Starting a business in Estonia as a foreigner

Starting a company in Estonia as a foreigner is a fantastic opportunity because the country is very welcoming to international entrepreneurs. Estonia’s advanced digital systems and supportive government policies make it easy for foreigners to set up and run a business.

Foreigners have the right to open a company in Estonia, even if they don’t live there. This is possible through Estonia’s e-Residency program. With e-Residency, anyone in the world can get a digital ID that allows them to register and manage a company online. The process is simple and quick, allowing entrepreneurs to access Estonia’s business-friendly environment and the European market without much hassle.

Estonia is an ideal place to start your first startup because 99% of the population uses the internet regularly. The country also ranks #1 in the Tax Foundation Rankings, making it attractive for business from a tax perspective.  Additionally, Estonia has developed high-quality e-banking services that encourage people to get online, embrace e-governance, and use e-ID. These factors make Estonia a perfect hub for digital businesses and innovation.

Estonia’s commitment to making business easy for everyone, including foreigners, makes it an attractive place to start and grow a company.

Advantages of Having Company in Estonia for Foreigner

Estonia offers significant tax advantages for businesses, making it an attractive destination for startups and entrepreneurs. One of the most appealing aspects is the 0% tax on retained and reinvested profits. For example, if your startup does not pay out dividends to company shareholders and instead reinvests the profits back into the business year after year, there is no corporate tax to pay. Your startup benefits from a 0% tax rate on these reinvested profits, allowing for more capital to fuel growth and innovation.

When it comes to distributed profits, Estonia has a tax rate of 14-20%. This tax applies when the company pays out profits to its shareholders. Despite this, the overall tax burden remains favorable compared to many other countries.

Moreover, Estonia’s tax system is highly efficient and user-friendly. An impressive 98% of taxes are declared electronically. Using your e-ID card or Smart ID, you can easily file VAT returns, submit annual reports, or apply for special licenses for your business. Filing a personal tax declaration can be done in just three minutes, showcasing the convenience and speed of Estonia’s digital infrastructure.

Additional benefits of Estonia’s e-Residency and digital governance include:

Encryption and Decryption: With your e-Residency card, you can encrypt and decrypt your corporate documents, ensuring secure communication and data protection.

E-Notary Public System: You can conclude agreements using the e-Notary public system via teleconference software. Unlike other EU countries where you must visit a local notary public office, in Estonia, this process can be completed remotely if both parties are e-ID card holders.

Investment Company Flexibility: You can create an investment company with multiple shareholders, and the transaction of purchasing shares is simplified without the need for a notarial meeting.

Quick Certificate of Tax Residency: Obtaining a certificate of tax residency is efficient, taking only 1-2 business days.

Simple Process of a Trademark Registration with EPA Office. 

These advantages, combined with Estonia’s supportive business environment and advanced digital infrastructure, make it an ideal location for starting and growing a company

Company for foreigners: 2 approaches

Simple Checklist:  Register company by e-Residency Card

Apply for e-Residency Card

Complete the application online.

Pay the state fee.

Choose Your Pick-Up Point

Select where you will collect your e-Residency card.

Receive Card

Collect your e-Residency card from your chosen pick-up point.

Find Service Provider

Set up a legal address and contact person for your company.

Run Your Company

Choose your business name.

Note: The company name cannot be similar to existing ones and must be unique. Check the Trademark Registration Database to ensure the name is available. The Commercial Register (RIK) does not allow the registration of a company name that is already trademarked.

Simple Checklist: How to Form a Company with a Notary Public

If you live outside of Estonia and there are no pick-up points available in your country, you might need to travel thousands of kilometers to receive your e-Residency card. Don’t have the time or money for traveling? You can also register a company fully remotely using a notary public with the assistance of Eesti Consulting.

Documents Required:

1. Power of Attorney Notarized and apostilled, issued in your home country.
2. Certified Translation of Power of Attorney From your home country’s language to Estonian. We can help you with this.
3. Other Documents
4. Passport copy
5. Utility bill
6. Filled KYC/AML form (We will check your business background).

It takes some time, but we can incorporate a company for you smoothly and without any rush!

Summary

Starting a company in Estonia as a foreigner is straightforward and beneficial. The e-Residency program allows you to set up and manage a company online without living in Estonia. This is especially great for businesses like SEO agencies, IT professionals, webdesigners since almost everyone in Estonia uses the internet, and the country has top tax rankings.

Estonia offers a 0% tax on reinvested profits, meaning you pay no corporate tax if you don’t distribute dividends. The tax on distributed profits is between 14-20%. Most taxes are declared electronically, making the process quick and easy.\

If you can’t travel to pick up your e-Residency card, you can still register your company remotely with a notary public through Eesti Consulting. This involves a few documents like a notarized Power of Attorney, a certified translation, and some personal identification.

In conclusion, Estonia’s business-friendly environment, advanced digital services, and favorable tax policies make it an excellent place for foreigners to start and grow a company.