Imagine Markus, an IT programmer, decides to set up a private limited company in Estonia. According to the rules, he is required to contribute a minimum share capital of €0.01 per shareholder. Since Markus is the sole shareholder, he needs to invest at least €0.01 as the share capital.

However, understanding the value of a strong financial foundation for his business, Markus chooses to invest a higher amount as his share capital. This decision not only shows his commitment but also enhances his company’s capital base, which could prove beneficial for future growth.

During the company registration process, Markus confirms the payment of his chosen share capital amount. Once the funds are successfully transferred to his company’s bank account within the EEA and registered in the Estonian Business Register, Markus can allocate these funds for various business needs, such as equipment, software, and operational expenses.

In the long run, by adhering to the requirement of declaring his share capital to the Estonian Tax and Customs Board, Markus positions himself to potentially access tax advantages if he decides to close his company down the road.

Importantly, Markus learns that he won’t be able to distribute dividends directly from his share capital contribution. Dividends can only be shared among shareholders from the company’s generated profits after the share capital has been paid and registered. This insight encourages Markus to plan his business finances prudently to ensure future profitability and returns for himself as the shareholder.