Navigating the Company Registration Process in Estonia
Estonia is a small country in Northern Europe, which is famous for its achievements in digitalization and innovation. It attracts many entrepreneurs with its simple and profitable system of company registration, which allows you to create your business online within a few hours.
How is this possible?
To put it simply, to register a company in Estonia, you do not need to travel there personally or hire lawyers. All you need is:
- to have an electronic signature,
- and a personal account on the E-Residency portal.
At the present moment, E-Residency is used by thousands of people. This program gives the opportunity to anyone in the world to become an e-resident of Estonia and get access to its digital services. With E-Residency, you can:
- apply for company registration online,
- choose a legal address and a bank account,
- manage accounting and tax reporting via the internet.
Additional Benefits of E-Residency portal и E-Business Register
Online registration also has a nice bonus of being cheap. For example, the state fee is only 145 euros, while at the notary’s office you will have to pay 190 euros. This does not include the cost of the notary’s services, which can range from a few hundred to thousands of euros.
The truth is, the type of registration does not affect the size of the share capital. It depends on the type of your company and ranges from 2500 euros to 25 000 euros, but you can postpone it and pay later.
Later on, using the E-Business Register will allow you to reduce the costs of accounting and legal services for your company. After all, on the portal you can do all the reports.
An Additional Way to Register company in Estonia
If for some reason electronic registration through the portal does not suit you, then Estonia offers an option of opening a business through a notary.
What do you need for this?
- Let’s assume that you already know what your company will be called, what it will do and what form of business will best suit your plans.
- Now you need to prepare the necessary documents, samples of which you can request from Finexmo lawyers or get them from the notary.
- You can pay the share capital with money or property that can be valued and transferred to the company:
- If you pay with money, then you need to open a bank account in Estonia and transfer the amount of share capital to it.
- If you pay with property, then you need to provide the notary with an appraisal of the property and a contract for its transfer.
How to Open Сompany in Estonia and Pay Taxes Correctly
E-Residency and a notary can both register you as a taxpayer. Registration as a VAT payer is necessary for your company to be able to issue invoices with VAT, receive VAT refunds and avoid double taxation.
Interesting fact: Registration as a VAT payer can be mandatory or voluntary.
- Mandatory registration occurs when your company reaches a certain turnover threshold in Estonia or provides certain types of services in other EU countries.
- Voluntary registration occurs when your company wants to benefit from paying VAT, such as reducing your tax liabilities or increasing your competitiveness.
You may also find it useful to know that Estonian law allows companies to pay 0% taxes on profits if they do not distribute their profits. Zero remains if the company does not conduct commercial activity in the jurisdiction or sells goods or services to tax residents.
This means that you do not have to pay any income taxes on your company’s income until you decide to pay dividends to shareholders or owners. And if you decide to pay dividends, you will only pay 14% tax on profits. In other countries, you would pay from 20% to 30% tax on profits regardless of whether you distribute them or not.
You will surely agree with us that this is a very business-friendly system.
Efficiency at a Distance
People who already have a lot on their plate will appreciate that you do not need to come personally to register a company in Estonia. You can entrust all the work to Finexmo. Our lawyers will help you with choosing the optimal form of organization, preparing the necessary documents, opening a bank account and other issues.