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Business Setup and Support in Estonia Confirmation of the origin of funds in Estonia

Taras Miroshnychenko

Head of International Corporate Law and Fintech Practice

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miroshnychenko@prikhodko.com.ua

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Expert in fintech, crypto, and international corporate law with over 20 years of experience. Specializes in crypto licensing (VASP/CASP), iGaming business support, and international structuring, asset protection, and OSINT analytics for risk assessment and due diligence.

Confirmation of the origin of funds in Estonia

In today’s world, where financial transparency and compliance with anti-corruption regulations are becoming increasingly important, the issue of proving the origin of funds is gaining special importance.

This is especially relevant for those doing business or investing in Estonia, a country known for its progressive approaches to e-government and high standards of financial reporting.

The law firm “Prikhodko & Partners” examines the key aspects of proving the origin of funds in Estonia to help clients avoid legal risks and ensure compliance with the law.

Why is proof of the origin of funds important?

Proof of origin is the process of proving that financial assets are derived from legitimate sources. This is necessary to prevent money laundering, terrorist financing, and other criminal activities.

Estonia, like other European Union countries, has strict financial reporting requirements that require businesses and individuals to provide evidence of the legality of the sources of funds.

For businesses operating in Estonia or planning to invest in the country, verification of the origin of funds is a mandatory step when opening bank accounts, obtaining loans or participating in large financial transactions.

Individuals may also need to verify the source of funds, for example, when purchasing real estate or obtaining visas to reside in Estonia.

Basic requirements for confirming the origin of funds in Estonia

Documentary confirmation. To confirm the origin of funds, it is necessary to provide documents that confirm the source of their receipt. These can be purchase and sale agreements, employment contracts, tax returns, bank statements, documents confirming the receipt of inheritance or investment income.
Transparency of transactions. All financial transactions must be transparent and easily traceable. Banks and other financial institutions in Estonia carefully check every transaction that raises suspicions.
Compliance with international standards. Estonia adheres to international standards in the field of anti-money laundering (AML) and counter-terrorism financing (CFT). This means that the requirements for proving the origin of funds may be even stricter than in other countries.
Reporting for residents and non-residents. Both residents and non-residents of Estonia must comply with requirements for proving the origin of funds. For non-residents, this may be especially important when opening accounts in Estonian banks or investing in the Estonian economy.

How to prepare for the process of verifying the origin of funds?

Keep all documents. Even if you don’t plan on making any major financial transactions in the future, it’s a good idea to keep all documents that you might need to prove the source of your funds. This includes contracts, invoices, tax returns, and other financial documents.
Consult with experts. The process of confirming the origin of funds can be complicated, especially if you work with international transactions or large amounts. The lawyers of Prikhodko & Partners will help you prepare the necessary documents and ensure compliance with all legal requirements.
Be prepared for additional requests. Banks and other financial institutions may request additional documents or explanations. It is important to respond promptly to such requests to avoid delays in processing transactions.

Legal consequences of non-compliance

Failure to comply with the requirements for proving the origin of funds can lead to serious legal consequences, including fines, account blocking or even criminal liability.

Estonia has strict sanctions for violating anti-corruption laws, so it is important to approach this issue with the utmost seriousness.

Features of confirmation of the origin of funds for non-residents

For non-residents planning to invest in Estonia or open accounts in Estonian banks, the process of verifying the origin of funds can be particularly difficult.

This is due to the fact that banks and financial institutions carefully check the sources of funds, especially if they come from other countries. In such cases, it is important to provide not only standard documents, but also additional confirmations, such as:

Certificates from banks in the country of origin of the funds;
Documents confirming sources of income (e.g., investment portfolios, service contracts, etc.);
Tax returns for the last few years.

It will also be useful: TAX CONSULTATION IN ESTONIA

Electronic solutions in Estonia: benefits and challenges

Estonia is known for its innovative approaches to e-government, which greatly simplifies many processes, including financial transactions. However, this also means that all transactions leave a digital trail, making them more transparent for control. For businesses, this can be both an advantage and a challenge.

On the one hand, electronic systems allow for quick and efficient confirmation of the origin of funds. On the other hand, any errors or discrepancies can be easily detected, requiring businesses to pay closer attention to detail.

How can “Prikhodko and Partners” help?

The law firm “Prikhodko & Partners” has extensive experience in working with clients who do business or invest in Estonia.

Our experts will help you:

Prepare the necessary documents to confirm the origin of funds;
Ensure compliance with anti-corruption legislation;
Resolve issues related to opening accounts in Estonian banks;
Minimize legal risks when conducting financial transactions.

Proof of origin of funds is an important step for any business or individual working with financial assets in Estonia.

Compliance with legal requirements not only helps to avoid legal problems, but also increases the trust in your business from partners and financial institutions.

Trust professionals to avoid mistakes and ensure the success of your financial transactions.

Calculate the cost of services

1 question

Do you need confirmation of funds in Estonia?

Yes

2 question

Are you planning to place funds in Estonia?

Yes

3 question

Do you need help in confirming your funds in Estonia?

Yes

4 question

Do you need advice on placing funds in Estonia?

Yes

Is there really no corporate income tax in Estonia?

Estonia applies a deferred taxation system. This means that while profits remain in the company’s accounts or are reinvested in its development, the corporate income tax rate is exactly 0%. Tax is paid only when funds are distributed in favour of the founders.

What is the current tax rate on dividends? (Does the 14% preferential rate still apply?)

The preferential 14% tax rate on dividends was completely abolished from 1 January 2025. Currently, all distributed profits (dividends) are taxed at a single rate of 22% (calculated using the 22/78 formula on the amount of the distribution).

Can I open an account with a traditional Estonian bank remotely?

No. Traditional Estonian banks require proof of a close economic connection with the country (substance) — the presence of a genuinely leased office in Tallinn and employed resident staff. For remote businesses operating through e-Residency, the optimal and reliable solution is to use licensed payment institutions (EMIs) that provide full IBAN accounts.

Is a company required to pay a salary to its director?

Estonian law does not require a company to pay a mandatory salary to its director. If you are a tax resident of another country and do not live in Estonia, you may also be exempt from paying Estonian social tax (33%) provided that social insurance coverage in your country of actual residence is confirmed.

What are the conditions for obtaining a residence permit through business?

A successfully operating business is a lawful basis for obtaining a residence permit. The legislation requires an investment of at least EUR 65,000 in the company’s share capital for shareholders, or at least EUR 16,000 if the business is registered as a sole proprietorship.

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