Virtual Office FAQ
ID-card and Digi-ID are the easiest, most convenient and most secure methods of using internet banking and other e-services in Estonia.
Digital identity card or Digi-ID is an ID-card like a smart card, that you can use for authentication of the holder and giving digital signatures in an electronic environment. Also encryption functionality is supported.
You can apply for Digi-ID if you are:
Upon registering a company in Estonia, you can apply for opening a bank account in Estonia if you have partners in Estonia/employees living in Estonia/carry out activities in Estonia.
If the intended activity of the company is not related to Estonia, you will not be able to open a bank account in Estonia.
If you want to open an account with an Estonian bank, the company has to start its activities, in full or in part, in the territory of Estonia, and we will be happy to help you. We advise you to contact the bank after your company has evidence of activities in Estonia (to open an account with an Estonian bank, a board member of the company shall be present).
We are happy to provide information on the location of banks operating in Estonia, how much does it cost to open an account, what is a fee, etc.
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 the open bank account where you want and can do it.
At the moment we are introducing a
check it out!
The standard rate of VAT is 20%, the reduced rate is 9% and 0% in some cases.
The taxable period is one calendar month, and VAT returns must be submitted to the tax authority by the 20th day of the month following the taxable period.
Usually, Tax and Customs Board will register with the VAT for those companies that engage in economic activities or prove their commencement (§ 20 (4) of the Value Added Tax Act).
As a result, the registration of non-operating ready-made companies is usually not possible for the sale of companies by sellers of the companies.
It is possible to buy formerly operating companies, including VAT registered companies. In this case, the registration of the company as a VAT taxpayer will be retained.
Residents pay tax on their worldwide income. Taxable income includes, in particular, income from employment (salaries, wages, bonuses and other remuneration); business income; interest, royalties, rental income; capital gains; pensions and scholarships (except scholarships financed from the state budget or paid on the basis of law). Taxable income does not include dividends paid by Estonian or foreign companies when the underlying profits have already been taxed.
The personal income tax is withheld from the employees’ gross salary every month and paid by the employer.
Non-residents pay personal income tax only on their income received from Estonian sources. Taxable income in Estonia includes:
The rate of social tax is 33% (20% for social security and 13% for health insurance). Besides the social tax, unemployment insurance tax at a rate of 0.8% must be paid on the gross salary (an additional 1.6% is withheld from the employees’ salary).
Employers registered in Estonia (including the permanent establishments of foreign entities) must pay social tax on all payments made to employees, except on those specifically exempted by law.
An e-resident is a non-resident according to Estonian tax legislation.
Only income derived in Estonia is taxed in Estonia.
If there is no activity or income derived from Estonia, taxes should be paid in the country where the service is provided or activity is done or income is derived from, the pure e-residency alone does not influence the foreign or Estonian taxation.
The Estonian e-residency does not automatically exempt from taxation elsewhere.
An Estonian company established by an e-resident is an Estonian tax resident.
There is no corporate income tax on retained and reinvested profits.
Tax on distributed profits is 14-20%.
Distributed profits include:
Dividends paid to non-residents are no longer subject to withholding tax, irrespective of participation in the share capital of the distributing Estonian company. However, various withholding taxes may still apply to other payments to non-residents if they do not have a permanent establishment in Estonia or unless the tax treaties otherwise provide.
As the tax period for corporate entities is a month, income tax must be returned and paid monthly by the 10th day of the following month.
It is possible to run your company without any corporate income taxation at all.