The Republic of Estonia is divided into mainland and over 2,200 islands and islets set on the eastern coast of the Baltic Sea. Estonia is considered a developed nation with a high-income advanced economy. Being a member of the European Union, Estonia offers tons of attractive features and trade benefits for local and foreign investors.
One of the major benefits of having a business in Estonia is the close proximity of the country to the Scandinavian and Finnish markets. Factors such as ease of doing business, availability of resources and raw materials, and less cost of making goods in comparison, also add to the attraction.
The types of legal business structures in Estonia along with basic requirements are represented in the table below:
| S$ | Types of business structure | Local name | Minimum paid-up capital required |
| 1. | Private Limited Company | osaühing (OU) | €2,500 |
| 2. | Public Limited Company | Aktsiaselts (AS) | €25,000 |
| 3. | General Partnership | Täis Ühing (TU) | No min.capital required |
| 4. | Limited Partnership | Usaldusühing (UU) | No min.capital required |
Private limited company – OU
An OU is the most favored business structure in Estonia for various reasons. While the minimum capital required to register OU is €2,500, the payment may be deferred for up to 10 years. Secondly, the shareholders (owners) are not personally responsible for any liabilities in case of solvency, loss, or debts. An OU is recognized as a legal person, and as such, all losses are borne by the company and not the shareholders. The fee to register an OU is €265.
Public limited company – AS
In Estonia, a public limited company can be registered with or without a share subscription. The members of the board of an AS must register with the Central Register of Securities of Estonia. The two-tier management board is split between a Management Board and a Supervisory Board. A member of one board shall not be a member of the other, as each board serves different boards.
The state charges €200 to establish an AS business; the fee is called the state commercial expense for the establishment. The usual time required for the registration process from the time of applying is 3 to 5 business days.
General partnership – TU
A general partnership is rarely the choice of business structure in Estonia due to high obligations and low flexibility model. There is a certain financial threshold beyond which a partnership structure cannot legally operate. Mostly preferred by local and small investors who wish a quick set-up or wish to test a new product or service in the market before investing larger capital.
In a general partnership, all partners are responsible for debts and losses in personal capacity to the extent of their investment in the business.
Limited partnership
A limited partnership is similar to a general partnership in formation, operation, and functionality. It differs in way that a limited partnership comprises two sets of partners; general partners and limited partners. General partners are personally responsible for all liabilities whereas the limited partners are restricted to their share in the investment. Limited partners are often referred to as ‘sleeping partners’ or ‘investment partners.
Eligibility & process to register a company in Estonia
Estonia is a highly digitized country that offers an environment conducive to business and trade. Besides having the proper finances, in order to register a company in Estonia the applicant must:
- Have an Estonian ID card
- E-Residency card
- EU residence card
- Personally visit the notary in absence of the above 3 conditions.
In cases where all or one of the above conditions are met, the process that follows is listed below:
- Choosing a name for the business and check availability by visiting this official website.
- Choosing the appropriate business structure
- Obtain a legal business address (shop/office/warehouse etc.)
- Online registration of the company and paying the relevant fee
- Register the employees with an employment register (online)
- Acquire a license if the business activities require special permission
- Register for VAT if applicable
Costs involved in establishing and running a company in Estonia
There are certain costs that are compulsory to bear while establishing and running a company, while other costs can be avoided through planning and adopting alternate routes. The costs involved are divided into two categories; a) One-time costs, and b) Recurring costs.
One-time costs
One-time costs include but are not limited to:
- Company incorporation: €400 – €800
- E-residency application & deliver: €120
- Account opening fee (bank): €0 – €100
- Notarization €500 – €800
- Translation of documents €10 – €50
Recurring costs
The recurring costs are ones that repeat in due course of business. These costs include:
- Office rent
- Accounting services
- Corporate secretary/legal attorney, etc.
- Registering for VAT, EORI, OSS, etc.
- Notarizing business agreements and contracts
Methods of company registration
Estonia offers various methods through which a company can be registered and incorporated. Depending on what suits the applicant most, they can choose from one of the following methods to register the company.
Registration through e-Resident card
In cases where the investors have a representative in Estonia, have a legal address, and hold an e-Resident card, they can register online by paying €265 state fees.
Registration by visit
Having a legal residence and a contact person in Estonia is mandatory. The application state fee in case of personal presence at the notary is €200, while the notary fee is €165. The process will take 2 to 5 working days to complete.
Registering by proxy
As the name suggests, in this method the real owners do not register the company themselves, instead, a power of attorney is provided to a natural person of their choosing. This method is adopted when the investor(s) does not wish to expose him/herself and awards the power of attorney through a notary certificate to a trustworthy person. The state fee in this case is €200 and the fee for notary services is €165.
Note that the annual cost of maintaining a company paid to the state is different and above the costs mentioned above. The annual fee to the state may vary between €200 – €500 per year depending on the size and structure of the business.
You may also find these articles helpful
Guide on company registration in Estonia
Guide on obtaining EORI number in Estonia
VAT number registration in Estonia – full guide
