Estonia, a small country in Northern Europe, is known for its progressive policies and digital infrastructure. It's one of the most advanced economies in the world and has experienced incredible growth over the last few years due to its investment in digitalization, education and entrepreneurship. Due to these factors, Estonia is attracting more foreign companies than ever before—and increasing their revenue as well! In fact, according to The Economist Intelligence Unit (EIU), Estonia will be in the top 10 global tech hubs by 2025.
Estonia is a small, open economy with high-tech infrastructure, and a good educational system. It has a highly skilled labour force and ranks highly in the Global Innovation Index; it is also noted for its e-Government initiatives. Its main obstacles to growth are the decline of the manufacturing sector and low birth rates. The country's standard of living is among the highest in Eastern Europe and its GDP per capita has risen steadily since 2001.
Estonia is one of the strongest economies in Europe, with a GDP per capita that exceeds that of many other EU countries. Estonia has been a member of the European Union since 2004, and as such follows all EU laws and regulations. Businesses in Estonia can take advantage of this fact by using its common market to trade with other European countries without having to go through any extra red tape.
In addition, because it shares a border with Russia (and Latvia), it's able to import goods at lower prices than many other EU countries because they don't have to be shipped across water or through Russia first. This makes Estonian products cost-competitive in both domestic and international markets!
Requirements for opening a business in Estonia from abroad
- You will need a personal identification document (passport, ID card).
- You are required to have a business plan that includes information about your product or service, target markets, competitors and marketing strategy.
- Proof of sufficient funds to cover expenses for the first year.
- Contact details for the Estonian company that will serve as your contact person in Estonia (the responsible party).
- A certificate of good standing from the home country of your foreign company.
Taxation and legal requirements
The Estonian tax rate is 20%, which is one of the lowest in Europe. It's payable on the company’s income, but there are no personal income taxes. The legal requirements are that you must have a registered office in Estonia and you must have a registered bank account in Estonia.
Primary considerations for companies that want to open a branch in Estonia
Now that you are aware of the advantages of establishing a branch in Estonia, you might want to know more about the steps that can help you achieve your goal. Here’s what you need to know:
- There is a difference between a branch and a representative office. A branch typically has complete independence in running its operations and making decisions on behalf of its parent company, while representative offices have limited authority over their activities and are not allowed to conduct any transactions with third parties.
- The requirements for opening a branch depend on whether it is incorporated or unincorporated (see below). In addition, there are also some additional requirements depending on whether your Estonian entity is registered as an Eesti filiaal (Finnish subsidiary) or Eesti filiaal (German subsidiary), as well as whether it intends to provide investment services or not. You should always make sure these details are covered before applying for registration!
- Finally, benefits include tax incentives provided by law; ease of entry into other markets through strong trade ties with Finland; simplified administrative procedures; reliable security system backed up by strict laws on data protection; well-trained professionals with excellent English skills who can help newcomers integrate into society quickly.
How to start a business in Estonia
If you want to start a business in Estonia, it’s not as hard as you might think. Once you've decided on the legal structure of your company, you can register your company in the Commercial Register (trade register). It is also possible to form a new company through a representative office or branch office of an existing foreign company.
Once you have decided upon the legal form for your business and registered it with the Commercial Register (trade register), one of the first things that needs to be done is opening a business account so that money can be transferred into it. You will also need to pay taxes on profits made by companies and individuals - these vary depending on whether they are resident or other individuals or companies respectively.
Select a legal structure
The next step is to choose a legal structure for your company. There are two main options when it comes to doing so: public and private companies. Public companies can be listed on the stock exchange or sold to other investors, while private companies are often owned by a single person or group of people. You can also register as an unlimited liability company (AS) or limited liability company (OÜ).
Register your company in the Commercial Register (trade register)
The Commercial Register is a national database of limited companies, including their owners, shareholders, and managers. It also contains information on business transactions and bankruptcy proceedings. The register provides information on the legal status of a company at any time. You can find out if it has been liquidated or suspended from trading by checking this register online or visiting your local county court office (maakohus).
How to register a company in the Commercial Register:
- Prepare all necessary documents required for registration (see below).
- Visit your local county court office (maakohus), where they will give you an appointment for submitting your application via paper form or via email if you are already registered with them as an individual entrepreneur.
- Pay registration fee of €35 (or €70 if done through mail).
Open a business account and pay the registration fee
Now that you have set up your business, it’s time to open a business account and pay the registration fee. The next step is paying the VAT, income tax and social tax. These are all very simple and straightforward processes which can be done online via the website of each institution or at a local branch office. There are multiple advantages of opening a business in Estonia.
These are things like:
- Low taxes
- Ease of doing business
- Access to the EU market
- Access to the Nordic and Baltic markets (Norway, Sweden, Finland, Latvia and Lithuania)
The most important advantage is that you have access to a large market with low taxes and good infrastructure. It has one of the best educated workforces in Europe. You can find everything you need for your business here: from qualified employees to high-quality real estate or manufacturing facilities. The country also offers many social benefits for its employees such as maternity leave or child care services at home or at work.
We hope that this article has helped you understand how to start a business in Estonia.
If you follow the steps outlined above, you’ll be able to launch your new venture and grow it into something great! If you would like to start things off right in Estonia with a business account that makes it easy to manage all your finances, why not try wamo? Download wamo from Google Play or the App Store and get registered in 10 minutes!