How to Establish a Company in Estonia
There are different business forms in Estonia, but private limited company is the most commonly used form of entity for doing business in Estonia. The advantage of private limited company is that shareholders have no personal proprietary liability for the company’s obligations and it can be established in a fast and simple manner.
What steps have to be taken to establish a company in Estonia?
- The founders have to agree on:
- business name of the company. The name has to include "OÜ" or "Osaühing" and must be clearly distinguishable. Proposed names can be checked here (search for "name query");
- initial area of activity. You can search for national classification fields of activities;
- shareholders and their share capital contributions;
- address of the place of business;
- specifications about the management of the company.
- You have to prepare documents of association and register the company in the Commercial Register;
- The entity can be established via electronic registration or through a notary (detailed info below);
- Share capital is at least 2500, but entity can be established without it (detailed info below);
- Establishing may take from 2 hours to 3 days, depending if you do it electronically or via notary;
- State fees may be 190 euros or 145 euros, depending if you do it electronically or via notary (detailed info below);
at the Company Registration Portal of the e-Business Register is possible if:
- the entity is created without an immediate share capital contribution or with a monetary contribution made electronically in the course of preparing an application in the portal of the e-Business Register. If you want to establish a company with a non-monetary contribution, you should establish it through a notary;
- all persons related to establishment of the entity (members of the management board, founding members, etc.) have to be able to sign the application of initial entry and establishment documents digitally. Digital signing is possible with an Estonian ID-card (and ID-card reader) or via mobile-ID/Smart-ID. Foreigners can get the ID card or mobile-ID/Smart-ID by becoming e-Residents (more information below).
Articles of association can be prepared through the portal using a provided template.
Please find a detailed guide of electronic registration here. Electronic registration time-frame may vary from few hours to one business day.
Registration through a notary
is as follows:
- the founders will meet a notary;
- the notary will prepare necessary documents (taking into consideration your input): an application of establishing a company, the memorandum of association and articles of association. Notary offices provide samples of documents necessary for establishing a company;
- the founders will pay in share capital;
In case of monetary contribution, founders shall open a bank account in Estonia or in another bank which is established in the European Union in the name of the company being founded, into which they shall pay their monetary contributions. Bank certificate regarding the deposit of the share capital should be forwarded to a notary;
- the founders will pay a notary fee and a state fee;
- the notary will send the application and all the documents to the Commercial Register.
You can find a suitable notary from here. Registration through a notary may take 2-3 days.
More specific information about establishing a private limited company can be found here.
How much does it cost?
State fee for establishing a company is 190 euros (electronically) or 145 euros (through a notary). The state fee can later be recognized as a business expense.
Notary fees depend on the size of share capital and the number of founders. More information.
The share capital of OÜ is relatively low - at least 2500 euros, but it can be also established without contributing the share capital if the proposed area of activity does not require capital investments. In this case, instead of share capital, there will be the founders’ liabilities in the amount they promised to provide as share capital contribution. Such “promise” shall be written in the articles of association. In certain fields of activity, such as banking, insurance companies, etc., the laws may provide for higher share capital requirements.
What happens after a successful registration process?
Depending on what kind of goods or services you are planning to do business with, you might need to acquire a license. Please find the information on the areas of activity.
What is e-residency?
E-Residency offers an opportunity for digital entrepreneurs to start and manage an EU-based company online. It is a government-issued digital identity and status that gives access to Estonia’s transparent digital business environment.
If you want to apply for a e-residency, you will need the following documents:
- a copy of your government-issued ID;
- a passport-style digital photo;
- motivation statement;
- Visa or Mastercard.
You will have to pay the state fee (€100–120) and submit an application. After submitting the application and paying the state fee, you should receive a confirmation email notifying about the successful submission.
Estonian Police & Border Guard Board conducts background check and will notify you by email when the process is complete. You should keep in mind that the process may take up to 6–8 weeks.
If you receive e-Residency, you will be invited to collect e-Residency kit at location selected on your application, bring government-issued ID submitted with application and submit fingertips.
What are the applicable taxes?
State taxes for the company are:
- Income tax
Profits are not taxed until they are distributed as dividends or deemed profit distributions.
Distributed profits are generally subject to a 20% corporate income tax (20/80 on the net amount of profit distribution).
Company has to be registered as a VAT payer if the company’s annual turnover exceeds 40 000 euros. The standard VAT rate is 20% and it applies to all suppliers of goods and services not qualifying for a reduced rate or exemption. A reduced rate is 9% which applies to accommodation, books, certain periodicals, listed pharmaceutical products and medical devices. The VAT rate on the export of goods, intra-Community supply of goods and certain services is 0%.
- Other specific taxes depending on the field of activity (e.g. land tax, customs duty, excise duties, etc.).
More information about taxes can be found here. You can find information about corporate accounting here and tax calendar here.
Employees shall be registered with the Estonian Tax and Customs Board and company’s obligation is to pay its employees salary (gross minimum wage is currently 584 euros). It is also necessary to calculate and pay taxes:
- personal income tax 20% (basic exemption in one month is 500 euros which is applied to all income);
- social tax 33% (comprising 20% social security contributions and 13% health insurance contributions) which has to be paid by employers on top of the gross salary. The minimum social tax in 2021 is 192,72 euros per month.
More information about the registration of employees can be found here.
Please feel free to contact us at email@example.com if you have any additional questions.