Company set up in Estonia: Minimum share capital, company forming cost and VAT registration in Estonia
Minimum share capital
The minimum share capital required to establish a limited liability company is EUR 2500 which shall be paid by shareholders with monetary or non-monetary contribution before a company registration with the Commercial register when the company bank account is opened.
From January 1th, 2011 it is possible to establish a company without contribution. The decided share capital (at least 2500 EUR but not more then 25000EUR) may be contributed later, after the term shareholders decide 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 only natural persons;
2. Articles of Association shall include the term, when the share capital is covered;
3. Until the contribution is made - the shareholders are personally liable for 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 140. 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 case if company is incorporated by legal person (company) there might be additional costs for translation services (approx 16 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 16 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. Preferable name of the company;
3. Legal address:
4. Business activities;
5. Preferable bank;
6. Certificate from the bank which proves that the initial share capitals of EUR 2500 and state fee EUR 140 have been paid.
B: if the establisher is a legal person:
1. Current extract from the establishers Commercial register (as the prove that the founder of the Estonian company is registered company in foreign state and see as well its legal representative(s)) – original possible Apostille;
2. Power of Attorney issued to us for establishing the new company– notarized;
3. Memorandum of Association of the founder- notarized;
4. Preferable name of the company.
5. Business activities.
6. Preferable bank.
7. Certificate from the bank which proves that the initial share capitals of EUR 2500 and state fee EUR 140 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, therefore is possible, that the Apostille is not required.
Taxation in Estonia
|
|
Rates, costs |
Short explanations |
|
VAT |
The standard rate is 20%, the reduced rate 9%. |
The taxable period is one calendar month. |
|
Corporate income tax |
General CIT is 0%, 21/79 (app. 27%) is applicable only in profit distributions.
|
21/79 (app. 27%) is covered mostly in dividend payments, but also on gifts, donations, fringe benefits and royalties, what company makes from the company account, tax is covered in company level. |
|
Dividend tax |
21/79 (app.27%) |
As the taxpayer is company, then shareholders status (legal person, individual or resident, non-resident) is not important. |
|
|
|
|
|
Personal income tax |
21% |
Covered basically by employer in salary payments, usually withheld tax, which means the tax payer is the person paying the taxable income to an individual |
|
Social security contributions |
33% |
Employees contribution, includes health insurance, unemployment insurance |
|
|
|
|
|
1 % |
Unemployment insurance, employer's contribution |
|
|
Land tax |
0,1 % to 1 % |
Annual tax, depends on the location of land |
|
Non-Taxable Income |
144 EUR |
|
Registration of a representative office
Foreign company has the right to start business in Estonia without opening any office in Estonia, enough is one representative person, locating in Estonia. 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 a foreign company wants to permanently offer goods or services in its own name in Estonia, it shall enter a branch in the commercial register. A branch is not a legal person. The company shall be liable for the obligations arising from the activities of the branch. A foreign company shall appoint a director or directors for the branch. A director must be a natural person with active legal capacity. The residence of at least one director must be in Estonia, in a member state of European Economic Area or in Switzerland.
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 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 of English.
- The page from Memorandum/Articles/Statue of company, which expresses the representatives of 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 from Latvia, Lithuania, Russia or Ukraine,
The registration is made in Tax and Customs Board within 5 days without any state fee.
The only representative office in Estonia, registered in Commercial Register is Branch which is not a legal person, which does not have start capital, but registered similarly as company in Estonia. The registration in Commercial Register takes 5 days and is made with the state fee 140 EUR.