Question 1

What to consider before establishing a company in Estonia?

John Doe · Accepted Answer

A) An annual report must be submitted

To the registration department of a country court no later than within 6 months after the end of the financial year. The report can be submitted through the Company Registration Portal. If you do not submit the report in due time, the court maintaining the register may fine both the company and its management board members without advance warning. The company's financial year is always the calendar year, starting on the 1st of January and ending on the 31st of December.

B) The company’s business name, registry code and location

Must be stated in the company’s business documents and on its website. The annual report must also state those data and additionally the company’s e-mail address and website address as well as other telecommunications data.

C) Activities

Are presented in the annual report. Enclose up to 10 largest activities by sales revenue as annexes to the report. Activity cannot be freely described but instead must be indicated as the relevant wording in the Estonian Classification of Economic Activities, level 4. Insignificant activities are not required to be stated. The management report provides a more detailed description of the reporting year’s activities and the changes planned for the coming year. Please keep in mind that stating an activity in the Commercial Register does not automatically grant you the right to engage in it if a special law prescribes any additional requirements (for example the Trading Act requires that a place of sale be registered with the local government, the Building Act requires that a building contractor be registered, the Public Transport Act requires a public transport or taxi license, etc.).

D) Changing registry data (company address, management board members, etc.)

A petition for entry of change is filed with the county court maintaining the register. A petition for entry can be filed through Company Registration Portal or a notary. A state fee must be paid when filing a petition for entry (indicating the company’s registry code and the relevant reference code). Notice of changes to data outside entries must be sent through Company Registration Portal or by post. Data outside entries can be changed without a state fee. A state fee is also not required for submitting a resolution of shareholders or the supervisory board to extend the duration of powers of a management board member entered into the register. Documents (both on paper and digital) must be submitted as originals (incl. with original signatures) or as notarised copies. A notary may also prepare a digital copy of a document. Documents must be in Estonian or accompanied by a translation made by a sworn translator or certified by a notary. If failing to submit the required data, the company, as well as all its management board members can be fined repeatedly.

E) A person’s address

Is looked up from the Population Register by the county court maintaining the register. But if a company’s management board member, liquidator or the chair of the supervisory board does not have a place of residence registered in the Estonian Population Register, the data of that place of residence must be submitted and any changes in those data must be notified of immediately. Those data are also considered data outside entries so no state fee is required for them. Every Estonian company must have an Estonian address.

F) The list of shareholders

Is kept by the private limited company’s management board. If other shareholders have a pre-emptive purchase right, a shareholder selling its share must present the sales contract to the management board so that the management board can inform other shareholders. The notary certifying a sale or pledge of a share will also communicate the transaction to the county court maintaining the register. The management board may assign the list of shareholders to be maintained by the Estonian Central Register of Securities for a fee. In that case transactions with shares are conducted through a securities account opened in a bank. If a company had multiple shareholders and only a sole shareholder remains then the management board must send a notice to that effect to the county court maintaining the register. Only private persons who have an Estonian personal ID code can register an Estonian company online. If you as a legal entity would like to register an Estonian company, please get in touch with us. We will help you with the registration process. The company can be registered by one founder. If you have more than one founder, please get in touch with us. We will help you with the registration process. To register an Estonian company, both the founder and the board member(s) must have an Estonian personal ID code. If the founder and the board member are different persons, both must digitally sign the company registration application. You will be able to download the application after filling out the registration form. Once you have signed the downloaded document, you must upload it to the portal for submission. The management board of an Estonian company can be located outside of Estonia. In this case it is regulated by the law to provide the address of the board and appoint an authorized contact person.

G) Equity capital level

You must make sure that the company’s net assets (equity capital) do not decrease below one half of its share capital, and never below the lower limit of share capital set forth in the law. Otherwise the management board must summon the shareholders to decide an involvement of new funds, a merger, a reconstruction or dissolution of the company, etc. In the case of long-term insolvency, the management board must immediately present the court with a bankruptcy petition. Failure to react can bring about proprietary and criminal liability for the management board. The share capital of the company must be at least 2500 euro. The maximum share capital permitted is 25 000 euro. You can register the company without having to deposit the share capital. You can do this later at the bank.

H) The Tax and Customs Board

And other national and local authorities utilise the Commercial Register’s data through a computer network and they are forbidden from requesting you to submit an excerpt of the Commercial Register (§ 541 (1¹) of the Commercial Code). You do not have to register separately as a person paying income tax, social tax and land tax. Still, you have to register as a person paying value added tax (VAT) if your company’s annual turnover exceeds the lower limit set forth in the law. You can register as a person paying value added tax through the website of the Tax and Customs Board.

Question 2

What to consider before establishing a company in Estonia?

John Doe · Accepted Answer

A) An annual report must be submitted

To the registration department of a country court no later than within 6 months after the end of the financial year. The report can be submitted through the Company Registration Portal. If you do not submit the report in due time, the court maintaining the register may fine both the company and its management board members without advance warning. The company's financial year is always the calendar year, starting on the 1st of January and ending on the 31st of December.

B) The company’s business name, registry code and location

Must be stated in the company’s business documents and on its website. The annual report must also state those data and additionally the company’s e-mail address and website address as well as other telecommunications data.

C) Activities

Are presented in the annual report. Enclose up to 10 largest activities by sales revenue as annexes to the report. Activity cannot be freely described but instead must be indicated as the relevant wording in the Estonian Classification of Economic Activities, level 4. Insignificant activities are not required to be stated. The management report provides a more detailed description of the reporting year’s activities and the changes planned for the coming year. Please keep in mind that stating an activity in the Commercial Register does not automatically grant you the right to engage in it if a special law prescribes any additional requirements (for example the Trading Act requires that a place of sale be registered with the local government, the Building Act requires that a building contractor be registered, the Public Transport Act requires a public transport or taxi license, etc.).

D) Changing registry data (company address, management board members, etc.)

A petition for entry of change is filed with the county court maintaining the register. A petition for entry can be filed through Company Registration Portal or a notary. A state fee must be paid when filing a petition for entry (indicating the company’s registry code and the relevant reference code). Notice of changes to data outside entries must be sent through Company Registration Portal or by post. Data outside entries can be changed without a state fee. A state fee is also not required for submitting a resolution of shareholders or the supervisory board to extend the duration of powers of a management board member entered into the register. Documents (both on paper and digital) must be submitted as originals (incl. with original signatures) or as notarised copies. A notary may also prepare a digital copy of a document. Documents must be in Estonian or accompanied by a translation made by a sworn translator or certified by a notary. If failing to submit the required data, the company, as well as all its management board members can be fined repeatedly.

E) A person’s address

Is looked up from the Population Register by the county court maintaining the register. But if a company’s management board member, liquidator or the chair of the supervisory board does not have a place of residence registered in the Estonian Population Register, the data of that place of residence must be submitted and any changes in those data must be notified of immediately. Those data are also considered data outside entries so no state fee is required for them. Every Estonian company must have an Estonian address.

F) The list of shareholders

Is kept by the private limited company’s management board. If other shareholders have a pre-emptive purchase right, a shareholder selling its share must present the sales contract to the management board so that the management board can inform other shareholders. The notary certifying a sale or pledge of a share will also communicate the transaction to the county court maintaining the register. The management board may assign the list of shareholders to be maintained by the Estonian Central Register of Securities for a fee. In that case transactions with shares are conducted through a securities account opened in a bank. If a company had multiple shareholders and only a sole shareholder remains then the management board must send a notice to that effect to the county court maintaining the register. Only private persons who have an Estonian personal ID code can register an Estonian company online. If you as a legal entity would like to register an Estonian company, please get in touch with us. We will help you with the registration process. The company can be registered by one founder. If you have more than one founder, please get in touch with us. We will help you with the registration process. To register an Estonian company, both the founder and the board member(s) must have an Estonian personal ID code. If the founder and the board member are different persons, both must digitally sign the company registration application. You will be able to download the application after filling out the registration form. Once you have signed the downloaded document, you must upload it to the portal for submission. The management board of an Estonian company can be located outside of Estonia. In this case it is regulated by the law to provide the address of the board and appoint an authorized contact person.

G) Equity capital level

You must make sure that the company’s net assets (equity capital) do not decrease below one half of its share capital, and never below the lower limit of share capital set forth in the law. Otherwise the management board must summon the shareholders to decide an involvement of new funds, a merger, a reconstruction or dissolution of the company, etc. In the case of long-term insolvency, the management board must immediately present the court with a bankruptcy petition. Failure to react can bring about proprietary and criminal liability for the management board. The share capital of the company must be at least 2500 euro. The maximum share capital permitted is 25 000 euro. You can register the company without having to deposit the share capital. You can do this later at the bank.

H) The Tax and Customs Board

And other national and local authorities utilise the Commercial Register’s data through a computer network and they are forbidden from requesting you to submit an excerpt of the Commercial Register (§ 541 (1¹) of the Commercial Code). You do not have to register separately as a person paying income tax, social tax and land tax. Still, you have to register as a person paying value added tax (VAT) if your company’s annual turnover exceeds the lower limit set forth in the law. You can register as a person paying value added tax through the website of the Tax and Customs Board.