a photocopy of the ID if the documents are sent by mail.
- A copy of a document proving your residence and the right to use these premises (your tenancy agreement, for example). If the property you register to live at belongs to many owners, you must have everyone’s consent.
If you own an Estonian ID card, you can register your place of residence online via the citizen portal eesti.ee.
One of the shortest methods for receiving a residence permit is through the establishment and operation of a business. By having a local company you can become eligible for a temporary residence card and work permit. It’s ideal for any entrepreneur outside of the EU to gain access to that area.
3. Business in Estonia?
One of the greatest benefits of Estonia being a member of the European Union is access to the single market. A significant advantage of the single market for all businesses is the creation of a level playing field – the same standards and legislation apply to everyone.
Why is Estonia so good for an entrepreneur?
- Establish Estonian companies online
- Administer the company online from anywhere in the world
- View your tax accounts and submit online tax returns via the e-Tax Board
- Access all your Estonian bank accounts with a single smart card
- Use the digital signature on an official document in Estonia
- Use the smart card to encrypt emails and files for free
- Use Estonian public services via the state portal
- Consistently maintained digital ID infrastructure
- Access to global markets, avoid country specific solutions
So, who can establish a company in Estonia? Anyone 🙂
But there are some requirements with which we can help. Estonian company must have an Estonian address and if board member/s residing outside of Estonia, also a contact person. It’s mandatory for also e-resident and post box address is not allowed.
4. Ok, what are legal forms in Estonia?
- private limited company (OÜ)
- public limited company (AS)
- general partnership (TÜ)
- limited partnership (UÜ)
- commercial association (ühistu)
In addition to the possibility of establishing a business entity, it is possible for any natural person to conduct business as a sole proprietor.
And let’s not forget there is also a non-profit association.
The private limited company (osaühing or OÜ in Estonian) is the most common form of business in Estonia.
5. What is the famous e-residency program?
E-Residency is an Estonian government issued digital identity that provides the freedom for anyone in the world to easily start and run a global business. E-residents can establish an EU company online within a day then administer it remotely from anywhere in the world while accessing all the tools needed to grow.
E-Residency is a transnational digital identity for all world citizens interested in establishing a trusted location independent company entirely online.
Anyone in the world can apply for e-Residency and about 99% of applications are approved because legitimate entrepreneurs are attracted by the open and transparent nature of the business environment being offered.
Location-independent is also very important because e-residents can run their business online from anywhere in the world and don’t have to re-establish it when they move countries or face administrative challenges while traveling. This is why the program is particularly popular with ’digital nomads’ who work and travel, as well as international freelancers and expats.
- Digitally sign documents and contracts
- Verify the authenticity of signed documents
- Encrypt and transmit documents securely
- Establish an Estonian company online within a day. At the moment a physical address in Estonia is required, which may be obtained using an external service provider.
- Administer the company from anywhere in the world.
- Conduct all the banking online, e.g. make electronic bank transfers.
- Access online payment service providers
- Declare Estonian taxes online. E-Residency does not automatically establish tax residency. To learn about taxation and to avoid double taxation please consult a tax professional.
It takes 30 days to process your application. During that time, the Estonian Police and Border Guard Board may request further information for the background check. If you are granted e-Residency then you will be noticed by email from the Police and Border Guard Board.
All e-residents get a plastic ID card with pin codes, to identify themselves in the digital environment, using a digital card reader connected to a computer. In order to use the card reader, the user has to install special software available at www.id.ee.
6. What is the Estonian Startup Visa?
The Startup Visa helps non-EU founders grow their startup in Estonia, one of the world’s best places to start and run a company. It also makes it easy for Estonian startups to hire non-EU talent. If your product packs innovation and has the potential to scale, the Estonian Startup Visa may be just the ticket.
7. Why establish a company in Estonia?
- 0% corporate income tax from profits retained and reinvested
- A company in one day, establishing is done online
- 100% online management, digitally sign documents, declare taxes, conduct banking, and submit annual reports, etc
- All services and official registers are in English
- Simplified Commercial Code and accounting rules
- Integration into EU jurisdiction and the European Economic Area (EEA)
- Professional support that will help you set up your company efficiently and smoothly
- Bunch of additional services
Does our virtual office client, e-resident, or company establisher must use Estonian bank accounts? No, it is not mandatory. For registering share capital and contact daily banking you can use credit or payment institutions in the European Economic Area. That means Estonian banks, banks in all over European Union, and also different payment solutions providers like Monese, Transfervise, Payoneer, etc. just mentioning some of them.
But wait a moment, why you need a bank account in Estonia? You can open a bank account in your selected country, in your home country or use our partners.
Just establish a company in Estonia, get your papers legislated, and open a bank account where you want and can do it.
check them out!
8. Estonian taxis?
Taxes can be declared fully online.
There is no corporate income tax on retained and reinvested profits if the business is carried on in Estonia. Profits are not taxed until they are distributed as dividends or deemed profit distributions.
If annual turnover of the company exceeds 40 000 euros, then the company has to be registered as a VAT payer at the Tax and Customs Board. The standard VAT rate is 20% and a reduced rate is 9% which applies to specific goods (e.g. books or medical devices). The VAT rate on the export of goods, intra-Community supply of goods and certain services is 0%.
The concept of residency is important in taxation because it is the deciding factor as to the extent of the Estonian taxation of a person’s income: either their global income or only their Estonian income.
A resident is a person of unlimited tax liability: both Estonian and foreign income is taxed in Estonia but double taxation is avoided.
A non-resident only pays income tax in Estonia on Estonian income.
A natural person is a resident if one of the following conditions is met:
- his or her place of residence is in Estonia;
- he or she stays in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months. A person shall be deemed to be a resident as of the date of his or her arrival in Estonia;
An Estonian company is an Estonian resident but if the business is carried out elsewhere or the management of the Estonian company occurs outside of Estonia, the income earned in a foreign country is taxed in the foreign country and Estonia will ensure the avoidance of double taxation.
An e-resident is not a tax resident of Estonia but a non-resident who is only subject to Estonian taxation on Estonian income. E-residency does not provide an automatic exemption from taxation elsewhere.
Non-residents (natural and legal persons) have a limited tax liability in Estonia, only the Estonian-source income is taxed.
The e-residency is not related to the tax residency of a person.