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Skype, Hotmail and other entrepreneurs call Estonia home. Why do so many companies choose Estonia for their business? Estonia is a small country, willing to open its doors to new business companies and determined to create the best possible conditions for foreign entrepreneurs and investors.

Advantages of establishing a company in Estonia

Setting up a company in this country has many advantages, such as 0% (in other words, „zero“) corporate income tax, which allows you as a business owner to reinvest profits into your company, which is beneficial in itself.

Other advantages are low bureaucracy, trouble-free VAT registration and a much lower administrative burden, which is, for example, one-fifth compared to the Czech Republic. Among other things, Estonia is the twelfth country with the best conditions for doing business out of approximately 190 countries in the world, and Euros are paid here. Establishment of own s.r.o. (OÜ) in Estonia can also be a stepping stone to the markets of Russia and Asia for many entrepreneurs.

You are a „small“ or „medium“ entrepreneur. Is it worth setting up a company in Estonia?

Estonia does not present itself as a „tax haven“ and does not have increased financial or administrative demands on companies established here. It is not necessary to have a turnover in the order of tens of millions of crowns for starting a business in this country to be worthwhile. New entrepreneurs with low turnover are very welcome here and will certainly appreciate the zero taxation of profits that they can reinvest in the development of their company. Such a company can then grow faster and take full advantage of its competitive advantage over others.

Estonia is the most advanced of the former Soviet republics, very liberal and progressive. Paying only distribution tax (tax on redistributed profits), this is an ideal jurisdiction for holding structures. No profit or sales tax is payable. Numbers don't lie, numbers are reliable. And the Estonian ones reveal the sweet truth – tax conditions allow you to save a lot of money.

The resident form tax on redistributed profit is 21 %. This means the following: if you earn $1000 and the shareholder receives $1000, i.e. 100% of the profit, then it will be necessary to pay tax. But if you re-invest that $1,000, the business doesn't have to pay tax – ideal for investment companies.

No withholding tax, all profit made abroad is 100% tax free. So – if your business is not local and makes you money abroad, you can start celebrating because you pay no taxes and still own a European company. What do you think about it?

The minimal paperwork required is also a great bonus, this will save you a lot of sleepless nights. Estonia is a member of the EU and has a public register of companies, which allows opening a bank account in any bank.

Estonia has concluded a large number of treaties for the avoidance of double taxation. Talented workforce with good language skills and education. Estonia is ideal for creating small and medium-sized companies with up to 500 employees. It is good to know that Estonia is known, among other things, for a large number of software engineers.

Great potential for new businesses and investments in the European market. It is also a great opportunity to do business with the Russian market while still being in Europe. But you have to come to terms with the fact that even the winter will be Russian in this case.

In Estonia, you can realize yourself financially even without your physical presence, you can get an e-residency quite easily – you just need to verify your identity and have your fingerprints and biometric data taken at the border. In the near future, this process will also be possible at all Estonian embassies.

Nowadays, many entrepreneurs are quite busy with their time, and the administration itself is one of the least favorite activities for most of them. If you are one of them, we will arrange all administration and much more for you. So you can save not only a lot of time, but also money.

If you are interested in starting a company in Estonia, you are in the right place. Fill out the form and we can get started right away.

Basic information

  • Type of legal entity: OU company
  • Establishment time: one week
  • Number of shareholders: minimum 1, can be any nationality
  • Shareholders: members can be FO or business entities.
  • Share capital: 2500 Euros
  • Shares on bearer: not allowed
  • Registered address is mandatory, but does not have to be physical
  • A company secretary is required
  • Directors: minimum 1, maximum not defined
  • Resident function of the director: the director does not have to be resident in Estonia

Taxation

  • Corporate income tax 20 % (applies as tax on dividends)
  • Branch tax rate 20 %
  • Dividends 0%, interest 20 % (0 % from deposits in the EU)
  • The state VAT rate is 20 %, the reduced rate is 9 %
  • Double taxation agreements with various countries were applied, determining tax rates on dividends, interest and royalties
  • Accounting: Accounting and preparation of accounts is required
  • Audit is not required
  • Anonymity and privacy. Information about directors and shareholders is open in the commercial register

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