Business immigration to Estonia in 2022 is an excellent opportunity for foreigners to enter the world markets for goods and services, make the most effective investment and move to live in a developed European country. The Estonian authorities are doing everything necessary to attract entrepreneurs from abroad. Estonia has good infrastructure, special business programs for investors have been created, and a competent budget and tax policy is being pursued.
Next, we’ll talk about how to open a business in Estonia in 2022, get acquainted with the procedure for registering a company, outline the available forms of ownership, current tax rates, and a list of documents for obtaining an Estonian business visa.
Economy in Estonia
Estonia has been a member of the European Union since 2004, in 2011 joined the euro area. The main trading partners are Sweden, Finland, Germany, Lithuania, and Latvia. Most of the exports are electrical equipment, wood products, machinery, mineral fuels. The unemployment rate in Estonia in 2020 does not exceed 4–5%, and there is practically no inflation.
Information technology and telecommunications occupy a special place in the structure of the economy. Many experts consider Estonia to be the most progressive country in the world in terms of the rate of development of the IT sector. For example, up to 99% of transactions in the Estonian banking sector are carried out electronically. Residents of even the most remote cities and villages have access to the Internet.
You can register an Estonian company on the Internet within 15 minutes. Accordingly, other operations related to doing business in Estonia, for example, filing tax returns, are also carried out online. Estonian universities offer quality and prestigious education. Graduates have a good chance of finding work in Estonian companies or finding a job in any other EU country.
How to open a business in Estonia?
Estonian law does not provide for any special restrictions on foreigners doing business in the country. On the contrary, foreign entrepreneurs have equal rights with local citizens in receiving various benefits, subsidies, or loans, including from EU financial institutions.
All this makes the business climate in Estonia as favorable as possible and attracts a large number of foreign investors. The country has representative offices of major international companies, for example, Swedbank, Deutsche Post DHL, and Ericsson. By the way, the world-famous Internet service SKYPE was developed in Estonia.
Estonians are a northern people with a special temperament, way of thinking, and culture. The Estonian population has a good education, most of the citizens speak English. Business in Estonia for foreigners will not be such a difficult event in terms of long-term adaptation and getting used to mental differences.
To conduct a flexible and efficient business in Estonia, entrepreneurs receive special ID cards that allow them to carry out any banking and financial transactions online. Foreign businessmen wishing to register an Estonian company and permanently reside in the country to carry out business activities are required to obtain a long-term visa and apply for a residence permit in Estonia.
If you buy a business in Estonia or open a new company and show interest in the development of the company, this will be a sufficient basis for granting a residence permit. Usually, the list of documents is prepared in advance and submitted to the Estonian Consulate in the foreigner’s country. Initially, a temporary residence permit is issued with a maximum duration of up to 5 years. After that, you can apply for permanent resident status, and 8 years of residence in the country will allow you to obtain Estonian citizenship.
Procedure and cost of registering a company in Estonia
According to the Doing Business agency, in 2020, out of 190 countries of the world, Estonia ranks 16th in terms of accessibility to opening and ease of doing business. This is one of the best indicators even among many developed countries in Europe. For example, Estonia is ahead of Ireland, Austria, Iceland, and even Germany in this ranking.
In electronic form, the procedure for registering an Estonian company can be carried out as quickly as possible, literally within a few hours, through a special service – ettevotjaportaal.rik.ee
However, in this case, special ID-cards are required, which foreign entrepreneurs do not always have. But even the usual registration process through a notary takes no more than 3 days.
The main stages of registration of a business (company) in Estonia
- Selection and registration in the commercial register of a unique company name. Online and free of charge through a specialized website – ariregister.rik.ee
- Preparation and verification of company registration documents by a notary – articles of association, memorandum of association, memorandum of association, personal data of the owners, an extract from the bank on the payment of the authorized capital, information on the types of activities, contact details, certificate of payment of the state fee (145 euros) and other information following local law. If the documentation is in order, the notary, whose services are paid separately, registers a new company in the commercial register.
- Registration of the company as a VAT payer with the tax authorities. This norm is mandatory for an annual turnover of more than 16 thousand euros per year.
- Registration of employees at the so-called Health Insurance Fund. A kind of alternative to registering with health insurance funds.
- Obtaining licenses for doing business in Estonia, if the type of activity requires it. For example, in the case of creating a company in the field of tourism, healthcare, transport, public catering, and some other areas.
Forms of ownership for business in Estonia
Choosing a form of ownership for a company in Estonia is one of the first steps taken even before registering a business. Let’s briefly consider the main and most popular types of enterprises available to foreigners.
Private limited company (Osaühing)
It can be founded by one or more individuals and legal entities. The minimum requirements for the authorized capital are 2.5 thousand euros, which are paid in cash or completely non-cash (property) form. Management is carried out by a board of directors consisting of at least one individual. The liability of the shareholders or founders of the company is proportional to the contributions, and the company itself is liable for its obligations with the full amount of assets. The par value of one share can be 1 euro.
Joint Stock Company (Aktsiaselts)
The minimum share capital requirement is 25 thousand euros, and the par value of a share is 0.1 euros. A board, a supervisory board, and an auditor must be created. Registration of a company for one or more individuals and legal entities is allowed. The firm is liable for obligations with all assets owned by the company.
Self-employed (Füüsilisest Isikust Ettevõtja)
Ideal for small businesses in Estonia. There are no minimum capital requirements, a simplified tax, and accounting system, registration is allowed for one or more private individuals, for example, family members can be engaged in business together. Responsibility for obligations is imposed on all personal property of a businessman.
Taxes in Estonia
Among other undeniable advantages, business immigration to Estonia attracts one of the most liberal, flexible, and simple tax systems in the world, with low-interest rates. The main difference is that there is no corporate tax on corporate profits. That is, at the income tax rate of 20%, only the amount of the distributed (dividends), and not the reinvested profit, is taxed.
Main tax rates in Estonia in 2022
- Corporate income tax – 20%, only in case of profit distribution.
- VAT – paid for a turnover of more than 16 thousand euros per year. The basic rate is 20%. For some types of activities, reduced rates of 9 and 0% are provided.
- Social contributions – 33%
- Income tax is 20%.
- Insurance premiums to unemployment funds – 1.6% are paid by the employee and 0.8% by the employer.
- Pension contributions – 2% (paid by the employee).
Business visa to Estonia
As mentioned earlier in the article for business trips or moving to Estonia for permanent residence, entrepreneurs need to obtain a business visa at the Estonian Consulate in their country.
Usually, a long-term visa (type D) is issued, which allows you to stay in Estonian territory continuously for six months, and in total, you are allowed to visit the country without hindrance for 12 months.
Documents for a business visa to Estonia
- Completed visa application form with a photo posted in.
- Original international passport with at least two blank pages and an expiration date of at least 3 months after the expiration of the visa.
- A copy of the internal civil passport (pages with basic data and registration).
- Color photograph (3.5 x 4.5 cm).
- Medical insurance with coverage of at least 30 thousand euros.
- Documentary evidence of business registration in Estonia or an official invitation from business partners.
- Proof of sufficient means to live in Estonia.
- Receipt for payment of the state fee (80 euros).
- In each case, employees of the Estonian diplomatic department reserve the right to request additional documents.
