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Establishing a Company in Estonia

Nikhil Mogha

| Updated: Sep 29, 2022 | Category: Global Registration

Company in Estonia

With the growing market needs, the need for diverse market structures becomes the need of the time. To fulfil the economy’s needs and earn a fair profit on production, the manufacturers aim to diversify their operations worldwide. A country with fewer restrictions will achieve the objectives of the business, among which Estonia comes as a suitable choice for the manufacturers or new entrants to start their business.

Estonia is situated in northern Europe and is covered by Baltic countries like Russia and Latvia. Being a member of both EU and NATO[1], it adopts a free and transparent business model so that new opportunities could be evolved in the country. The economic and fiscal policies of the country are framed to welcome long-term investments in the export-oriented and innovative market. Estonia is becoming the fastest-growing business start-up hub across the world. Estonia is equipped with a digitised process which helps them to raise capital from all over the world. The present article will discuss the benefits and requirements for starting a company in Estonia.

Merits of establishing a Company in Estonia

  1. Tax-free Investments: Estonia offers a unique taxation system when it comes to the distribution of dividends to investors. The tax will not be deducted immediately from the profits earned by the company. However, the tax is liable to be deducted only when the profits are used to distribute dividends among investors. Also, the tax shall not be levied on the profits reinvested by the company for conducting business activities.
  2. Low Setup and operating Cost: Estonia offers low set-up costs for the new entrants in the market. The new entrant can establish the business in the country without any commitment of share capital when installing the company. Moreover, the operating cost involved in running the business is comparatively low.
  3. Uniform European Market: Estonia, being a member of a European country, offers the company to cover a large part of the market across the member nations. The company can supply its products duty-free to all the member nations of the EU and offers a wide range of products. With the initiative to maintain free trade among European countries, Estonia offers unhindered trade routes among the neighbouring countries.
  4. E-Residency benefits: Estonia offers a completely online registration process for companies. The company can obtain e-residency by filing an online application that offers them to operate their business anywhere in the world. The company has also been provided the facility to sign its documents and contracts digitally.
  5. Ease of doing business: Estonia offers the new entrant ease of doing business by providing an environment of stable and transparent market structure. It offers a stable environment to the company and provides the company with an opportunity to flourish in a competitive environment.

Types of Company Eligible for Registering a Company in Estonia

The commercial code of Estonia offers the new entrants diverse options for registering a business in Estonia. It is necessary to obtain an e-residency permit before establishing any company in Estonia. Once the person obtains the permit, the next step will include choosing the type of company that the person wants to establish:

  1. Private Limited Company
  2. Public Limited Company
  3. Sole proprietorship
  4. General partnership
  5. Limited Partnership
  6. Commercial Association

What are the essential documents for establishing a company in Estonia?

The company can also opt for the offline mode of registering a business if they wish to opt-out of the online registration process. The following documents are needed for registering a company in Estonia:

  1. Details of management of the board
  2. MOA of the Company
  3. AOA of the Company
  4. Resolution of Board
  5. Application
  6. Fee payment Certificate
  7. Deposit Certificate from the bank

Steps for Establishing a Company in Estonia 

The founders or the person who wants to establish a company in Estonia shall follow the below steps:

Step 1: Filing an Application

An online application is to be filed along with the requisite fee. It is necessary that applicant must personally collect their digital IDs as it is mandatory for the applicant to register their fingerprints for digital signature.

Step 2: Appointment of Service Provider

If the board’s management is located outside Estonia, then the company has to appoint a contact person who will act as a service provider for the company.The service provider will handle all the correspondence process of the company with the regulatory authorities of Estonia. 

Step 3: E-Business Registry

An online application is to be filed with the e-business registry, submit the requisite fee, and state the company’s governance structure.

Step 4: Business banking

An application is to be filed with the business banking so that all the banking activities of the company can be taken care of.

Procedure to establish a company In Estonia

The applicant shall follow the below-mentioned steps for establishing a company in Estonia:

  1. The applicant must choose a distinctive name that does not attract trademark infringement. The name shall be in Latin Letters, and it shall not contain any special characters.
  2. The following process involves choosing the area of activity. The company shall choose a main area of activity from where the business shall be conducted and select an EMTAK code for the area.
  3. The management of the board shall appoint a contact person at the registered company’s address,who will handle all the correspondence process with the regulatory authorities of Estonia.
  4. The next step involves filing an online application form on the E-business portal. It involves signing the documents and payment of fees.
  5. The applicant shall, after filing a registration applicant deposit the capital in the company’s account or the depository bank.
  6. After the application submission, the relevant jurisdiction court shall dictate its decision on the application through register E-mail.

Conclusion

Estoniais an independent country aiming to provide business opportunities to new entrants in the market. Estonia’s free and transparent business model will encourage investors worldwide to invest more in the country. The digitalisation registration process of the company in Estonia offers a simplified structure and involves low set-up costs. Estonia being a member of European countries enables the company to diversify its operations among the neighbouring countries without any extra taxes. The benefits of E-Resident allow the company’s founders to handle the operations of the company wherever in the world, provided they have appointed a contact person at the company’s registered address in Estonia.

Read our Article: Opening a Business Bank Account in Estonia

Nikhil Mogha

An Advocate by profession, Nikhil Mogha holds experience in the field of Business and Securities law. He has done his Masters of Law in Corporate Law from Guru Gobind Singh Indraprastha University, New Delhi. He is also versed with the drafting and research work in the field of Company Law, Banking Laws and Contract Laws.

Business Plan Consultant


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