Estonia has made company registration a breeze, especially with its e-Residency program. Here’s a detailed, step-by-step guide to get your business up and running in this digital-forward nation.
1. Obtain e-Residency
Launched on December 1, 2014, Estonia’s e-Residency program allows non-residents to access various Estonian services, including company formation, banking, payment processing, and taxation. By 2021, over 80,000 individuals from 170 countries had become e-residents, highlighting the program’s global appeal.
Steps to acquire e-Residency:
- Online Application. Complete the application form on the official e-Residency website, providing a copy of your passport and a recent photograph. You’ll also need to explain your reasons for applying.
- State Fee Payment. A fee of €100 is payable online during the application process.
- Application Review. The review process typically takes 6–8 weeks, during which Estonian authorities verify your information.
- Collect e-Residency Card. Upon approval, pick up your digital ID card at your chosen location, such as an Estonian embassy or consulate.
Of course, it is better to immediately contact experts and save yourself from the pain of registering a business in Estonia. Go to the LFTAdvisor website and consult with professionals who will help you successfully complete all the stages of starting an Estonian business described below.
2. Register Your Company
With e-Residency secured, you can proceed to company formation in Estonia, commonly a Private Limited Company (OÜ).
Key steps in registration:
- Choose a Company Name. Ensure it’s unique and complies with Estonian legal requirements. Check availability in the Estonian Commercial Register.
- Prepare Founding Documents. Draft the company’s articles of association and other necessary documents, either independently or with legal assistance.
- Submit Registration Application. Using your e-Residency card, file an electronic application through the Estonian Commercial Register portal, providing details of founders, share capital, and the company’s legal address.
- Pay Registration Fee. The online application fee is €190, payable during submission.
- Open a Bank Account. After registration, open a corporate bank account, either in Estonia or another EU country. Some banks offer remote account opening for e-residents.
3. Tax Registration and Compliance
Post-registration, ensure compliance with tax obligations.
- Register with the Tax and Customs Board. This can be done online through the relevant portal.
- Obtain a VAT Number (if applicable). If your annual turnover is expected to exceed €40,000, VAT registration is mandatory. Voluntary registration is also an option for lower turnovers.
- Maintain Accounting Records. Estonian law mandates proper accounting and annual financial reporting. Hiring a professional accountant or using specialized firms is advisable.
4. Additional Requirements
Legal Address in Estonia. Every company must have a registered address in Estonia. Many service providers offer virtual office services to fulfill this requirement. Local Contact Person. If your management board lacks EU residents, appointing a local contact person is mandatory. This role is often fulfilled by specialized firms for a fee.
5. Open a Bank Account
While not obligatory for company registration, having a bank account in a European bank facilitates business operations. Some Estonian banks cater to e-residents, though opening an account may require a physical presence. Alternatively, fintech companies like Wise or Revolut offer business accounts with remote setup options.
6. Business Operations and Reporting
Once all procedures are complete, you can commence business activities. Adherence to Estonian laws, including timely submission of tax declarations and financial reports, is crucial to avoid penalties.
7. Advantages of Doing Business in Estonia
Estonia offers several benefits for entrepreneurs.
- Favorable Tax System. Undistributed profits are tax-exempt, with a 20% tax applied only upon distribution of dividends.
- Transparent Legal Framework. Known for its clear and stable legal system, Estonia provides a secure environment for business operations.
- Advanced Digital Infrastructure. As a pioneer in digital governance, Estonia offers efficient e-services that simplify business management.
By following these steps, you can effectively establish and operate your company in Estonia, leveraging the country’s innovative digital ecosystem and business-friendly environment.
