According to the amendments of the Accounting Act,  which became effective on 1 January 2016, companies are divided into different categories based on the figures of the balance-sheet date of the accounts and the level of public interest. 

The categories of companies are:

micro undertaking – a private limited company which indicators meet on the balance sheet date of an accounting year all the following conditions: total assets up to 175,000 euros, liabilities not exceeding the owners' equity, one shareholder who is also the member of the management board and which sales revenue during an accounting year is up to 50,000 euros;

small undertaking – a company registered in Estonia which is not a micro undertaking and only one of which indicators may exceed on the balance sheet date of an accounting year the following conditions: total assets 4,000,000 euros, sales revenue 8,000,000 euros and average number of employees during an accounting year 50 persons; 

medium-sized undertaking – a company registered in Estonia which is neither a micro undertaking nor small undertaking and only one of which indicators may exceed on the balance sheet date of an accounting year the following conditions: total assets 20,000,000 euros, sales revenue 40,000,000 euros and average number of employees during an accounting year 250 persons; 

large undertaking – a company registered in Estonia at least two of which indicators exceed on the balance sheet date of an accounting year the following conditions: total assets 20,000,000 euros, sales revenue 40,000,000 euros and average number of employees during an accounting year 250 persons.

The most common forms of business in Estonia are private limited company (OÜ), public limited company (AS) and sole proprietor (FIE).

A private limited company is the most common form of business in Estonia. The advantages of a private limited company are:

• easy and quick registration;
• no required share capital;
• no personal liability of the shareholders for the obligations of the private limited company.

As of 1 February 2023, there is no statutory requirement for a minimum share capital. When setting up a private limited company, the founders are free to decide how much capital they need. This gives a great deal of freedom to decide on the share capital on the basis of the planned activities of the private limited company and the actual need for capital. However, the founders of a private limited company are liable for any damage caused to the company by the incorrect assessment of contributions or the start-up costs. If the amount of the share capital decided on is lower than 2,500 euros and the bankruptcy proceedings are terminated by abatement without declaring bankruptcy, the court will, at the request of the interim trustee, order the shareholder to pay an amount between the share capital of the private limited company and 2,500 euros, if the trustee fails to satisfy their claim for fees and expenses at the expense of the other assets of the debtor.

 

What should be done before setting up a private limited company?

Before setting up a private limited company, find out the answers to the following questions:

• What field of activity are you going to operate in? You need to choose your principal activity by using the official Estonian Classification of Economic Activities – EMTAK.
• What will be the business name of the private limited company? Check the suitability of your chosen business name via the name query of the e-business register.
• Who are the shareholders and who are the board members?
• What is the amount of the contribution of shareholders?
• Where will the registered office of the private limited company be? What will be its address?
• What will be the structure of governance of the private limited company?

 

What documents do you need to set up the private limited company?

In order to establish a private limited company, a memorandum of association shall be signed and the articles of association confirmed. The memorandum of association is signed by the founders. If only one person is the founder, they shall sign a foundation resolution. The memorandum of association and the articles of association approved thereby shall be notarised.

When establishing a private limited company in expedited procedure, document templates may be used that are available in the information system of the commercial register. In such cases, the template of the articles of association replace the notarised memorandum of association and the articles of association annexed thereto.

Members of the management board shall be appointed. The notarised consent of all members of the management board to being a member of the management board must be enclosed to the application for entry in the commercial register, unless such consent is included in the application. If the private limited company is founded by expedited procedure and includes members of the supervisory board and an auditor, their digitally signed consent to being a member of the supervisory board or an auditor is also required.

Upon incorporation, the share capital must be paid in full, as a monetary or non-monetary contribution, before the company is registered. Proof of a monetary contribution must only be provided to the Commercial Register if the contribution exceeds 50,000 euros. If the contribution is less than 50,000 euros, it is sufficient for the management board to confirm that the contribution has been paid to the private limited company. In the case of a non-monetary contribution, the contract for the transfer of the contribution to the private limited company must be presented, together with documents proving the value of the contribution. The value of the non-monetary contribution must be assessed by an auditor if the share capital of the private limited company is at least 25,000 euros or if the nominal value of the share received by way of a non-monetary contribution is at least 25,000 euros.

If you are establishing a private limited company with the help of a notary, they will prepare an application for the establishment of a private limited company, a memorandum of association, and articles of association.

 

How to register a new private limited company?

1. You can register a private limited company electronically via the e-commercial register portal

A private limited company can only be registered electronically in the e-commercial register if:

• all persons involved in the establishment (board members, founders, etc.) will be able to digitally sign the initial application and incorporation documents;
• the private limited company is established with a financial contribution made electronically through the e-commercial register portal in the course of drawing up the application, if the amount of the contribution exceeds 50,000 euros; for smaller contributions, the confirmation of the board of the contribution is sufficient.

A detailed guide for establishing a private limited company on the e-commercial register portal

Start the registration of a private limited company on the e-commercial register portal electronically

2. Establishment of a private limited company through a notary

In order to quickly set up a private limited company through a notary, see what documents are needed to set up a company. Notary’s offices also have templates of the documents required to establish a private limited company.

Contact details of notaries

 

How much does it cost to establish a private limited company?

The state fee for the registration of a private limited company is 200 euros. If you wish to set up a private limited company via the e-commercial register electronically in an accelerated procedure, the state fee payable is 265 euros. The amount of the state fee can later be transferred to the establishment expenses of the private limited company.

When establishing a private limited company at a notary’s office, a notary’s fee must be paid in addition to the state fee for the registration. The exact amount of the notary’s fee depends on the size of the share capital and the number of founders. Value added tax is added to the notary’s fees.

Contributions to a private limited company may be either monetary or non-monetary. In the latter case, the contribution to the share capital may be, for example, made in the form of equipment, computers, or other assets the financial value of which can be determined.

 

How long does it take to register a private limited company?

The registrar will review the petition for entry within 5 working days from its arrival and in expedited procedure, by no later than the next working day from its arrival.

The public limited company (aktsiaselts or AS in Estonian) is the form of business with the highest capital requirement (at least 25,000 euros) and must have a multi-tiered management structure.

The advantages of the public limited company are the following:

• the possibility of listing the company on the stock exchange;
• the possibility of involving a wide number of shareholders;
• suitable for implementing major projects;
• shareholders have no personal proprietary liability for the public limited company’s obligations.

 

What must be done before establishing a public limited company?

Before incorporation you will have to find the answers to the primary questions that will determine the most important rules of your company’s everyday activity.

• What will the company’s business name be?
• What will your initial area of activity be? Do you need any activity licences or other licences?
• Who are the shareholders, what is the amount of share capital and what will be the rights of the shareholders?
• What will the public limited company’s place of business and the address of its location be?
• How will the management of the public limited company take place?

 

What documents do you need to establish a public limited company?

In order to found a public limited company, a memorandum of association shall be signed and the articles of association confirmed. The memorandum of association is signed by the founders. If only one person is the founder, they shall sign a foundation resolution. The memorandum of association and the articles of association approved thereby shall be notarised.

The members of the supervisory board as well as the management board of the public limited company shall be appointed in the memorandum of association or the foundation resolution.

The consent of the person appointed is required for their appointment as member of the supervisory or management board.

The shares of the public limited company shall be registered in the Estonian register of securities or another depository. Upon founding, a notice from the registrar of the Estonian register of securities or another depository shall be submitted to the registrar of the commercial register regarding the registration of shares.

A notice from a bank or payment institution regarding the contribution of the share capital shall be appended to a petition for entry of the public limited company in the commercial register. If the contribution is non-monetary, documents verifying the value, delivery, receipt, and auditing thereof are required instead.

 

How to register a new public limited company?

The public limited company must be registered through a notary. Electronic registration is not possible. To streamline registration of the public limited company through the notary, make sure which documents you will need to register the company. Notary offices will also have the samples of documents necessary for forming a public limited company.

Find a suitable notary and contact information

 

What are the costs of establishing a public limited company?

To establish a public limited company, you will have to pay a state fee of 200 euros. The state fee can later be recognized as a business expense as the costs of establishing the public limited company.

The notary fee for establishing a public limited company depends on the number of founders and the amount of share capital.

 

How long will it take to register a public limited company?

The registrar will review the petition for entry within 5 working days from its arrival.

 

What must be done after founding a public limited company?

One of the primary special features of the public limited company is the requirement to register shares in the Estonian Central Register of Securities or in other depository.

 

A public limited company must have an auditor.

• If you will be operating in an area of activity subject to special requirements, you will have to apply for an activity licence or registration.
• The public limited company must be registered with the Tax and Customs Board if the planned annual turnover exceeds 40 000 euros.
• If you hire employees, you will have to register them in the employment register. 

A non-profit association (mittetulundusühing, MTÜ)is a voluntary association of persons, whose objective or main activity is not the earning of income from economic activity. A non-profit association may engage in economic activity and earn income, but this must be used to achieve the objectives specified in its articles of association. The activities of non-profit associations are regulated by the Non-profit Associations Act.

The highest management body of a non-profit association is the general meeting of its members. On a daily basis, a non-profit organisation is represented and managed by the management board elected at a general meeting.

Members of the management board must perform their legal obligations with the diligence normally expected from a member of the management board.

The founders of a non-profit association may be either natural persons or legal persons. A non-profit association must comprise at least two members.

The founders and members may also be foreign nationals. As Estonian law does not permit a branch of an international organisation to be registered as a non-profit association, a new legal entity must be founded in such cases. Additionally, a foreign legal entity may carry out its activities in Estonia directly on a cross-border basis without registering a separate branch or founding a new legal entity.

 

Before founding a non-profit association

The following must occur in order to found a non-profit association:

• a founding meeting with the members must be held;
• a memorandum of association must be entered into and the non-profit association’s articles of association must be drawn up.

NB: You may have the documents reviewed by your County Development Centre consultant before signing. The consultation is free of charge.

 

Documents required for founding a non-profit association

In order to found a non-profit association, you must enter into a memorandum of association and approve the articles of association.

The memorandum of association must include the following:

• the name of a non-profit association, which must contain an suffix referring to the fact that it is an association of persons, e.g. union, society, association, club, etc. If no such suffix is found or none are suitable, add the word mittetulundusühing to the name;
• the non-profit association’s contact address;
• the objective;
• the founders’ names, addresses (or registered offices), and personal identification codes or registry codes;
• the members’ obligations with regard to the non-profit association;
• the names, personal identification codes and places of residence of the members of the management board.

The articles of association are a document that must contain agreements important to the members with regard to the future activities of the organisation. As a minimum, the articles of association must include:

• the name and registered office of the non-profit association (at local government level);
• the objective;
• the conditions and procedure for membership in, and for leaving and exclusion from, the non-profit association;
• the rights and obligations of members or the procedure for establishment thereof;
• where applicable, the existence of departments, and their rights and obligations;
• the conditions and procedure for calling a general meeting and the procedure for adopting resolutions;
• the number of members on the management board or the maximum and minimum number of members;
• the distribution of assets in the event of the dissolution of the non-profit association. In order to make use of the income tax incentive, the distribution of assets to another association or legal entity under public law must be specified in a list of incentive beneficiaries to be included in the articles of association.

If you wish to add an association to the list of associations benefiting from income tax incentives, you must clearly indicate in the objective and activities of the association that the association operates in the public interest and for charitable purposes. Further information can be found on the Estonian Tax and Customs Board website.

The petition for entry in the register must be supplemented by the memorandum of association and the articles of association, contact details (telephone, email and website), and the main planned activity.

 

Registering a non-profit association in the Business Register

Once the articles of association and the memorandum of association have been approved at the foundation meeting, the non-profit association must be registered in the Business Register. There are two options for submitting the documents:

• electronically in the e-Business Register;
• via a notary.

The petition for entry in the register can be submitted to the Business Register electronically if all of the founders and members of the management board are able to provide a digital signature. In this case:

• fill in the petition for entry of a non-profit association in register directly in the e-Business Register;
• add the articles of association and the memorandum of association to the petition by uploading them as files;
• then, have the co-founders and members of the management board sign the documents in the e-Business Register;
• pay the state fee for founding a non-profit association (this can be done via bank transfer in the e-Business Register);
• submit the petition for registration to the Business Register.

Registration documents must be submitted via a notary if not all of the founders or members of the management board are able to sign the documents digitally. The authenticity of signatures is verified by a notary. In such a case, a notary that attested the petition must submit the notarised petition must through the electronic information system for notaries.

 

The cost of founding a non-profit association

The state fee for registering a non-profit association in the e-Business Register is EUR 30. The state fee can be paid by bank transfer as part of the process of preparing a petition for registration.

Founding a non-profit association via a notary entails a state fee of EUR 30 for registry acts, plus any notarial fees.

 

Registration deadline for non-profit associations

A non-profit association must be registered within 5 business days. If any deficiencies are found, the registrar must report them to the founders and set a deadline for rectifying the deficiencies.

A commercial association (tulundusühistu) is a company aimed at supporting and advancing the economic interests of its members through collective business activity. Members take part in the association in the following role:

• as consumers or users of other benefits;
• as suppliers;
• by contributing labour;
• through using services;
• in some other similar manner.

A commercial association can be established by at least two persons (both legal and natural).

The benefit of a commercial association is the absence of personal liability of its members for the obligations of the association. The articles of association may provide for the full personal liability of the members or, to the extent determined by the articles of association, additional liability.

There is no minimum share capital requirement for the association in the case of full personal liability. Unless the articles of association prescribe the personal liability of the members of the association for the obligations of the association, the share capital of the association shall be at least 2,500 euros.

 

What must be done before establishing a commercial association? 

Before founding the commercial association, find the answers to the primary questions that will determine the most important rules of your company’s everyday activity.

• What will the company’s business name be?
• What will your initial area of activity be?
• Who are the shareholders?
• What will be the private limited company’s place of business and its legal address?
• How will the company be run?

 

What documents are required for establishing a commercial association?

You will have to file the following documents in order to found a commercial association:

• application
• memorandum of association;
• articles of association;
• names, personal identification codes and addresses of the members of the management board, auditor and controller, as well as for members of the supervisory board if the commercial association has a supervisory board;
• contact details;
• proof of payment of the contribution of share capital and state fee.

 

How to register a new commercial association?

You can register a commercial association only through a notary, who approves the application for entry in the commercial register and prepares the necessary instruments of constitution. The notary who certifies the application shall submit the application together with the documents necessary for making the entry to the commercial register.

Find a suitable notary and contact details from this list

 

What are the costs of founding a commercial association?

To establish a commercial association, you will have to pay a state fee of 200 euros. VAT will be added to all of the notary fees.

How much time will it take to register a commercial association?

The registrar of the commercial register shall review the application for registration of the commercial association within 5 working days.

 

What must be done after registering a commercial association?

Depending on the company’s area of activity and size, a varying number of additional steps must be taken.

• If you will be operating in an area of activity subject to special requirements, you will have to apply for an activity license.
• If your planned annual turnover exceeds 40 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
• If you hire employees, they must be registered in the  employment register. 

Operating as a sole proprietor (hereinafter FIE) is most suitable for people who are starting operations alone or with their family.

Registering as an FIE is simple, but an FIE is liable for their obligations with all of their personal assets.

 

What must be done before registering as a sole proprietor (FIE)?

Before registering as a FIE, find the answers to the primary questions that will determine the most important rules governing your everyday activity.

• What will your FIE’s business name be? The FIE’s business name must consist of the entrepreneur’s given name and surname. The FIE's business name must be clearly distinguishable from other business name registered.
• What will your initial area of activity be? Do you need activity licences or other licences?
• What will your FIE’s address be?

Application for operating as a sole proprietor

For registering as a sole proprietor, you must only submit an application. The requirement is the existence of a bank account suitable for business activity. You can submit the application to the E-Business Register.

 

How to register as a sole proprietor

To register electronically in the e-Business Register, you must be able to provide a digital signature. You can register via an expedited procedure if the following conditions have been met:

• your registered place of residence is in Estonia;
• the state fee has been paid electronically in the e-Business Register;
• you have provided the details of the area of activity pursuant to level 4 in the Estonian Classification of Economic Activities.

The Register must include the business name of the sole proprietor, the registered office and address of the sole proprietor’s company, the date of the start and end of the financial year, and the sole proprietor’s name and personal identification code. The application for entry onto the Register must be include the applicant contact details and planned principal activity.

 

What are the costs of registering as a sole proprietor?

For registering as a FIE, you will have to pay a state fee of 20 euros.

 

How long will it take to register as a sole proprietor?

Upon submitting a petition for entry in the e-Business Register under the expedited procedure, the FIE is registered within one business day.

 

What must be done after registering as a sole proprietor?

Depending on your area of activity and turnover, a varying number of additional steps must be taken.

• If you will be operating in an area of activity subject to special requirements, you will have to apply for an activity licence.
• If your annual turnover exceeds 40 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
• If you hire employees, you will have to register them with Tax and Customs Board.  

General partnerships and limited partnerships are fairly uncommon forms of business in Estonia. They are suitable when a larger number of stakeholders are involved or for supporting the economic activity of shareholders.

The partners shall make contributions in the amount prescribed by the partnership agreement. A contribution may be monetary or non-monetary. A non-monetary contribution may also be the provision of services to the general partnership, or the transfer to or use of assets by the general partnership. The monetary value of a non-monetary contribution shall be determined by the partnership agreement.

The advantages of a general partnership or limited partnership are the following:

• simple and rapid registration
• no minimum capital requirement.

 

What must be done before establishing a general partnership or limited partnership

Before foundation, find the answers to the primary questions that will determine the most important rules of your company’s everyday activity.

• What will the company’s business name be?
• What will your initial area of activity be?
• Who are the partners?
• What will be the company’s place of business and its legal address?
• How will the company be run?

 

What documents do you need to establish a general or limited partnership?

To establish both partnerships, you first need the personal data of the partners. The partners must also have agreed on the previously stated provisions.

The following documents must be submitted to register a general or limited partnership in the business register:

• an application (digitally signed or notarised) in which you express your desire to register the partnership in the business register. The application is addressed to the registry department of the court and must contain the following information:

1. the requested business name;
2. the seat, address, and email address of the general or limited partnership;
3. in the case of a limited partnership, the financial amount of the contribution of the partner;
4. the beginning and end of the financial year;
5. the names and personal identification codes or registry codes of the partners;
6. the partners authorised to represent the general partnership and those only entitled to represent the general partnership jointly;
7. if the address of the partnership is in a foreign country, the name and personal identification code or registry code of the contact person, and the Estonian address for the delivery of declarations of intent and procedural documents addressed to the general partnership, as well as the email address of the contact person;
8. numbers of means of communication;
9. information about the proposed main activity;
10. proof of payment of the state fee.

If you register the partnership with the help of a notary, the notary will prepare an application for the establishment of a general or limited partnership for you.

 

How to register a new general partnership or limited partnership

Register online

You can register a general or limited partnership electronically in the E-BusinessCompany Registration Portal. You can do so if all of the founders, other persons related to the registration entry have an ID card or Mobiil-ID and can provide digital signatures.

Start electronic registration of the company

Founding a general or limited partnership through a notary

To allow the founding of the general or limited partnership to proceed efficiently, first make sure which documents you will need for completing the application process. Notary offices will also have samples of documents necessary for establishing the company.

Find a suitable notary here

 

What are the costs involved in establishing a general partnership or limited partnership

The state fee for entering a general partnership or limited partnership into the register is 20 euros. If you use the services of a notary to establish the general or limited partnership, you will have to pay a notary fee as well. The fee for notarizing the authenticity of a signature on the application is 12.75 euros. If you would like the notary to prepare a draft application, an additional fee of 18.20 euros will be charged. VAT shall be added to all of the notary fees.

 

How long will it take to register a general or limited partnership

The registrar will review the petition for entry within 5 working days from its arrival and in expedited procedure, by no later than the next working day from its arrival.

What must be done after establishing a general partnership or limited partnership

Depending on the company’s area of activity and size, a varying number of additional steps must be taken.

• If you will be operating in an area of activity subject to special requirements, you will have to apply for an activity license.
• If your planned annual turnover exceeds 40 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
• If you hire employees, you will have to register them in the employment register.

NB! In the E-Business Portal, the founded company can register as a person liable to value added tax and register their employees when founding their company.

A foundation (sihtasutus, SA) is established to administer or use assets to achieve the objectives specified in its articles of association. A foundation has no members. A foundation may use its income only to achieve the objectives specified in its articles of association. The activities of a foundation are regulated by the Foundations Act. A foundation can be founded by one or more legal or natural persons. A foundation may also be founded on the basis of a will.

The mandatory management bodies of a foundation are the management board and the supervisory board.

A foundation is managed and represented by the management board. The supervisory board plans the foundation’s activities, organises its management and supervises its activities.

As Estonian law does not permit a branch of an international organisation to be registered as a foundation, a new legal entity must be founded in such cases. Additionally, a foreign legal entity may carry out its activities in Estonia directly on a cross-border basis without registering a separate branch or founding a new legal entity.

 

Before founding a foundation

The founders of a foundation must adopt a foundation resolution, approve the articles of association and designate the members of its supervisory board and management board.

 

Documents required for founding a foundation

A foundation is founded by a foundation resolution, which must set out:

• the name and contact address of the foundation;
• the names and addresses of the residences or registered offices of the founders and their personal identification codes or registry codes;
• money or other assets, and the value thereof, that the founders are transferring to the foundation (the law does not prescribe any limits);
• the names, residences and personal identification codes of the members of the management board and the supervisory board.

The articles of association are a document that sets out the objectives of a foundation and generally regulates how its future work is organised. Upon preparing the articles of association of a foundation, some specifics must be taken into account, particularly in relation to assets, remuneration and beneficiaries. The articles of association must comply with the Foundations Act.

The articles of association of a foundation must set out:

• the name and registered office of the foundation (at local government level);
• the objective;
• the procedure for transferring assets to the foundation;
• the beneficiaries (except if all persons are entitled to receive disbursements pursuant to the objectives of the foundation);
• the term of the foundation if it is founded for a defined period;
• the distribution of assets in the event of the dissolution of the foundation. In order to make use of the income tax incentive, the distribution of assets to another association or legal entity under public law must be specified in a list of incentive beneficiaries to be included in the articles of association;
• the procedure for appointing and removing the members of the management board and the supervisory board and, where applicable, auditors;
• the number of members of the management bodies and their term of office;
• the procedure for amending the articles of association;
• details on the dissolution of the foundation (whether and under what conditions the founders have the right to dissolve the foundation);
• the procedure for remunerating the members of the management board and supervisory board;
• the procedure for using and disposing of assets;
• other conditions provided for by law.

If you wish to apply for entry into the list of associations benefiting from income tax incentives, you must clearly indicate in the activities planned for achieving the objective that you are operating in the public interest and for charitable purposes.

Once the documents are ready, you may have them reviewed by your County Development Centre consultant before signing. The consultation is free of charge.

A foundation resolution and the articles of association approved thereby must be notarised. These are signed by all founders. Once the foundation resolution has been notarised by a notary and before submitting the petition entering the foundation in the Business Register, a current account may be opened at a bank in the name of the foundation in order to transfer the assets being transferred to the foundation by the founders. In the period between adopting the foundation resolution and entry into the Business Register, the name of the foundation must be used together with the suffix asutamisel (‘in foundation’).

 

Registering a foundation in the Business Register

A foundation cannot be registered electronically in the e-Business Register, but only through a notary. In the notary’s presence, the petition for entry in the Business Register must be signed by all of the members of the management board. The notary who attested the petition must submit the notarised petition through the electronic information system for notaries.

The petition for entry in the register must be supplemented by the memorandum of association and the articles of association, a bank notice concerning the money transferred to the foundation, contact details (telephone, email and website) and the planned main activity. Transfers of assets to a foundation must be certified by signature of the members of the management board. If an immovable or a movable asset subject to registration is transferred, an excerpt from the land register or other register must be appended to the petition.

 

The cost of founding a foundation

The state fee for registering a foundation is EUR 80.

Notary services are payable, the fees for which are set out in the Notary Fees Act.

 

Registration deadline for foundations

A foundation must be registered within 5 business days. If any deficiencies are found, the registrar must report them to the founders and set a deadline for rectifying the deficiencies.

In Estonia, it is possible to found European companies governed by Council Regulation (EC) No 2157/2001 and the Estonian Implementation Act on the Statute for a European company. In addition, the laws and regulations applicable to public limited companies are applied to European Companies. The rules for the participation of SE employees are stipulated in the Act on Employee Involvement in European Companies.

There are four ways to found an SE:

• merger of existing public limited liability companies;
• forming a European holding company (public or private limited liability companies);
• forming a European subsidiary (companies, firms or other legal bodies);
• conversion (public limited liability companies that have had a subsidiary or a branch in another EU Member State for at least 2 years).

More information on European Companies can be found on the Your Europe portal

An SE is entered in the commercial register pursuant to the provisions of the Commercial Code governing the registration of a public limited company. The share capital of an SE must be at least EUR 120 000. An SE cannot be registered electronically in the e-Business Register; instead, it a visit to a notary public is required. Notaries also provide advice on what documents are required to found and register an SE.

If a foreign company wishes to provide goods or services in Estonia on its own behalf, the company must register a branch in the e-Business Register. The registration of a branch in Estonia for companies of the Member States of the European Union is generally not an obligation but an opportunity which facilitates their operation in another Member State. The branch is not a separate legal entity and the foreign company is responsible for the activities and obligations of the branch and the foreign company can have one branch in Estonia.

 

Requirement for registering the branch with the e-Business Register

The requirement for registering the branch with the e-Business Register is that the company has selected a director or directors for the branch to be established and authorized these individuals to open the branch. If more than one director has been appointed for the branch, the branch may generally be represented by any one of them.

An area of activity must be selected for the branch based on the classification of Estonian Classification of Economic Activities.

 

How does the registration of the branch with the e-Business Register work?

The basis for opening the branch is the notarized application of the branch director. The following documents must be appended to the application:

• official certificate regarding the existence of the company in its country of location (extract from the e-Business Register or copy of the registration certificate);
• consent or licence for establishing the branch if required by legislation;
• letter of authorization certifying the authority of the branch director or copy of the resolution appointing the director;
• copy of the company’s articles or memorandum of association certified according to the laws of the country of location;
• information on the proposed main business of the branch
• contact details (telephone, website, e-mail).

The documents must be in the required format, certified by apostil, legalized and translated into Estonian. The translation must be certified by a sworn translator. Legalization is a confirmation regarding the fact that the document you submit is suitable for use in Estonia.

 

How long will it take to register a branch?

The time expenditure for the entire process depends on the time necessary for preparing, translating and certifying documents both in the country of location and Estonia. The branch will be entered into the e-Business Register within 5 business days of submission of the registration application.

 

Expenses related to register a branch

The state fee for entry of a branch in the commercial register is 200 euros, plus notary fees.

 

What must be done after registering a branch?

• If the branch will be operating in an area of activity subject to special requirements, you will have to apply for an activity licence.
• If your annual turnover exceeds 40 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
• If you recruit employees, they must be registered in the employment register.

An entrepreneur account simplifies the payment and reporting of taxes for a private person who provides services to other private persons in areas of activity that do not involve direct expenses, or a private person who sells goods to private persons and legal persons that are self-produced or involve low costs of materials or acquisition.

A person who opens an entrepreneur account does not have to prepare accounting and tax reports – the tax liability is calculated on the basis of the payments to the entrepreneur account. Furthermore, a person who has opened an entrepreneur account is not obliged to register as an entrepreneur.

An entrepreneur account can be opened at LHV Pank.

 

Business income tax rate

The business income tax rate is 20% of the total amount received on the entrepreneur account if the amount does not exceed 25,000 euros per calendar year. If the income amount in one calendar year exceeds 25,000 euros, the exceeding amount is taxed at a rate of 40%.

If the amount received on the entrepreneur account exceeds 40,000 euros per calendar year, the obligation arises to register as an entrepreneur (self-employed person or a private limited company) in the Commercial Register and as a person liable to value added tax at the Estonian Tax and Customs Board. A registered entrepreneur is required to keep accounts and accounting for taxation purposes.

 

To whom an entrepreneur account is not useful

It is not possible for the user of an entrepreneur account to deduct costs incurred in the provision of services or the sale of goods, i.e. the total amount received on the account is taxed.

Therefore, an entrepreneur account is not suitable for those whose principal activity is the intermediation of goods purchased elsewhere or for whom the cost of materials necessary for the production of goods or the provision of services represents a large part of the selling price.

In areas of activity with direct input costs, it is more beneficial to be self-employed or operate as a company.

The holder of an entrepreneur account cannot be registered as unemployed and is not entitled to unemployment benefit because the holder of an entrepreneur account is considered a person engaged in entrepreneurship.

The holder of an entrepreneur account may not be a person liable to value added tax or be self-employed in the same or a similar area of activity.

Read more about the entrepreneur account on the website of the Tax and Customs Board.