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Business Setup and Support in Estonia LEGAL SUPPORT OF BUSINESS (COMPANY) 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.

LEGAL SUPPORT OF BUSINESS (COMPANY) IN ESTONIA

Estonia has established itself as one of the most progressive countries in the European Union in terms of ease of doing business and digitalization of public services.

For entrepreneurs planning to start a business in this country, the issue of proper legal support is particularly relevant.

The most common form of doing business in Estonia is OÜ (osaühing) – a limited liability company, which is best suited for small and medium-sized businesses.

An important aspect of doing business in Estonia is the concept of “substance” – the economic presence of a legal entity. This involves having a physical office, employees at the company’s registered office, a local website and IP address, as well as property and assets necessary to conduct business.

The lack of the appropriate level of “substance” can significantly complicate opening a bank account and registering a company as a VAT payer.

Ways to register a company:

There are two main ways to register a company in Estonia: through obtaining e-Residency status or through notarization.

The e-Residency program is particularly attractive to Ukrainian entrepreneurs, as it allows you to register a company online without the need for a physical presence in the country.

The e-Residency registration process takes an average of 3 days after receiving the card, although the process of obtaining the card itself can take up to 1.5 months.

Particular attention should be paid to the issue of authorized capital. The minimum authorized capital for an LLC can be as little as 0.01 euros per shareholder.

However, it is important to understand that for companies with authorized capital of less than 2,500 euros, the difference between the actual capital and this amount is considered the liability of the shareholders in the event of bankruptcy.

It will also be useful: TAX CONSULTATION IN ESTONIA

Tax burden:

The Estonian tax system is characterized by its progressive nature. A company’s profit is not taxed until it is distributed in the form of dividends.

The tax rate for dividend payments is 20% (or 14% for regular payments). When applying the reduced rate of 14%, an additional dividend tax of 7% is levied (5% for residents of Ukraine).

An important aspect of doing business in Estonia is the possibility of obtaining additional benefits. For example, a company director who is not an Estonian citizen has the right to obtain a one-year (and later three-year) business visa.

When the company’s capitalization reaches 65,000 euros, it becomes possible to obtain a residence permit in Estonia without the need for permanent residence in the country.

Opening a bank account:

Regarding banking services, Estonian banks have quite strict requirements for non-residents. An alternative to traditional banking institutions can be international payment systems such as Payoneer, PayPal or PaySera, which successfully meet the needs of most companies.

The e-Residency program provides additional benefits: the ability to register a VAT number online within one day, access to Estonian digital solutions for doing business in the EU, participation in a global community of entrepreneurs, numbering over 80,000 people from over 170 countries.

The only significant limitation of the program is that it does not grant the right to reside in Estonia or tax residency status.

Thus, legal support for business in Estonia involves a comprehensive approach to registration and operation, taking into account the peculiarities of the tax system and requirements for economic presence.

With proper planning and choosing the optimal form of company registration, Estonian jurisdiction can become an effective tool for the development of international business.

Professional support from the law firm “Prikhodko & Partners”

To avoid possible mistakes and make the company registration process as fast and safe as possible, contact the experienced specialists of the law firm “Prikhodko & Partners”.

Our experts will provide full legal support for the transaction, help with the preparation of all necessary documents, conduct a thorough check of the company before purchase and protect your interests at all stages of the transaction.

We have many years of experience in supporting such transactions and guarantee a professional approach to resolving any issues related to corporate matters in Estonia.

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.

Successful cases on the topic: