Full Information on Company Registration in Estonia

Why Open a Legal Entity in Estonia?

Recently, there’s been a shift in perception regarding the Estonian economy and the type of opportunities it provides. Some of the biggest money-makers on the world’s tech scene today are deploying their talents, technology, and resources in this country.

Estonian economy, at present, hinges on the creation of innovative, smart, and pragmatic solutions in any market where the focus is placed firmly on value creation. Right now, the belief is that everything can be done via the web with minimal waste of money and time. The e-Residency program was launched to fuel this innovation and help companies, start-ups, and entrepreneurs anywhere in the world to establish a presence in this European country to do this make sure you look into a immigration lawyer. In other words, company registration in Estonia is fast, easy, and cost-effective.

How Long Will It Take to Register A Company?

Each case is different, but, on average, it should not take longer than five business days after finalizing all the paperwork to complete the registration of a business in Estonia. There are many different variables in play but if you choose to register your company in Estonia, you should not expect to wait longer than five days if there are no complications. These problems might arise from an incomplete understanding of the various steps that you have to go through.

How to Open a Bank Account in Estonia for a Legal Entity?

After the process of company registration is completed, you are able to open a bank account. In order to do that, you have to have business associates from Estonia, employees that are Estonian residents, or conduct business activities in Estonia. If your company’s activities are located outside of Estonia, you need to open an account in another country.

Usually, the question of how to set up a business account in an Estonian bank is not encountered by companies that choose to hire professional help. Typically, a business register company provides assistance in opening Estonian bank accounts (such as the prestigious Luminor) for free.

How Did Estonia Become a Hub for Entrepreneurs?

Estonia is among the most digitized nations in Europe, ranking among the top countries in e-government. Residents can do pretty much anything via the web except for select government services. There are no plans for the government to move away from IT development and there are multiple indicators of great innovation in Estonia. With every year, the number of available e-services is growing. The country currently ranks fifteenth in the economic quality category in the world and, even more impressive, twentieth in the investment environment category. All of these things made and will continue to make this country a perfect place to start a business.

What Organizational / Legal Things to Consider Before Even Starting A Company? 

Before setting your plan of establishing a business in the Estonian jurisdiction in motion, there are several things to take into consideration. These seemingly trivial matters can often play a significant part in whether your business idea will succeed or fall by the wayside. Here are the questions you need to ask yourself before setting up your new company in Estonia.

  1. Which management structure will suit your enterprise?
  2. What will your company be named?
  3. Who will take on the role of shareholders?
  4. In which economic sector will you be operating?
  5. What will be the address of your enterprise?
  6. Do you have any plans to operate in the international sector?

Why is It So Easy to Do Business in Estonia?

It’s very easy to do business in Estonia because of several reasons. For instance, one of the biggest things that make e-government work so well in Estonia is that Estonia is surrounded by equally “smart” countries. There’s also the fact that their economy has been extremely agile and stable for decades and so the government has had all the funding it needs. Finally, the Estonian economic sector is very welcoming to technology startups. Entrepreneurs can stay here to enjoy continuous growth and support from the government. The notable successes of Estonian tech startups only serve to prove this point even more. Today, some of the biggest names in technology are based in Estonia!

Why Do People Choose Estonia for Starting a Company? 

Key reasons why many choose Estonia as their go-to for starting and/or growing a business:

  • Both the founder and members of the board don’t have to be citizens of Estonia;
  • 0% commercial income tax;
  • Company’s director is not legally entitled to receive any type of wage;
  • Company can be established, managed, and operated remotely;
  • After enough time passes, it’s possible to apply for a residence permit without having to travel to Estonia;
  • Progressive taxation, low cost of living, and high-speed internet, and various other perks.

 Is a VAT number necessary in Estonia?

A company established in Estonia has to obtain a VAT number in case its gross revenue surpasses 40,000 Euro. The common VAT rate is 20% and it is applicable for all providers of services and goods that do not qualify for an exemption or reduced rates. A lowered rate of 9% is applied for several types of goods, including certain pharmaceuticals. If certain conditions are met, a company can be exempt from VAT, i.e. enjoying a VAT rate of 0%.