All rules for opening, managing and closing legal entities are governed by the Estonian Commercial Code.
- The most popular legal forms – Limited Liability Partnership (similar to LLC) and Joint Stock Company. Their share in the total number of registered enterprises in Estonia is about 99%.
- Any foreign citizen (or legal entity) can open a legal entity in Estonia.
- To do this, you must either prepare the documents necessary for opening yourself, notarize them and send them to the Commercial Register, or buy a ready-made legal entity; the sale and purchase transaction is also drawn up at the notary.
- Required documents for opening a company in general: document(s) identifying the person(s) of the owner(s) and member(s) of the board, memorandum of association (or decision – if 1 owner), articles of association firms, a payment document confirming the payment of the state duty for the establishment of a firm, a certificate of the contribution of share (or share) capital to the starting bank account.
- The state duty for the establishment of an LLP, joint-stock company or a branch of a foreign legal entity is 200 euros.
- The term for establishing a company is usually 5 calendar days (much longer by law) from the moment the necessary documents are processed by a notary public, provided that all documents are in order.
- Minimum share capital for LLP – 2 500 euros. Since 2011, it can be declared upon opening, but not physically transferred to the current account. In this case, a special note is made about this in the data of the Commercial Register that are in the public domain.
- Minimum share capital for JSC – 25 000 euros
- The activities of legal entities established by foreign citizens (or legal entities) are no different from the activities of legal entities established by Estonian citizens.
- The number of foreign citizens who own a legal entity is not limited.
- The activities of a legal entity are carried out by the Board of the company. The number of members is determined in the Charter of the company (minimum 1 person). Thus, the owner can at the same time be a member of the management board of the company.
- The amount of notarial expenses when establishing a company is regulated by Estonian law and depends on the number of board members of the company being founded. For example: 1 board member – about 60 euros, 2 members of the Board – about 100 euros.
- Both forms of companies (LLP and JSC) are required to maintain accounting records. There are no – or differences in the taxation of a limited liability partnership and a joint stock company.
- For companies in Estonia, there are two main corporate taxes – this is income tax, which is 0% and turnover tax - 20%.
- In addition to the main taxes, the company also pays taxes related to wages - income tax (graded tax rate starting from 20%), withheld from the employee, and social tax 33%.
- For personal income tax and social tax, the company submits a report via the Internet (special form) to the Tax Department every month by the 10th.
- For value added tax, the company submits a monthly report via the Internet (special form) to the Tax Board by the 20th.
- Since 2000, Estonian companies have introduced a 0% corporate income tax rate. This applies only to the reinvested profits of the firm, i.e. undistributed. If the shareholders or shareholders (owners) decide to distribute profits in the form of dividends, then the company pays an additional income tax for shareholders in the amount of 20/80 (or 25%).
As you can see, Estonia is increasingly becoming an attractive place for foreign investment in the European region due to the 0% income tax rate on profits