Company Formation in Estonia

Estonia is a Nordic country of 1.3 million people nestled on the shores of the Baltic Sea in Northern Europe.

Since regaining its independence with the collapse of the Soviet Union in 1991, Estonia has become one of the most economically successful of the European Union’s newer eastern European members.

Estonia has a highly educated population (English speaking proficiency is amongst the world’s highest) low corruption and sits at the forefront at the development and delivery of both private and, in particular public, services by digital means. Of late it has stolen a jump on rival jurisdictions by offering a specific licensing regime for Cryptocurrency related businesses (see below for details).

Limited Liability Companies in Estonia

The Estonian private limited liability company (Osaühing or OÜ) is the most common form of business as its shareholders have no personal proprietary liability for the company’s obligations.

Key benefits of incorporation in Estonia include:

Tax Efficiency: Zero tax is payable in Estonia if profits are reinvested

Clean Name: Estonia isn’t known as a tax haven yet can deliver the same results

Stability: Estonia is very stable economically and ranks as highly as the US for non-corruption

Easy 2 set up: To set up you just need 1 Director/shareholder + a legal address/rep in Estonia

Speedy set up available: You can own an Estonian Company within as little as 24 hours

Easy to administer: Estonian Companies only require 1 Director and 1 Shareholder

Access to Europe: A Euro VAT number can be obtained enabling you to trade on the Continent

VAT Free: No VAT is payable on transactions within Europe (outside Estonia)

Cryptofriendly: Cryptocurrency related businesses are welcome to incorporate in Estonia

Bank Friendly: Incorporating in an EU country gives you wide access to EU/1^st World banks

Language Friendly: (Per its Nordic kin) Estonia ranks VERY highly 4 English Language proficiency

E-Residency available: Estonia offers a Digital ID enabling one to securely access government services in and sign docs/do business in Estonia remotely. 98% of government services can be accessed electronically in Estonia. Check here for details:

https://www2.politsei.ee/en/teenused/isikut-toendavad-dokumendid/e-residendi-digi-id/index.dot

Estonia is also one of the most (probably THE most) Efriendly/developed countries in Europe:

Tax filing, tax payment, banking and business registration can all be done electronically
Public services inc Voting, Government services and Ministries are all accessable electronically
Law Courts and Police Services can all be accessed electronically
Estonia has deployed Blockchain technology to secure Health Care Data including as regards health records and medicine prescriptions

For more details click on this Article: http://www.wired.co.uk/article/digital-estonia

Other Features Include:

Low Minimum Share Capital Requirement (just 2,500 Euros)
Payment of the share capital can be delayed indefinitely (if the Share Cap is under E25K)
Low Cost: Incorporation, Legal, Accounting, Banking and other support services are very competitively priced by comparison with the global norms
No withholding tax is levied on profit distribution
Pre-incorporated shelf Companies are available (including some with current VAT registration
You can take up ownership of a new Estonian Company vie the net without needing to leave home

Taxation in Estonia

Estonia has one of the most progressive tax regimes in the world in that:

The tax rate on reinvested profit is 0%
Income tax is charged only at a rate of 20% on gross dividends.
The general VAT rate is 20%.

Corporate profits are not taxed ie (tax rate 0%) unless or until the profits are distributed as dividends; In short, all undistributed corporate profits are tax-exempt. This 100% exemption covers both active income (e.g. trading) and passive income (e.g. dividends, interest, royalties etc) as well as capital gains from sales of all types of assets, including shares, securities, and immovable property.

Estonia levies a corporate withholding tax only on profits that are distributed as dividends, share buybacks, capital reductions, liquidation proceeds or deemed profit distributions. Income tax at a rate of 20% is charged on gross dividends (calculated as 20/80 of the net dividend).

The standard VAT rate (in Estonian käibemaks, KM) is 20% and applies to all supplies of goods and services inside Estonia. The 9% reduced rate applies to accommodation, books, listed pharmaceutical products and medical devices. The VAT rate on the export of goods, intra-Community supply of goods and certain services is 0% (i.e. exemption with credit). If the annual taxable turnover exceeds 40 000 EUR you will need to register with the Tax and Customs Board as a VAT payer.

Employers registered in Estonia (including permanent establishments of foreign entities) must pay social tax on all payments made to employees. The rate of social tax is 33% (20% for social security and 13% for health insurance). Minimum wage in Estonia is 500 EUR/month as of 2018.

Crypto Business Licenses in Estonia

Estonia has a favorable tax and legal environment for cryptocurrency exchange companies. This small European Union country of just 1.3m people is regarded as one of the world’s most advanced digital nations and is fast becoming a viable alternative to the behemoth Financial Services Jurisdictions such as Singapore and Switzerland – its competitive advantage being it offers less red tape and lower establishment/operating costs.

Companies aiming to do business in the Cryptosphere can apply for 2 different activity licenses in Estonia:

(a) A Cryptocurrency Exchange License

(b) A Virtual Currency Wallet Service License

Both of these licenses are issued by the Estonian Financial Intelligence Unit (FIU) and can be applied for separately or together (in fact it’s cheaper to apply for both at the same time). The full procedure to set up the company and obtain the licenses is straight forward and can be carried out remotely with no visit required (at the time of writing, on average, it takes 30 days from receiving all necessary documentation).

Eligibility for such a license is liberally applied (you don’t need be ex Merril Lynch or hold any form of Fund Manager License to be eligible to apply for such a license) and the cost is very reasonable especially compared with the cost of applying for comparable special licenses elsewhere (eg Fund Licenses, Broker’s Licenses etc).

Corporate Services in Estonia

We provide a full range of corporate services in Estonia including, as required: