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Unlocking Business Success in Estonia: Zero Corporate Tax and European Market Expansion Opportunities
Estonia is a Nordic country located in the north-eastern part of Europe and is the northernmost of the Baltic States. Estonia is an archipelago of up to 1,500 islands with diverse topography that was once part of the Soviet Union. In 1991, it declared its independence along with the other Baltic republics and joined the United Nation. Following independence, Estonia began to democratize and shift its economy towards market capitalism. In 2004, Estonia joined NATO and the European Union.
Establishing a business in Estonia has various advantages, the most important of which is the country’s zero-rate corporate income tax (profit tax) policy. Companies are tax free if they do not pay dividends to their shareholders and are taxed 20% if they distribute their profits as dividends. This means that the company can have more money to reinvest, which is conducive to the long-term development of the enterprise. On the other hand, as one of the EU countries, registering an Estonian company is beneficial for you to expand your business to Europe. Considering the tax exemption for Estonian companies, registering a company there offers far greater advantages than in other EU countries.
Ideal for Foreign Investment with Equal Rights, Anti-Corruption Leadership, and Forex Freedom
The Estonian government is also very protective of foreign investment, and its foreign investment law prohibits the nationalization, expropriation, or confiscation of foreign assets. Foreign investors and foreign-owned businesses have the same rights and obligations as domestic companies.
Estonia is ranked 14th out of 180 countries in the “Corruption Perception Index 2022” published by Transparency International, an international anti-corruption organization.
In addition, Estonia has no foreign exchange controls, in other words, any currency, regardless of the amount, can be freely exchanged and transferred in and out of Estonia. However, according to EU regulations, any large remittances require an anti-money laundering declaration. Under Estonian law, foreign companies are free to open foreign exchange accounts locally, and corporate profits can be remitted abroad as long as various taxes and fees are paid in accordance with legal requirements.
Types of Estonian Company Registration
- Public Limited Liability Company (AS)
- Private limited liability company (OÜ)
- Non-profit association (MTÜ)
- Sole trader (FIE)
- General partnership (TÜ)
The Main Conditions for Registering an Estonian Company Are as Follows:
- The company has at least one shareholder and one director, although there is no local director requirement.
- The minimum share capital is EUR 2,500. The minimum nominal value of the shares is EUR 1 and no paid-up shares are required.
- If you are an electronic resident (E-residency) of Estonia, you can register a company directly online, which takes only 1 working day. If you do not have E-residency, you need to register the company in person or issue a Power of Attorney (POA) to appoint a professional team to register the company on your behalf.
- A local person is required as a contact person, and the address of the contact person can be used as the registered address.
Get Expert Help Opening an Estonian Company with 3E Accounting
Estonia is an attractive destination for foreign investment due to the benefits of European Union membership, a favourable investment climate and policies, and loose capital controls. Foreign direct investment (FDI) in Estonia is the highest in the three Baltic States and one of the highest in Central and Eastern Europe. If you want to learn more about registering an Estonian company, please contact 3E Accounting.
