Company Formation in Estonia: Everything you need to know about Estonian legal regulations

Company Formation in Estonia Everything you need to know about Estonian legal regulations

Estonia is one of the most user-friendly business-friendly countries in Europe for company registration and maintenance. Company registration procedures are straightforward and take just a few minutes to complete online. Moreover, there aren’t any special taxes or licenses for businesses operating in Estonia. In this blog post, we’ll give you an overview of company formation in Estonia and the various legal entities you can choose from as well as the pros and cons of each option. Read on to discover what kind of business entity is best for your needs, whether you will need to appoint representatives when registering your business and much more!

There are three company types that are common in Estonia: the limited liability company (OÜ), the limited partnership (Osaühing) and the joint stock company (Aktsiaselts). Each legal entity has its own set of benefits and drawbacks. Depending on your industry and company structure, you can choose the best option for your business. Let’s take a closer look at each legal entity to see which one is best for you. Limited liability company (OÜ): Themost popular legal entity for business registration in Estonia, the OÜ is characterized by limited liability for shareholders. This means that shareholders are not liable for debts or other obligations of the company. You can register an OÜ online with the Estonian Business Registration Office. Limited partnership (Osaühing): If you want to invite investors to your business, then the limited partnership is a good choice. This legal entity allows you to have general partners who have unlimited liability and limited partners who are not responsible for the company’s obligations. Joint stock company (Aktsiaselts): The joint stock company is a good option if you want to raise capital through an initial public offering (IPO). This option is also a good choice if you want to sell shares to investors.

Who can register a company in Estonia?

Anyone who is at least 16 years old can register a company in Estonia. Foreigners who reside outside of Estonia can also register a business in this country. If you are setting up a company in Estonia, you will need to select a name for your business and register this with the Estonian Business Registered Office.

Company Registration and Maintenance Costs in Estonia

There are no special taxes or fees for companies operating in Estonia. Taxes are paid on the company’s profit at the end of the year based on a standard corporate tax rate, which is currently 22%. All companies operating in Estonia must have at least one director who acts as a representative of the business. As soon as a director is appointed to the board of your Estonian company, you’ll have to pay government fees of around €30 per year. But while company registration and maintenance in Estonia are free of charge, there are some additional costs to consider when setting up a business in this country. For example, you should budget approximately €350 for a lawyer to draft your company’s articles of association and €150 for the company’s name registration.

Pros and Cons of Company Formation in Estonia

As we’ve explored in this article, there are some clear advantages and disadvantages of company registration in Estonia. Let’s round up the main pros and cons of setting up a business in this European country. Pros: – Businesses in Estonia enjoy low corporate tax rates – There aren’t any special licenses or permits needed for companies in this country – Estonian companies can open a bank account and take out loans with ease – Online company registration is simple and straightforward – There are no restrictions on where you can do business from Cons: – Estonia is not part of the European Union, which can make cross-border business more difficult – Estonia is not part of the Eurozone, which means that investors may have concerns about currency exchange rates – Estonian businesses must pay 22% tax on profit, as well as advance social security payments on all employees – There are no special tax breaks for startups in Estonia.

Company Registration Timeframe in Estonia

While it all depends on the length of your company name, generally, you can expect to have your Estonian company up and running within a couple of weeks once you’ve submitted all the required documentation. In the first step, you will have to choose a name for your company, which must include a ‘registered trade mark’ and cannot be the same or similar to an existing company name. Then, you will need to submit your company’s articles of association to the Business Registration Office. You’ll also need to appoint your company’s directors before you can complete the online registration process. Once your registration is complete, you will receive your company ID and a certificate proving your company has been registered.

Summing up

If you want to start a business in Europe, you might want to consider setting up shop in Estonia. This Baltic country is a great choice for company formation, as the company registration process is straightforward and the country is business-friendly. If you are looking to set up a company in Estonia, make sure you consider the legal entity types available in this country. For more information on company formation in Estonia, don’t hesitate to get in touch with us. Our experts will be happy to guide you every step of the way and help you choose the best legal entity for your business.

Written by Joshua Galyon

Joshua is a senior editor at Snooth, covering most anything of interest in the world of science and technology. Having written on everything from the science of space exploration to advances in gene therapy, he has a real soft spot for big, complicated pieces that make for excellent weekend reads.

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