Notable facts about Estonian business environment you ought know

Published 23 September 2019 by Law Office Turnstone

Estonia is well known for its business-friendly environment. The attractiveness and advantages of the Estonian business environment are mainly reflected on its economic potential, cost- effectiveness, infrastructure and most importantly on its digital innovation and technology. For example Estonian state provides various e-services which are still unavailable in most countries, including digital identity, X-road, i-voting, e-Tax Board, e-residency and many more. 

But still, when meeting different people globally, there are many of those who have not heard of all the advantages and innovativeness that Estonian business environment is able to offer. People are mostly positively surprised and interested when it comes to procedures to start a company in Estonia or the advantages of Estonian tax system. Therefore, this article will give a brief overview of the advantages that Estonian business environment can offer, while focusing on topic such as establishing a company. 

Starting a company 

Most common form of business entities in Estonia is private limited company (in Estonian OÜ). Starting a company in Estonia is easy, rather cheap and there are two ways to start one. You can do it in person or online. 

For example, because the private limited company (OÜ) structure is the most simple and commonly used, it's possible to establish this type of company using an expedited procedure in which all documents are submitted online and signed digitally. But to register digitally, it's required to have an Estonian ID-card what is issued to all Estonian residents upon application. 

However, even if you're not a resident of Estonia there is no cause for concern, because you can actually still establish a company, by becoming an e-Resident. Yes, this rare and unique system allows you to get a digital residence card and for example establish a trusted EU company online in only few hours or one business day time. You can manage the resulting company fully online from anywhere in the world location-independent. In addition to that, as an e-Resident you can apply for a business bank account, access international payment service providers, digitally sign and transmit documents or declare Estonian taxes online. Although this is a fairly new system, it has proved popular and is well supported by government. 

“as an e-Resident you can establish a trusted EU company online in only few hours or one business day time.

To establish a private limited company you will have to pay a state fee of 145 euros. By establishing the company electronically through the company registration portal under expedited procedure, the state fee will be 190 euros. After paying the registration fees, all you have to do is digitally sign the documents and you're company will be established. Most of the information in company registration portal is also available in English, including the forms and explanation of the registration procedure.

Also you can establish your company through a notary who will prepare the documentation for you. Although this is a more expensive option, as there will be a legal fee to pay on top of the state registration fee. If you're working through a notary, you'll need to prepare memorandum and articles of association, application forms, bank certificate confirming you've paid the minimum share capital and certificate proving you've paid the state fee for registering a company.

The notary will take your details and register your company using these documents, which will take two or three days. You'll have to provide your ID documents, signatures, and further information such as the registered address of the business.

To start a private limited company you also must commit share capital of at least 2500 euros (although it can be more than this). In some cases you don’t need to pay the share capital immediately when you establish your company, although you may be unable to withdraw any profits from your business until you do so.

Over the last few years, the lawyers at Law Office Turnstone has gained much experience by helping entrepreneurs from inside and outside the European Union to establish a private limited company in Estonia. Depending on the company’s area of activity and size, a varying number of additional steps must be taken. Thus Law Office Turnstone team would be gladly your partner and contact point in European Union who will help you to establishing a company and advise you on any legal matters. 

Cristen Helendi

Lawyer

Law Office Turnstone