Estonia has a favorable tax and legal environment for cryptocurrency exchange companies. It also offers registration for businesses looking to offer Cryptocurrency Wallets.
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 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).
General
The operating license are issued by the Estonian Financial Intelligence Unit (FIU) which is a government body that operates as an independent cell of the Estonian Police and Board Guard Dpt. (Check this link for details: https://www2.politsei.ee/en/teenused/majandustegevuse-luba.dot )
The licenses can be applied for at the same time (albeit via separate applications) and at the conclusion of the application process 2 separate Licenses are issued; one enabling you to offer a Cryptocurrency Exchange Services, the other enabling you to offer a Cryptowallet service. For details of the main Acts regulating the activity check this link: https://www2.politsei.ee/en/
The Company is classified as a Financial Institution but has no special reporting requirements (other than those which normally apply to an Estonian Company)
Estonian Company Requirement
To successfully apply for a cryptocurrency exchange and/or wallet service license you will firstly need to incorporate an Estonian Company.
This process can be carried out remotely with no visit required and it usually takes about 5 business days for the full procedure. The key features of the Estonian Model of Company are as follows:
• A minimum of 1 shareholder only is required
• The shareholder/s can be a natural person or a legal entity
• There is no local shareholder requirement (ie the shareholder/s can come from any country)
• A minimum of 1 Director only is required
• There is no local Director requirement (ie the Director/s can come from any country).
• No secretary is required
• No stand-alone office is required (only a local registered office and registered agent which service OCI will provide).
• Beneficial owners’ details must be disclosed to the authorities starting from September 1st 2018 though a Seychelles Foundation can be deployed to act as the beneficial owner/shareholder (Contact us for details of how/why that will work)
Tax on Cryptos
Estonia also offers a competitive tax environment for such businesses. Features include:
• Virtual currencies are not subject to VAT
• Corporate profits are not taxed unless or until dividends are paid
• Income tax of 20% is charged on gross dividends (calculated as 20/80 of the net dividend).
• Special conditions apply enabling a Company to apply for a 14% rate beginning September 1st 2018.
Set Up Procedure and Documentation
Our Legal Team can/will attend to all that needs to be done in order to comply with Estonia’s Anti Money Laundering (“AML”) Regulations including:
Internal Security Measures
• assessment and management of the risk of terrorist financing and money laundering;
• collection and maintenance of statutory records;
• performance of the notification obligations;
• notification of the management as/when required;
• internal control rules for checking adherence thereto.
Rules of Procedure
• identify low risk transactions and establish the appropriate requirements/procedures to enable the execution of such transactions;
• identify higher risk transactions, (including risks arising from means of communication, computer systems and other technological developments) and establish the appropriate requirements and procedure for the execution and monitoring of such transactions;
• establish the rules that ensure that Due Diligence/KYC requirements are met;
• set out the requirements and procedures for keeping the necessary documents and records;
• set out the requirements and procedures for an application including instructions to staff etc for how to effectively identify whether or not a person is:
(a) a politically exposed person;
(b) a person whose place of residence or seat is in a country where insufficient measures
for prevention of money laundering and terrorist financing have been laid out;
(c) a person with regard to whose activities there is previous suspicion that the person may
be involved in money laundering or terrorist financing;
(d) a person against whom international sanctions have been imposed;
(e) a person with whom a transaction is carried out using telecommunications.
Legal Framework & Requirements
The legal framework for Crypto Companies in Estonia is governed by the Money Laundering and Terrorist Financing Prevention Act which passed into law in November 2017.
We can/will prepare all policy documents and manage the process as regards the FIU acting under a Power of Attorney (PoA). For a remote setup we will require the following documentation:
• Valid copy of passport *
• Certificate of non-criminal record from the registry of convictions (not older than 3 months) for shareholder(s), board member(s), ultimate beneficial owner(s) and authorized person/s *
• Power of Attorney *
• Brief description of planned business model and CV’s of all participants
* Notarized and confirmed with an apostille, in English (or notarized English translation)
Would you like to know more? Then please Contact Us:
info@offshorecompaniesinternational.com
