Did you register a company in Estonia? Now it’s time to hire an employee.
Which data must be entered into the employment register?
First of all you will need provide us with personal identification code, including first name, surname and date of brith
Date when your employment starts
Kind of employment
Self – employed Local government – local government SM without obligation – without obligation to pay social tax TSD – declaration of income and social tax, payment of mandatory funded pension and unemployment insurance contribution TM obligation – obligation to pay income tax VÕS contract – a contract under the law of obligations
Rate of working time
Your job title
Addess, where your work is performed.
Where I can register employment contract?
To register an employee , please log in to the e-MTA portal of the Estonian Tax and Customs Board and choose your role as business client.
Who is entitled to registration under simplified procedure?
Every person, who holds a personal identification code can be registered under the simplified procedure. The way of registration is as follows:
Call on 880 0812
Send an SMS message to 1811 The format of a string should be the same: ”employer’s registry code/ID-code(space)employee’s ID-code(space)date of commencement of the employment“
What is the difference between “unpaid work” and “voluntary work”?
Unpaid work requires registration in the employment register because this kind of work is normally paid in other circumstances. An employee works under an employment contract or the law of obligation. Whereas voluntary work does not require registration, because this kind of work is associated with typical non-profit activities like helping other people.
What formalities are involved after employment’s registration?
File the “TSD” declaration until 10 day of month following the taxable period.
First of all you have legal obligation to record the rate of working in the employment register on the TSD declaration (the social tax and income tax return). You need to perform this duty until the 10 day of month following the taxable period. What is important you can not modify the working time rate retroactively.
What is a workplace?
A workplace is a place of work and its surroundings on the premises of an enterprise of a sole proprietor or company, a state or local government agency, a non-profit association or a foundation (hereinafter enterprise) or any other places of work to which an employee has access in the course of his or her employment or where he or she works with the permission or on the order of the employer (§ 4 (1) of the Occupational Health and Safety Act ).
A place of business is the place of the permanent and continuous business or professional activities of a person (§ 9 (2) of the Taxation Act ). Source: Emta.ee
What are the rules of working place address in Estonia?
The workplace is generally the place where the employer performs business activities. The employer can have one or more business places – f.e stores, and branches and an employee may work in a few places.
In the case when employee performs the work at several locations the address of the workplace shall be location where the employee works for most of the working time If the employee works f.e 50% in one location and exactly 50% of the times in another location, the employer has the right to decide which address will be assigned to the employee.
In the case of remote working – the employee’s workplace address will be the same as the place of business of employers.
1- Corporation Tax may be deferred in the event when the profits achieved by the company will be invested – brought forward (0% Corporation Tax?)
2- Gain access to e-Residency card and manage your company paperless i.e
digitally sign all letters from authorities, documents, business correspondence, encrypt data
and communicate safely with your counterparties
3- Obtain easily a cryptocurrency license in Estonia if you want to provide crypto-related services to your customers such as cryptocurrency exchange or digital wallet services
4- Open a bank account with no hassle with the assistance of Eesti Consulting in or outside Estonia
How to Establish a Company in Estonia
There are various ways of company registration in Estonia. In this article we learn only about the most commonly used form of business in Estonia – limited liability company (LLC) – a private limited company, know in Estonia “osaühing” the abbreviation “OÜ
REGISTRATION THROUGH A NOTARY
There are 2 different ways of this method. A founder will meet a notary or we will act as an attorney. To act as attorney, in the name of the client we need to get notarized and apostilled Power of Attorney. Then we will order a certified translation of this document to the Estonian language. Then the notary will prepare an application of establishing a company, the memorandum of association and articles of association.
REGISTRATION THROUGH e-Residency card
We recommend a company registration through an e-Residency card. See this video to explore how to apply for an e-Residency card
Get a free certificate of tax residency ( worth: 100€ – you pay: 0€) if you choose Eesti Consulting as your legal advisor and company formation agent. Coupon code: #FREETAXRESIDENCY
Recruitments of a company in Estonia
Business name of the company
Company may have only one business name
The company name must contain the appendage “osaühing” or the abbreviation “OÜ”
The appendage or abbreviation must be visible at the beginning or end of the business name
The business name of the branch of a foreign company shall consist of the business name of the company and the phrase “Eesti filiaal” – Estonian branch
The management board may have one or several members
A member must be a natural person
A member need not be a shareholder but a member may be a shareholder too.
Every member may represent Estonian company in all transactions unless the articles of association prescribe that some or all of the members shall represent Estonian company jointly
A transaction made between an Estonian company and a member of the management board is not valid
if the supervisory board or shareholders do not agree to the transaction ( exception is in the event of
every day economic activities undertaken by Estonian company according to the market price of a service)
At least 2500 € as share capital of OU company. ( in the event of providing a cryptocurrency-related services – the share capital shall be at least 12,000 €)
A contribution may be monetary or non-monetary
The minimum nominal value of a share is 0,01€
The share capital may be paid to your bank account located in Estonia or outside Estonia (only within the European Economic Area)
The share capital shall be registered in the Estonian Business Register and declare at the Estonian Tax and Customs Board
You can use share capital to pay for business expenses and costs of a company but is not permitted to pay dividends from share capital to shareholders
You have a right to deferring of share capital payment for up to 10 years if you meet these 2 conditions: ****All founders are private members AND ****The share capital is less than or equal to 25,000€
How to open a bank account in Estonia acting as an Estonian company? Follow these steps to start banking in Estonia:
Register a company in Estonia with the assistance of Eesti Consulting
Purchase a set of corporate documents regarding your company
Certificate of tax residency
True copies of corporate documents
Article of Association translated from Estonian to English
A payment institution is a type of financial institution that provides payment services to individuals and businesses. Payment institutions are regulated by financial authorities and are required to obtain a license to operate. Some of the payment services that payment institutions may offer include money remittance, payment initiation services, execution of payment transactions, currency exchange services, and issuing electronic money. Payment institutions may also offer related services such as fraud prevention, data management, and information services. Payment institutions play an important role in facilitating electronic payments and transactions, particularly for those who do not have access to traditional banking services.
Set up payment institution in Lithuania with Eesti Consulting
What is a payment institution or electronic money institution called?
The electronic money institution, often referred to as an EMI license or E-money license, is a regulated financial institution whose purpose is to provide services related to electronic money and payment services. The full E-Money license is not limited in time or type of activity. A company that holds a license of an electronic money institution in Lithuania can provide any services in the European Economic Area (EEA) without having to obtain a position in another EU country. After obtaining a license in Lithuania, an electronic money institution may provide services in other EEA member states by establishing branches
The kind of services that require a license in Lithuania
services enabling cash to be placed on a payment account as well as all operations necessary for operating a payment account;
services enabling cash withdrawals from a payment account, as well as all operations required for operating a payment account;
execution of payment transactions, including the transfer of funds to a payment account with the payment service provider of the payment service user or with another payment service provider: execution of payment orders, including one-off payment orders, execution of payment transactions through a payment card or similar device and / or execution of transfer orders, including standing orders;
execution of payment transactions, in which funds are covered by a credit line for a payment service user: execution of direct debits, including one-off direct debits, execution of payment transactions using a payment card or similar device and / or execution of a transfer order, including standing orders;
issuing and / or acquiring payment instruments;
execution of payment transactions in which the payer agrees to perform a payment transaction using any telecommunications terminal equipment, digital or IT device, and the payment is made to the telecommunications network operator or IT system operator, acting only as an intermediary between the supplier of goods or services and the payment service user.
Share capital for EMI , PSP, EMONEY license
>= 20 000 €
Not less than EUR 20,000 if the payment institution intends to provide only money transfer services – transfers – “money transfer services”
>= 50 000€
Not less than EUR 50,000 if the institution intends to provide payment initiation services
>= 125 00 €
Not less than EUR 125,000 if the institution will provide services from the following catalog*
* “Service enabling cash to be placed on a payment account as well as all operations required for operating a payment account” “Service enabling cash withdrawals from a payment account as well as all operations required to operate a payment account” “Payment transactions, including transfers of funds to a payment account at the institution of a payment service provider or payment service user or at the institution of another payment service provider, direct debits, payment transactions via a payment card or similar charging device or the execution of credit transfers, including standing orders “ “Payment transactions in which funds are covered by a credit line for a payment service user, execution of direct debits, including one-off direct debits, execution of payment transactions by means of a payment card or similar device or transfer order, including standing orders” “Issue of payment instruments or acquisition of payment transactions”
The autorisation proces of payment license in Lithuania
The Bank of Lithuania takes an open approach to authorising payment institutions and other institutions, starting the process well before an application is submitted. Prospective licensees are encouraged to contact the Bank early to discuss their plans and which financial services require licensing. This allows for a clear explanation of the authorisation process, requirements, expectations, and other aspects that may affect the process. The authorisation process involves submitting an application to the Supervision Service of the Bank of Lithuania, followed by an assessment of the application and attached documents. If there are no deficiencies, the licence can be issued within three months, but typically additional information or documents are required, which can extend the assessment period. After assessing the documents, the Board of the Bank of Lithuania decides whether to issue a licence or not.
EU e-money license in Lithuania STEP BY STEP
We present the following steps to obtain the EU E-money license from Lithuania called often EMI LICENSE You will have acces to all European Countries based on 1 license coming from Lithuania.
STEP 1:COMPANY REGISTRATION
Certificate of incorporation
Power of attorney ( notarial deed)
Register of shareholders
Drafting of the articles of association
Beneficial owners list
Technical documentation of new fintech company
Company income statement over the last few years
UBO income statement for the last few years
Directors of the company
CV and professional experience
Current procedures regarding company wallet accounts
STEP 2: FILLING OUT APPLICATIONS
Fintech business plan
Company organizational structure
IT security – schemes
Financial forecasts in the form of schametes
STEP 3: FINANCIAL DOCUMENTS
Opening a bank account
Registration for VAT
Contract for accounting and financial statements
AML KYC CTS training
Meeting with bank representatives
11 benefits of PSP license in Lithuania
1) THEY LOVE NON-RESIDENTS – The company’s management board does not have to be residents of Lithuania
2) COMPANY REGISTRATION IN LITHUANIA AFTER… Company formation begins only after the license has been granted.
3) SEND THE LICENSE License application submitted without setting up a company.
4) ALL IN ENGLISH – Preparation of documentation in English
6) IBAN – Access to the IBAN system – every customer will receive an IBAN account.
7) PSD2 – Implementation of PSD2 enabling payment initiation service (PIS) and account information service (AIS).
8) REMOTE KYC AML VERIFICATION – Remote KYC customer verification thanks to automated technologies. The customer does not have to come to the facility to open an account – examples of Lithuanian websites are: Paysera or Mistertango.
9) SEPA SCHEME – Direct access to the single payment area in EUR in the SEPA system
10) GATE TO ALL EU COUNTIRES Do business throughout the European Union based on one license issued by a Lithuanian bank. Did you know that Google also has a Lithuanian license
11) NO FINANCIAL PENALTIES IN THE FIRST YEAR No financial penalties for the first year for minor infringements of entrepreneurs operating on the regulated market.
There are 3 ways of company registration in Estonia. We will show you how it works and how fast your limited liability company may be registered in this country.
3 ways of company registration in Estonia:
by e-residency card
by the power of attorney
Company formation with e-Residency Card
To get started, go to https://apply.gov.ee/ and read the form, then fill it out carefully. Apply for an e-resident card. The cost of the application is 100 EURO. The waiting time for issuing the card is usually 1-2 months. You can pick up the card at the nearest Estonian embassy – here is a list of card pickup points.
Company registration with e-Residency card is smooth. We need some documents from you – Personal Identification Number and 2 pieces of personal documents – usually Passport or identity card and proof of your residency – f.e utility bill.
Our package for e-Residents contains:
Legal address for 1 year in heart of Tallinn
Contact person for 1 year
Company formation service
State fee (190EUR) included in the fee
Register your company by person
Reach Eesti Consulting and then we will set up an appointment at the nearest notary’s office. We will help you prepare an application for the registration of your company in Estonia so that all paperwork can be completed in one visit. Please do not forget to bring your photo ID with you.
The average waiting time for an appointment at a notary’s office is about 7-8 business days. Please don’t reserve a flight to Estonia until we have made an appointment. The registration of the company by a notary public doesn’t preclude obtaining an e-resident card.
Register your company by Power of Attorney
We recommend this option primarily for people who are unable to come to Estonia, e.g. due to the covid-19 epidemic. Many of our clients grant us a power of attorney to register a company in Estonia from overseas countries – such as the USA or Australia. The cost of flying to Estonia is too high, so the easiest way is to go to a local notary in your country of residence and issue a power of attorney. Such power of attorney must be apostille.
Your company is already registered in the Commercial Register called “RIK”. Now your goal should be to open a bank account. For this, you will need the original company documents and even Apostille and sworn translations. Our company will help you in obtaining the following documents.
Our company offers specialized translation services from Estonian into other foreign languages.
Sworn translations concern translations from Estonian into: – English – German – French – Spanish language – Italian language – Finnish language – Polish language
Our sworn translators have over years of experience, especially in legal translations. Usually, our translation orders concern translations of printouts from the commercial register – RIK, company agreements, lists of directors and shareholders, as well as translations of certificates of residence, corporate correspondence, as well as civil law contracts.
We also provide telephone and interpreting services, e.g. during visits to Estonian offices.
A company in Estonia with an account in Switzerland In connection with the development of the coronavirus epidemic (COVID-19), entrepreneurs from around the world are looking for tax solutions that will ensure their continued functioning.
Bank account opening in Switzerland (remotely from your home country
Why the company in Estonia?
You don’t pay income tax (Corporation Tax) (0%) if you don’t pay dividends. You can issue invoices and earn income and you won’t pay the tax until the dividend is paid.
You can form and manage the company remotely if you are e-Residency card holder ( more about programme – here )
You can open the Estonian company remotely if you live in your home country if you will issue the Power of Attorney in the presence of the notary.
Stable banking system independent of political turmoil
Capital diversification – if the country in which you live – gets into financial trouble – goes bankrupt – you want to finance the deficit with taxpayers’ money – do you remember the situation of taxation of deposits from Cyprus in 2013?
Multi-currency account with debit and credit cards
COMPANY FORMATION – You need file KYC AML form and provide at least proof of ID (passport or identity card – scanned copy) + proof of address f.e utility bill not older than 90 days – We form the company on behalf of you based on Power of Attorney or with your e-Residency card
ORIGINAL DOCUMENTS – We arrange the original documents – Apostille, notarized extracts – Article of Association.
REMOTELY BANK ACCOUNT OPENING – We will apply for the bank account on behalf of you . You need file KYC AML form and provide suitable documentation. Don’t worry – we will assist you.
WHICH DOCUMENTS ARE NEEDED FOR BANK ACCOUNT OPENING IN SWITZERLAND?
In the case of an Estonian company that wants to open a bank account in Switzerland – the bank will ask for the following documents:
Extract from RIK – Commercial Register
The names of directors
The names of shareholders (if they are natural persons)
The list of beneficial owners
The nature of business (EMTAK codes)
Apostilled and notarized documents
Certificate of tax residency of the company
CAN I OPEN SWISS BANK ACCOUNT REMOTELY WITHOUT VISIT IN SWITZERLAND?
The bank account is opened remotely without visiting Switzerland. To do this, you must first contact our company, which will introduce you to the appropriate bank manager. Then the company and management board documents are sent to the bank. To confirm the customer’s identity, the bank will conduct one verification conversation, which is a video conference.
WHAT IS THE ONGOING FEE FOR SERVICING THE ACCOUNT?
The bank charges fees quarterly and it is 120 CHF.
WHAT IS THE MINIMUM DEPOSIT WHEN OPENING AN ACCOUNT?
Minimal deposit is aprox. 10 000 EUR, you need paid this capital to bank account but when the account is opened -you can use this amount – amount is not blocked.
IN WHAT CURRENCIES WILL I HAVE THE SWISS BANK ACCOUNT?
The bank offers the following currencies:
Others if you ask the bank manager
IS THIS BANK ACCOUNT SECURE?
Yes, this account is secure. The bank offers access to electronic banking. Each customer receives a token – Digipass, which generates one-time codes for logging into the bank.
A trademark is used to identify products and services. His task is to distinguish your products from coco-competitive products. A trademark can be a word, drawing, letter, number, color, spatial form, including the shape of the goods, and even sound.
We have the following types of trademarks: word mark, word graphic, spatial mark, positional mark, color combination, sound mark, moving mark or holographic mark.
Source of Estonian Trademark Law
Trademark Act – View
TAX AND LEGAL INCENTIVES OF TRADEMARK REGISTRATION
A TRADEMARK CAN BE SOLD
A trademark is a property right that you can sell. You don’t have to sell your business or enterprise – you can sell the trademark itself. By registering a mark on an individual, you can retain the right to the most important asset when, for example, your company encounters difficulties and its assets are seized.
THE EXCLUSIVE RIGHT TO USING ® OR “R”
Only registered trademarks have the right to use the ® or “R” symbols to inform customers, business partners and third parties that the logo and identification has legal protection guaranteed by the country in which the trademark or the European Union is registered. registration for all countries.
If you do not want to sell a trademark and preserve property rights to it – the best idea is to license the trademark. Assuming you develop a global brand. You want to keep your right to a trademark in a specific geographical territory – e.g. Estonia, and outside these countries you license the trademark – e.g. applies to franchise systems. Your customers pay you a monthly license fee, and you accumulate passive income that your brand generates.
TRADEMARK IS AN ASSET
A trademark has been an asset since its registration – an asset that can be included in the books of account and made depreciation. You will not enter a mark in the account book that has not been registered but was created by yourself. That is why it is good to register a trademark belonging to a natural person and then sell or license that trademark.
LEGAL TAX OPTIMIZATION
Did you know that if you are a trademark owner as a natural person – can you legally sell this trademark to your company or grant it a license and receive remuneration that will be taxed in your country of tax residence?
IF THE FOREIGN COMPANY PLAN ENTER INTO ESTONIAN MARKET (…)
SPECIAL RESOLUTION OF FOREIGN COMPANY
In order to establish a branch of a parent company in Estonia, an act of establishment is necessary. It may be a resolution – usually Special Resolution – adopted by the authorities of a foreign company. How can this decision be made? It depends on the law of the country in which the company is registered (Company Law) and on the Article of Association of the parent company.
This decision must be sworn translated into Estonian and must contain information about the subject of the activity and indicate the person who will be the representative of such branch in the territory of Estonia.
FEATURES OF THE BRANCH OF A FOREIGN COMPANY:
– The company’s branch has no legal personality
– The company’s branch has no legal capacity
– A branch of the company is responsible for paying Corporation Tax only on profits that can be attributed to that branch
– The parent company is responsible for the operation of this branch, including the preparation of billing documentation – Annual Accounts (Profit & Loss, Balance Sheet, Trial Balance)
– The department must have an Estonian representative (Authorized contact person)
– Branch operations must be identical to the parent company.
LIST OF DOCUMENTS FOR PURPOSE OF OPENING THE BRANCH IN ESTONIA
– name and legal form of the parent company
– country in which the parent company is registered
– subject of activity according to SIC Codes classification (EMTAK)
– purpose of company registration
– company address
– list of actual beneficiaries (who owns shares in the company)
– list of board members
– Article of Association
– memorandum of association
– Registration certificate
SHOULD I PAY SHARE CAPITAL – 2500 EUR?
If you decide to establish an Estonian company – you must set a minimum capital of 2,500 EUR. In the case when you register a branch – the law does not require a minimum capital, but the resolution on establishing such a branch should show that the capital will be transferred. It is difficult to imagine a branch that will not be co-financed by a foreign parent company. You need to think about how the branch will be able to function independently – rent an office, pay for accounting or settle accounts with business partners.
FEATURES OF THE SUBSIDIARY IN ESTONIA
Minimum share capital is: 2500 EUR
Management independence as opposed to the branch
Autorized contact person (Estonian) is mandatory
Legal address must be located in the Estonia
Board of directors can reside out of Estonia
Shareholder will be parent company (f.e keeping 100% shares in Estonian OU)
TAX RESIDENCY OF SUBSIDIARY
(2) A legal person is a resident if it is established pursuant to Estonian law.
Tax rates of subsidiary in Estonia:
1) Employment contracts – 20% of Income Tax – natural persons
2) Corporation Tax – 14-20% (if the profits are distributed from the company to its shareholders – depending on ditribiuting policy)
3) Corporation Tax – 0% – tax shifting – when the profits are not paid from the company
4) There are three VAT rates in Estonia – basic: 20% , reduced 9% and exempt – 0%. The subsidiary is not treated as VAT payer automatically upon starting the company. If the company does not exceed the thresold of 40,000 EUR turnover per calender year, it has no legal obligation to register to VAT taxation. The subsidiary can register to VAT voluntary upon company formation. EMTA (Revenue) ask the clients, who wish to be VAT registered about their connection with Estonian counterparties – clients, contractors, business partners.
CLIENT DUE DILLIGENCE PROCESS
We need the following data for the purpose of subsidiary registration in Estonia.
– Name and surname of directors
– Passpot or EEA card number
– Date of birth
– Full residental address
– Country of residence
– Phone number
– E-mail number
– Website address
– Company name
– Nature of business
– Capital – min. 2500 EUR
– Beneficial owenrs list
BRANCH REGISTRATION BY POWER OF ATTORNEY
We offer subsidiary registration based on a power of attorney (POA) with a notary public in Estonia. There are about 30 notaries in Tallinn and each one has a tight deadline. We will arrange a meeting with a notary for you and come to Estonia to register the company or we will do it completely remotely with a power of attorney. We will provide you with a power of attorney template. You can give it to us remotely – notary and Apostille are necessary.