Estonia Company Registration - Types of Companies - Company Formation Costs

Additional Services for Company Formation in Estonia

Estonian Business Strategy

Recently, many of the world's fastest-growing companies have started their operations in the northern European country of Estonia. Perhaps you have already heard of companies like Skype, Bolt, TransferWise, Playtech, or Pipedrive?

The Estonian business strategy is based on a well-developed digital infrastructure and the belief that almost everything can be done online with minimal loss of funds and time. Some of the startups established to date are companies managed by digital nomads, entrepreneurs, freelancers, and self-employed individuals. The e-Residency program was created for them, aiming to provide entrepreneurs from all over the world with access to the Estonian business environment and to simplify the processes of the business sector. Thanks to Estonia's EU membership, e-Residents have the right to use e-services on an equal footing with Estonian residents and to manage their companies completely remotely, while their business is based on the European Single Market.

The location-independent lifestyle is made possible by e-Residency: low-cost administration, ease of doing business, and preferential taxation.

Benefits of Company Registration in Estonia

Estonia is one of the most digitized countries offering the latest opportunities and favorable conditions to establish a company. This is well-tracked by the average number of enterprises in Europe - 5 per 100,000 people, whereas in Estonia this mark is 6 times higher. Therefore, Estonia ranks third in the ranking of European countries for the establishment of start-ups, due to a number of advantages of setting up an Estonian company:

• 0% corporate income tax (tax on retained profits).
• Founders and Management Board members can be non-residents of Estonia (no need for a local Director).
• There is no mandatory condition and salary requirement for paying a salary to the company manager.

• No need to contribute registered capital when starting a company.
• The possibility to manage the company completely remotely if the owner has an e-Resident card.
• In case of doing business in Estonia, a Board member has the right to apply for a residence permit for up to 5 years.
• The possibility to purchase transport and real estate in the ownership of a tax-free Estonian company.
• Estonia has signed the Convention for the Avoidance of Double Taxation with 59 countries.
• Estonia has a transparent and clear tax system that does not include progressive taxes.

Types of Estonian Company Registration

Registration of a company with an e-Resident card. When establishing a company using an e-Resident card, a legal address and a contact person in Estonia

are a prerequisite. A state fee of 265 EUR is not included in the price.

Company setup in Estonia by visit. It is mandatory to have a legal address and a contact person in Estonia.

To open a company in Estonia, you need to be present at the notary - the company is established within 2-5 working days after the application is made. For company formation in Estonia, you need to pay a state fee of 200 EUR and notary services.

Opening a company in Estonia by power of attorney. It is mandatory to have a legal address and a contact person in Estonia.

To open a company in Estonia by power of attorney, you will need to prepare a notarized power of attorney in the Estonian language for a representative of our company. Your presence in Estonia is not required when establishing a company by power of attorney. When registering a company, you need to pay a state fee of 200 EUR and notary services in the amount of 165 EUR.

Business Forms in Estonia

According to the Commercial Code, there are 6 forms of business in Estonia:

Private Limited Company (Osaühing or OÜ)

Public Limited Company (AS)

General Partnership (TÜ)

Limited Partnership (UÜ)

Commercial Association (Tulundusühistu)

In addition to the listed legal forms of entrepreneurship, an individual entrepreneur can also operate as a Sole Proprietor (FIE), which must also be registered in the Commercial Register.

Foreign companies can also offer their goods or services by opening a branch in Estonia. The branch must be registered in the Commercial Register by submitting an application with all the necessary documents. It should be noted that a branch is not a type of entrepreneurial activity, and the foreign company is fully responsible for the obligations arising from the activities of the branch.

Before determining the appropriate form of business, you should answer these basic questions that will determine the rules of the daily business of your company:

How will the company be managed?

What will be the name of the company?

Who will act as a shareholder?

What will be the initial field of activity?

What will be the location and legal address of the company?

Estonian Private Limited Companies

The Limited Liability Partnership (Osaühing or OÜ) is the most common form of business to set up a company in Estonia. Holders of an Estonian ID card or e-Resident card can establish a private limited company and manage it online.

The advantage of an OÜ is the simple and fast registration as well as a relatively small share capital rate (2,500 EUR). Among the advantages is that the shareholders are not personally liable for the obligations of such a company.

The cost of establishing an OÜ is 200 Euros. When established electronically in an accelerated manner, the state fee will be 265 EUR. The state fee is then accounted for as business expenses for establishing a private limited company.

Before the payment of the capital, the founders are personally liable for the missing contribution. Such a company must have a management body (Management Board) that represents and manages the company. The Board may consist of one or more members. Members of the management board are not required to be shareholders in the company.

If more than half of the Management Board members do not permanently reside in Estonia, the company must submit a contact person to the Commercial Register. Additionally, the foreign owner must provide their address and e-mail address.

A private limited company can also be established without investing share capital if the proposed field of activity does not require it. The capital of an OÜ will consist of the liabilities of the founders in the amount of the determined contribution.

If the company's annual turnover in Estonia exceeds 40,000 EUR, the founder must register as a VAT payer with the Tax and Customs Board. In addition, some fields of activity require a license (e.g., cryptocurrency business).

The Tax and Customs Board reviews the application within 5 business days from the date of its submission, and in an accelerated manner by no later than the next business day.

Public Limited Company (AS)

A Public Limited Company (Aktsiaselts or AS) is a form of business for setting up a company in Estonia with the highest requirements for registered capital (at least 25,000 EUR) and must have a multi-level management structure.

Advantages of an Estonian Public Limited Company:

The possibility of listing the company on the stock exchange

The ability to attract a wide range of shareholders

Suitable for the implementation of large projects

Shareholders are not personally liable for the obligations of a PLC.

One or more natural or legal persons with or without a stock subscription can establish a PLC in Estonia. The company is obliged to fulfill its obligations with all its assets. The shareholder is not personally liable for the obligations of the Public Limited Company. Compared to a private company, a PLC's Management Board member must be registered with the Estonian Central Securities Depository, and the rights to registered shares will belong to the person specified as the shareholder.

A Public Limited Company is required to have a Management Board and a Supervisory Board. The Supervisory Board usually consists of 3 members, who do not have to be shareholders, but half of them must be residents of the EU. The Supervisory Board appoints and regulates the management of the company. Members of the Supervisory Board cannot be members of the Management Board. If more than half of the Management Board members do not reside in Estonia, the company must submit a contact person in Estonia to the Commercial Register to whom the necessary documents can be sent. Additionally, a PLC must have an appointed auditor.

The state tax for the establishment of a Public Limited Company is 200 Euros. Later, the state fee is accounted for as business expenses for the establishment of the PLC.

The application for the registration of a Public Limited Company in the Commercial Register must be accompanied by a notification from a bank or payment institution that the capital has been deposited. If the contribution is not monetary, documents will be required instead to prove its cost, delivery, receipt, and audit.

A Public Limited Company Online A public limited company must be registered with a notary. The notary fee for the establishment of a PLC depends on the number of shareholders and the size of the capital.

One of the main features of a public limited company is the requirement that the shares be registered with the Estonian Central Securities Depository or another custodian.

The Tax and Customs Board will review the application for the registration of a PLC within 5 business days from the date of its submission.

If you plan to operate in a business area with special requirements, you must apply for an appropriate license.

A public limited company must be registered with the Tax and Customs Board if its planned annual turnover exceeds 40,000 Euros.

The company's employees will need to be registered in the Employment Register.

General Partnership (TÜ) and Limited Partnership (UÜ)

A General Partnership (Täisühing or TÜ) and a Limited Partnership (Usaldusühing or UÜ) are relatively rare forms of business for setting up a company in Estonia. They are suitable for starting a business involving a larger number of stakeholders or for supporting the economic activities of shareholders.

The advantages of a General Partnership or a Limited Partnership are simple and fast registration and the absence of a requirement for the minimum amount of capital.

General Partnership (TÜ)

A General Partnership must consist of two or more partners operating under a common business name and who are jointly and severally liable for the obligations of the company without limitation. A General Partnership operates on the basis of a partnership agreement concluded between the partners. There is no requirement for a minimum capital investment, and profits are distributed among the shareholders in proportion to their shares, unless otherwise specified in the agreement. The partnership agreement does not require notarization or filing with the Commercial Register.

Limited Partnership (UÜ)

An Estonian Limited Partnership must consist of at least one general shareholder and one limited shareholder operating under a common business name. At least one of the members must be a general partner who is unlimitedly liable for the debts of the partnership; one of them is also a limited shareholder who is liable to the extent of their contribution. The general partner is solely responsible for the legal obligations of the company, while the limited partner is liable to the extent of their investment amount.

Methods of establishing a TÜ and a UÜ:

Online on the Company Registration Portal (digital signature required)

Establishment through a notary

The state fee for the registration of a General or Limited Partnership is 13 Euros. When using the services of a notary, you will also need to pay a notary fee. The fee for notarization of the authenticity of the signature on the application is 12.75 Euros (excluding VAT).

The Tax and Customs Board will review applications for the registration of a General Partnership or a Limited Partnership within 5 business days from the date of application.

If you plan to operate in a business area with special requirements, you must apply for an appropriate license.

The company must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 Euros.

The company's employees will need to be registered in the Employment Register.

Commercial Association (Tulundusühistu)

A Commercial Association (Tulundusühistu) is a company that aims to support and promote the economic interests of its members through collective business activities, where its members are:

As consumers or users of other goods

In the role of suppliers

Through labor contribution

Through the use of services

In another similar way

A Commercial Association can be formed by at least two persons (legal or physical). The advantage of a commercial association is that its members have no personal liability for the obligations of the association. The articles of association may provide for the full personal liability of the participants or within the limits set by the articles of association.

A company can only be registered through a notary, who will certify the application for the registration of the company in the Commercial Register and prepare the necessary constituent documents. Additionally, it is necessary to pay a state fee of 200 Euros to create a Commercial Association. VAT will be added to all notary fees.

In the case of full personal liability, the association does not require a minimum capital. If the articles of association do not provide for the personal liability of the cooperative members for the obligations of the association, the amount of registered capital will be at least 2,500 Euros.

The Tax and Customs Board reviews the application for the registration of a Commercial Association within 5 business days from the date of its receipt.

If you plan to operate in a business area with special requirements, you must apply for an appropriate license.

The company must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 Euros.

The company's employees will need to be registered in the Employment Register.

Estonian Sole Proprietor (FIE)

An individual entrepreneur (IE, Füüsilisest isikust ettevõtja or FIE) is the most suitable form of business for those who run small businesses alone or with a family.

Advantages of operating as a Sole Proprietor:

Simple registration

There is no requirement for the minimum amount of capital.

Individual entrepreneurs are not required to have articles of association.

However, it is important to note that an individual entrepreneur bears unlimited personal liability for the debts incurred while doing business.

An individual entrepreneur can suspend their activities by notifying the commercial register and specifying the time interval. An individual entrepreneur who does seasonal work can report the start and end dates of the Sole Proprietor's business activity.

When creating an FIE, there is no need to prepare a memorandum or articles of association. An important requirement is a bank account suitable for doing business.

To register as a Sole Proprietor, you will need to pay a state fee of 13 EUR.

Online registration Fast electronic registration will only take a few hours. To register as an FIE in Estonia, you must provide the following information.

Registration with a notary The notarized application for the registration of an FIE takes 5 business days from the date of its submission. The fee for notarization of the authenticity of the signature is 12.75 Euros. VAT will be added to all notary fees.

If you plan to operate in the field of activity where special requirements apply, you will need to apply for an appropriate license.

An individual entrepreneur must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40,000 Euros.

The company's employees will need to be registered in the Employment Register.

It is assumed that the Sole Proprietor will keep the accounting records of the company in accordance with the provisions specified in the Estonian Accounting Act.

Get Information on Becoming an E-Resident and Opening a Company in Estonia