How to open a company in Estonia: Your Complete Step-by-Step Guide
Are you seeking a business-friendly environment with cutting-edge digital infrastructure to launch your new venture? Have you considered the benefits of opening a company in Estonia? Estonia offers entrepreneurs many opportunities thanks to its strategic location in Europe and supportive government policies. This blog post will guide you through the essential steps to open a company in Estonia, highlighting the various business entities, the e-residency program, financial setup, legal requirements, and more. By the end, you’ll understand why Estonia is an excellent choice for your business and how to get started.
What are the benefits of opening a company in Estonia?
E-residency program
Estonia’s e-residency program allows entrepreneurs worldwide to manage an EU-based company entirely online. This makes signing documents, accessing online banking, and handling business operations from anywhere convenient.
Favorable tax system
Estonia offers a flat corporate income tax rate and does not tax retained and reinvested profits. This straightforward and business-friendly tax system encourages investment and growth.
Strategic location and market access
Located in Northern Europe, Estonia provides easy access to the EU market, benefiting from free trade agreements and reduced tariffs. This strategic location is ideal for expanding businesses.
Advanced digital infrastructure
Known for its advanced digital infrastructure, Estonia offers seamless online services for company registration, tax filing, and administrative tasks, saving time and reducing bureaucracy.
Supportive government policies
The Estonian government supports entrepreneurship with various programs and incentives, including grants, tax benefits, and access to business incubators, fostering a pro-business environment.
Highly educated workforce
Estonia has a highly educated workforce, especially in technology and engineering. This skilled talent pool supports high-tech and innovative businesses, contributing to their success.
Ease of doing business
Estonia ranks high in ease of business due to its efficient business registration process and minimal bureaucratic red tape, enabling quick and smooth company operations.
Quality of life
With excellent healthcare, education, and public services, Estonia offers a high quality of life. This attractive living environment helps attract and retain talented employees, benefiting businesses.
Types of business structures in Estonia
Before starting a business in Estonia, it’s essential to understand the different types of business structures. Each has its features and requirements.
Private limited company (OÜ)
A private limited company, or OÜ, is Estonia’s most popular type of business. It is excellent for small and medium-sized enterprises. The owners, called shareholders, are only responsible for the company’s debts up to the amount they invested.
Public limited company (AS)
A public limited company, or AS, is meant for larger businesses. This type of company can raise money by selling shares to the public and has stricter rules and regulations than an OÜ.
Sole proprietorship (FIE)
A sole proprietorship, or FIE, is a business owned and run by one person. It is the simplest type of business to start. However, the owner is responsible for all the business’s debts and obligations.
General partnership (TÜ)
A general partnership, or TÜ, is a business owned by two or more people. Partners share the profits, losses, and responsibilities equally unless they agree otherwise. Each partner is personally responsible for the business’s debts.
Limited partnership (UÜ)
A limited partnership, or UÜ, has both general and limited partners. General partners manage the business and are personally responsible for its debts. Limited partners contribute money and share in the profits, but they do not manage the company and have limited liability.
How to open a company in Estonia online
Estonia makes it simple to register a business online from any global location. The primary actions to take are as follows.
Make an online application.
Go to the official website for e-residency and fill out the application. Give your contact information, a business concept, and a digital picture.
Submit documents
Upload a copy of your passport along with the other necessary files.
Pay the fee
Make an online credit or debit card payment for the state fee.
Background investigation
The Estonian Police and Border Guard Board will carry out a background investigation.
Pick up your e-residency kit.
Once approved, you will receive an email notification. You can collect your e-residency kit at an Estonian embassy or a designated pick-up location.
Activate your digital ID.
Follow the instructions provided with your kit to activate your digital ID. This will allow you to sign documents, access online banking, and manage your business online in Estonia.
Register your company online.
Once you have your e-residency card, log in to the Estonian e-Business register and register your company online. Provide information about the company, such as the name, address, owners, and share capital. The entire process is digitised and takes about 15 minutes.
Register with the Tax and Customs Board
Companies with employees or those eligible for VAT payments must register with the Estonia Tax and Customs Board.
Steps to open a company in Estonia through a notary
There are several steps you must take to open a company in Estonia. The following are the primary steps that you should take:
Step 1. Choose a unique company name
The first thing to do is give your company a name. To carry out this,
- Make sure the name you choose for your company stands out from those of other businesses.
- Make sure the name satisfies the requirements established by the Estonian Business Register.
- Visit the Estonian Business Register website to see if the name you have in mind is available.
- Reserve the name to stop others from using it.
Step 2. Draft and notarise the articles of association
Next, you need to write the articles of association. This document outlines the company’s structure, purpose, and rules. It must be notarized, meaning an official notary must certify it. To do so,
- Draft the articles of association using a legal template or with the assistance of a legal professional.
- Ensure the document includes all required information as per local regulations.
- Contact a licensed notary to arrange a notarisation appointment.
- Present the articles of association to the notary for review. The notary will verify the identities of the signatories and witness the signing.
- The notary will certify the document, officially notarising it. Keep the notarised articles of association for further registration processes.
Step 3. Online registration with the commercial register
After preparing the articles of association, you can register your company online with the Estonian Commercial Register. This straightforward process can be done quickly if all your documents are ready.
- Prepare all necessary documents, including the notarised articles of association.
- Access the Estonian Commercial Register’s online portal. Complete the online registration form with the required details about your company.
- Upload the notarised articles of association and any other necessary documents.
- Pay the registration fee online.
- Submit the registration application through the portal.
- Wait for confirmation of registration, which may include a certificate of incorporation.
Step 4. Obtaining necessary licenses and permits
Your business type will determine what licenses and permits you require. To obtain the licenses and permits, proceed with the following steps.
- Determine which particular licenses and permits are needed for the kind of business you operate.
- Find out about the requirements and application process for every license and permit.
- Compile all the information and paperwork required for the applications.
- Submit the applications to the relevant authorities.
- Pay any required fees associated with obtaining the licenses and permits.
- Wait for approval and issuance of the licenses and permits.
- Ensure all licenses and permits are in place before commencing business operations.
How much does it cost to open a company in Estonia?
Opening a company in Estonia is relatively affordable compared to many other European countries. Here’s a table that breaks down the potential costs involved.
| Expense | Cost range (€) |
| E-residency application fee | 100-120 |
| Company registration fee | |
| – Online registration | 190 |
| – Notary registration | 145-200 |
| Share capital requirements | 2,500 (can be deferred initially) |
| Notary fees | 100-200 |
| Bank account opening | |
| – Initial deposit | Varies by bank |
| – Monthly maintenance fees | 5-15 |
| Legal and consultancy fees | 200-1,000 |
| Accounting services | 50-300 per month |
| Licenses and permits | Varies by business type |
| Annual reporting fee | 20-30 |
Total estimated costs
Minimum: Approximately €3,000
Maximum: Approximately €5,000
Financial setup
Setting up your business’s financial aspects is crucial. This includes opening a bank account, meeting capital requirements, and understanding taxes.
Opening a business bank account
After registering your company, open a business bank account in Estonia. This account will be used for all company transactions, like paying taxes and receiving payments.
Initial capital requirements
Different types of businesses have different capital requirements. For example, a private limited company (OÜ) needs a minimum share capital of €2,500.
Understanding Estonian tax obligations
You need to understand Estonia’s tax obligations. These include corporate tax rates and VAT registration. Estonia has a flat corporate tax rate and does not tax reinvested profits, which can benefit business growth.
Legal and compliance requirements
You must follow specific legal rules and regulations to run your business smoothly in Estonia. Here’s what you need to know:
Key legal considerations for new businesses
When starting your business, you must ensure you follow all legal requirements. This includes writing the articles of association and a document that explains your company’s structure and rules. You also need to register your company with the commercial register. Additionally, some industries have specific regulations you must follow, so it’s essential to check what applies to your business.
Ongoing compliance and annual reporting requirements
After your business is up and running, you must follow specific rules. This includes filing annual reports that provide an update on your company’s activities and financial status. You also need to keep accurate records of all your financial transactions. Staying compliant with these requirements is crucial to avoid any legal issues.
Hiring employees in Estonia
If you plan to hire employees in Estonia, it’s essential to understand the labour laws and how to find the right people for your business.
Labor laws and regulations
Estonia has specific laws that protect workers’ rights. These laws cover working hours, minimum wage, and job contracts. Ensure you know these rules to treat your employees fairly and follow the law. This will help you create a good working environment and avoid legal problems.
Recruitment process and finding talent
Estonia has a well-educated workforce, especially in fields like technology and engineering. Job boards and recruitment agencies can help you find the right employees and attend networking events. These resources can help you connect with skilled workers who fit your business well. Finding the right talent is vital to helping your business grow and succeed.
Common challenges faced by companies in Estonia and their solutions
Starting a business in Estonia can come with challenges. Here are some common challenges and tips to overcome them.
Challenge 1. Navigating legal requirements
Understanding and complying with Estonia’s legal requirements can be daunting for new business owners.
Solution
Hire a local legal advisor or consult with a legal professional who specialises in Estonian business law. They can help you navigate the legal landscape and ensure compliance with all regulations.
Challenge 2. Language barriers
Non-Estonian speakers may need help in dealing with local authorities and documentation.
Solution
Use translation services or hire a bilingual consultant to assist with communication and ensure that all documents are accurately translated.
Challenge 3. Access to funding
Securing initial capital or finding investors can be challenging, especially for foreign entrepreneurs.
Solution
Explore various funding options such as Estonian startup grants, European Union funding programs, and local venture capital firms. Networking with local business communities can also help you find potential investors.
Challenge 4. Understanding the tax system
Navigating the Estonian tax system and understanding your tax obligations can be complex.
Solution
Engage a local accountant or tax advisor to help you understand and manage your tax responsibilities. They can also assist in setting up efficient tax planning strategies.
Challenge 5. Finding skilled employees
Recruiting qualified staff can be a challenge, especially in a competitive market.
Solution
Use local job boards, recruitment agencies, and professional networks to find potential candidates. Offering competitive salaries and benefits can also attract skilled employees.
Challenge 6. Adapting to the local business culture
Adapting to the Estonian business culture and practices can be challenging for foreign entrepreneurs.
Solution
Take the time to learn about the local business etiquette and cultural norms. Networking with local business owners and attending business events can provide valuable insights and help you integrate into the business community.
Tips for business success in Estonia
Business success is not only about avoiding pitfalls; it’s also about adopting best practices. Here are some tips to help you thrive:
Leverage technology
Use technology to automate processes and improve efficiency. This can save time and reduce errors.
Focus on customer experience.
Providing excellent customer service can help build loyalty and attract more customers. Always prioritise your customers’ needs and feedback.
Stay informed
Keep up with industry trends and regulations. This helps you stay competitive and compliant with new laws or market changes.
Networking
Build a strong network of contacts. This can provide valuable support, advice, and opportunities for collaboration.
Takeaway note
Follow all the steps for registration, understand your financial and legal obligations, and take advantage of the support and resources available to entrepreneurs in Estonia. With good planning and execution, you can successfully start and grow your business in Estonia.
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FAQs
How long does it take to open a company in Estonia?
Registering a company online can take up to 15 minutes if all documents are prepared. The process, including notarization and other preparations, typically takes a few days.
Is Estonia good for startups?
Yes, Estonia is excellent for startups. It offers a business-friendly environment, advanced digital infrastructure, and supportive government policies, making it an ideal location for new ventures.
Is it easy to get an Estonian work permit?
Getting a work permit in Estonia is relatively straightforward, especially for high-skilled workers and entrepreneurs. The process involves meeting specific criteria and submitting the required documents.
Can a foreigner start a business in Estonia?
Yes, a foreigner can start a business in Estonia. The e-residency program allows non-residents to establish and manage an EU-based company entirely online.
How to register a company in Estonia?
To register a company, choose a unique name, draft and notarise the articles of association, and register online with the Estonian Commercial Register. For detailed steps, consider consulting legal professionals or business consultants.
