BUSINESS IN ESTONIA
Business immigration to Estonia in 2024 is a great opportunity for foreigners from different countries to enter the world markets of goods and services, invest funds in the most efficient way and move to live in a developed European country. At least Estonian authorities are doing everything necessary to attract entrepreneurs from abroad. Estonia has a good infrastructure, special business programmes for investors, and a competent fiscal policy.
Estonia has been a member of the European Union since 2004, joining the euro zone in 2011. Its main trading partners are Sweden, Finland, Germany, Lithuania and Latvia. The lion's share of exports are electrical equipment, wood products, machinery and mineral fuels. The unemployment rate in Estonia in 2024 does not exceed 7-8%, and inflation is practically non-existent.
Information technology and telecommunications occupy a special place in the economic structure. Many experts consider Estonia to be the most progressive country in the world in terms of IT sector development. For example, up to 99% of transactions in Estonian banking are made electronically. Residents of even the most remote towns and villages have access to the Internet.
Local authorities claim that it is possible to register an Estonian company on the Internet within 15 minutes. Accordingly, other operations related to doing business in Estonia, such as filing tax returns, are also done online. Estonian universities offer high quality and prestigious education. Graduates have a good chance of finding a job in Estonian companies or finding employment in any other EU country.
Estonia has just over 1.3 million inhabitants, about a third of whom are fluent in Russian. Further, we will talk about how to open a business in Estonia in 2024, familiarise ourselves with the procedure of company registration, outline the available forms of ownership, current tax rates and the list of documents for obtaining an Estonian business visa.
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How to start a business in Estonia
Estonian legislation does not provide for any special restrictions for foreigners doing business in the country. On the contrary, foreign entrepreneurs have equal rights with local citizens in obtaining various benefits, subsidies or loans, including from EU financial institutions.
All this makes the business climate in Estonia as favourable as possible and attracts a large number of foreign investors. There are representative offices of major international companies in the country, such as Swedbank, Deutsche Post DHL and Ericsson. By the way, the world-famous SKYPE internet service was developed in Estonia.
Estonians are a northern nation with a special temperament, way of thinking and culture. In its mass the population is highly educated, the majority of citizens speak English. Business in Estonia for foreigners will not be so difficult in terms of long adaptation and getting used to the mental differences.
In order to conduct flexible and efficient business in Estonia, entrepreneurs receive special ID-cards, which allow them to carry out any banking and financial transactions online. Foreign businessmen from third countries (outside the EU) who wish to register an Estonian company and stay in the country permanently for the purpose of business activities are required to obtain a long-term visa and apply for a residence permit in Estonia.
If you buy a business in Estonia or open a new company and show interest in the development of the company, this will be sufficient grounds for granting a residence permit. Usually a list of documents is prepared in advance and submitted to the Estonian Consulate in the alien's country. Initially, a temporary residence permit is issued with a maximum period of validity of up to 5 years. After that it is possible to obtain the status of permanent resident, and 8 years of residence in the country will allow you to obtain Estonian citizenship.
Procedure and cost of company registration in Estonia
According to Doing Business, Estonia ranks 18th out of 190 countries in terms of accessibility of starting and ease of doing business. This is one of the best indicators even among many developed European countries. For example, in this rating Estonia is ahead of Ireland, Austria, Iceland and even Germany.
The procedure of registering an Estonian company electronically can be carried out as quickly as possible, literally within a few hours. It is done through a special service – ariregister.rik.ee. However, in this case, special ID-cards are required, which are not always available to foreign entrepreneurs. But even the usual process of registration through a notary takes no more than 3 days.
Main stages of business (company) registration in Estonia
Selection and registration of a unique company name in the commercial register. This is done online and free of charge via a specialised website.
Preparation and verification by a notary of the company registration documents – articles of association, memorandum of association, personal data of the owners, bank statement on payment of the authorised capital, information on the type of activity, contact details, certificate of payment of the state duty (145 euros) and other information in accordance with the local law. If the documentation is in order, the notary, whose services are paid separately, registers the new company in the commercial register.
Registration of the company as a VAT payer with the tax authorities. This is mandatory for annual turnover of more than 16 thousand euros per year.
Registration of employees in the so-called Health Insurance Fund. A kind of alternative to registration with health insurance funds.
Obtaining licences for doing business in Estonia, if the type of activity requires it. For example, if you are setting up a company in tourism, health care, transport, catering and some other areas.
Forms of ownership for business in Estonia
Choosing the form of ownership for a company in Estonia is one of the first steps taken before registering a business. Briefly review the main and most popular types of businesses available to foreigners.
Private limited company (Osaühing). Can be founded by one or more individuals or legal entities. The minimum requirements for the authorised capital are 2.5 thousand euros, which is contributed in cash or fully in-kind (property) form. Management is carried out by a board of directors consisting of at least one natural person. The liability of the shareholders or founders of the company is proportional to the contributions, and the company itself is liable for its obligations with its full assets. The nominal value of one share may be EUR 1.
Joint Stock Company (Aktsiaselts). The minimum requirements for the authorised capital are 25 thousand euros, and the nominal value of a share is 0.1 euros. A management board, a supervisory board and an auditor must be appointed. It is allowed to register a company for one or more natural or legal persons. The liability of the shareholders is proportional to the contributions and the company is liable for its obligations with all assets owned by the company.
Individual entrepreneur (Füüsilisest Isikust Ettevõtja). The ideal option for running a small business in Estonia. There are no minimum capital requirements, simplified tax and accounting system, registration is allowed for one or more individuals, e.g. family members can be jointly engaged in business activities. Liability for obligations is imposed on all personal property of the businessman.
Taxes in Estonia
Among other undeniable advantages, business immigration to Estonia attracts one of the most liberal, flexible and simple tax systems in the world, with low interest rates. The main difference is the absence of corporate tax on company profits. That is, only the amount of distributed (dividends) and not reinvested profits is taxed at the 20% income tax rate.
Rates of main taxes in Estonia in 2024
Corporate income tax – 20%, only in case of profit distribution.
VAT – paid when turnover exceeds 16 thousand euros per year. The basic rate is 20%. For some types of activities there are reduced rates of 9 and 0%.
Income tax – 20%.
Social contributions – 33%
Unemployment insurance contributions – 1.6% paid by the employee and 0.8% by the employer.
Pension contributions – 2% (paid by the employee).
Business visa to Estonia
As mentioned earlier in the article, for business trips or moving to Estonia for permanent residence, entrepreneurs from third countries need to obtain a business visa from the Estonian Consulate in their home country. Usually a long-term visa (type D) is issued, which allows you to stay on Estonian territory continuously for six months, and in total you are allowed to visit the country for 12 months.
Documents for a business visa to Estonia
A completed visa application form with a photo pasted in.
Original passport with at least two blank pages and an expiry date at least 3 months after the visa expiry date.
Copy of the internal civil passport (pages with basic data and registration).
Colour photo (3.5 x 4.5 cm).
Health insurance with at least 30 thousand euros coverage.
Documentary proof of business registration in Estonia or an official invitation from business partners.
Proof of sufficient funds for living in Estonia.
Receipt of payment of the state fee (80 euros).
In each individual case the Estonian diplomatic staff reserves the right to request additional documents.
