Company incorporation in Estonia
The most common form of business presence in Estonia is a limited liability company [OÜ].
Minimum share capital
The minimum share capital required to establish a limited liability company is EUR 2500 which shall be paid by shareholders with a monetary or non-monetary contribution before a company registration with the Commercial register when the company bank account is opened.
Since January 2011 it has been possible to establish a company without contribution. The decided share capital (at least 2500 EUR) may be contributed later, after the period stipulated by the shareholders in the Articles of Association. OÜ without contribution is not a new form of limited liability company and the regulation for general OÜ will apply. The Commercial Register will make a notice in the company's official extract, that the company is established without contribution.
Requirements for OÜ without contribution:
1. Shareholders may be natural persons only;
2. Articles of Association shall include the term during which the share capital is covered;
3. Until the contribution is made - the shareholders are personally liable for the company's activities;
4. Until the contribution is made – is not possible to distribute dividends;
5. The maximum share capital of OÜ without contribution is 25 000 EUR.
Company formation cost including bank account and VAT registration
State fee for registering OÜ (private limited liability company) is EUR 145. State fee does not include notary fee, which approximately is 40 EUR. There is no state fee for registering as VAT payers in Estonia. In order to open company's bank account the cost slightly varies on the particular bank. In the case of a company being incorporated by a legal person (company) there may be additional costs for translation services (approx. 20-25 EUR/page).
The registration takes 5 business days from the submission of documents at Commercial Register.
Legal address
Please do note that it is necessary to indicate the legal address of the company. Therefore the registration at particular premises in Estonia is necessary as the initial step. For your convenience we may offer to use our firm's legal address in Tallinn.
Procedure of incorporation
The initial step is to conclude the act of establishment of the company;
Temporary bank account is opened and an initial contribution for the subscribed shares is paid. The amount of the initial contributions must be at least EUR 2500;
The articles of association of the company are drawn up and approved by the notary and the necessary management bodies in the company are appointed;
The company is deemed to have been established upon registration thereof with the Commercial Register.
All the documents must be submitted to Commercial Register in Estonian language. According to local laws, the translation of documents can be made only by the certified translator. Approximate cost for one page translation is 20-25 EUR/page; approximate cost for the translation of Company setup documents is 290 EUR.
Required Documents and Information
A: if the establisher is an individual:
1. Power of Attorney issued to us for establishing the new company- notarized;
2. Confirmation from the management board members signed in the presence of a notary that the right to be management board members a company in Estonia. (no Business Prohibitions etc.) notarized;
3. Preferred name of the company;
4. Legal address:
5. Business activities;
6. Preferred bank;
7. Certificate from the bank which proves that the initial share capitals of EUR 2500 and state fee EUR 145 have been paid.
B: if the establisher is a legal person:
1. Current extract from the establishers Commercial register (as the proof that the founder of the Estonian company is a registered company in a foreign state and see also its legal representative(s)) – original document, possible need for Apostille;
2. Power of Attorney issued to us for establishing the new company– notarized;
3. Memorandum of Association of the founder- notarized;
4. Preferred name of the company.
5. Business activities.
6. Preferred bank.
7. Certificate from the bank which proves that the initial share capitals of EUR 2550 and state fee EUR 145 have been paid.
Ø Apostille may be required in documents, issued by foreign authorities (Commercial registers) of countries, with whom Estonia does not have the Legal Help Agreement.
Taxation in Estonia
|
Rates, costs |
Short description |
|
|
VAT |
Standard rate |
The taxable period is one calendar month |
|
Corporate income tax |
General CIT 0 %. |
25% is applied mostly on dividend payments, but also on gifts, donations, fringe benefits and royalties, what the company makes from the company account. The tax is covered in company level. |
|
Dividend tax |
25 % |
As the taxpayer is a company, the shareholder's status (legal person/ individual, resident / non-resident) is irrelevant |
|
Personal income tax |
20% |
Covered basically by the employer in salary payments. Usually withheld tax, which means the taxpayer is the person paying the taxable income to and individual |
|
Social security contributions |
33 % |
employer's contribution – health insurance |
|
1.6 % |
employee's contribution – unemployment insurance |
|
|
0.8 % |
employer's contribution – unemployment insurance |
|
|
Land tax |
0,1 % – 2,5 % |
Annual tax, depends on the location of the land |
|
Non-taxable income |
154 EUR / month |
|
Registration of a representative office
A foreign company has the right to start business in Estonia without opening any office in Estonia, one representative person locted in Estonia is sufficient. Only registration is made in Estonian Tax and Customs Board, where the foreign company is registered as Non-Resident Tax Payer in Estonia. The Non-Resident is not registered in Estonian Commercial Register and all actions of Non-Resident are managed from the foreign state.
If the foreign company opens a representative office in Estonia, it is not necessary to repeat the registration in Commercial Register. The only registration required to be made is to the Estonian Tax and Customs Board, where the foreign company is registered as being permanently established in Estonia. The Permanent Establishment is not registered in Estonian Commercial Register and all actions of the Permanent Establishment are managed from the foreign state.
Required documents/information for both registrations (Non-Resident Tax Payer and Permanent Establishment):
- Application form, signed and issued by the representative person of company. If the person is not willing to be presented in Estonian Tax and Customs Board, a lawyer may be authorized with notarized Power of Attorney.
- Document, certifying the registration of the foreign company in the foreign state (an extract from Commercial Register/Registration Certificate from Commercial Register)- translated into Estonian or English, legalized with Apostille, if the company is not from Latvia, Lithuania, Russia or Ukraine, with whom Estonia has the Legal Help Contracts and the Appostille is not required.
- Document, certifying the business in Estonia (contracts/invoices/business plan)- translated to Estonian or English.
- The page from Memorandum/Articles/Statute of the company, which expresses the representatives of the foreign company (persons entitled to sign documents under the name of foreign company). Translated to Estonian or English and legalized with Apostille, if the company is not based in Latvia, Lithuania, Russia or Ukraine,
The registration is made to the Tax and Customs Board within 5 days without any state fee.
For questions, please, contact Valters Gencs, attorney at law at info@gencs.eu
