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Have you heard about a small country in northern Europe called Estonia? If so, you are probably already considering starting a company in Estonia. Because, well, haven’t most of the success stories like Skype, Bolt, Pipedrive, Wise, Monese, and many more started exactly in Estonia? Yes, right you are, they have!
There are many reasons why more and more entrepreneurs are choosing Estonian companies to be their legal entities. One of them being a special and borderless digital identity program called e-Residency.
1. Why Estonia and e-Residency?
Estonia, also referring to itself as e-Estonia, is very proud to have built a digital society. Every Estonian person can sign documents digitally and submit the tax return in a matter of minutes.
Forget bureaucracy! Doing business is made really easy and favorable in Estonia.
- Establishing a company is fully online and takes only a few hours
- Almost all of the banking transactions are made online
- The income tax on retained and reinvested profits is 0%
- The economy is small, but growing and hassle-free
- Costs related to maintaining the business are rather low
Take advantage of the e-Residency yourself!
With e-Residency, these business opportunities that only Estonian entrepreneurs were able to enjoy, were brought to all entrepreneurs in the world. Therefore, the e-Residency cardholders have access to the EU business environment and Estonian public services. Basically, people choose to become e-residents so that they can conduct their location-independent business from anywhere in the world with a trustworthy EU company
Here are some main reasons why to register a company in Estonia:
- Estonia is one of the most digitally advanced societies
- Stability – membership of the EU, NATO, OECD, Eurozone, and Schengen Area
- Low starting and managing cost
- Low state fees
So, no wonder, why over 80 000 people all over the world have decided to become e-Residents, and over 15 000 of them have already successfully started their location-independent Estonian business. Convinced to get your company going as well?
But if you need a bit more convincing, keep reading the article.
2. How much does it cost to start a company in Estonia?
All business services are quite reasonably priced in Estonia. As always with starting a business, the costs divide between one-time and recurring costs.
One-time costs
- Applying for e-Residency – state fee 120 €
- Company registration fee – 299 € (including state fee of 265 €)
One-time costs are pretty simple and straightforward. They include state fees for e-Residency and the company registration fee.
Recurring costs
- Legal address and contact person
- Annual report
- Accounting
Recurring costs are also quite simple and their prices start from 15€ per month.
Legal address
The only thing you most definitely need is an Estonian address where your company will be legally registered. This legal address is mandatory for all Estonian companies and it doesn’t mean that you have to start looking for an office space. There are service providers, who offer the address service for a small monthly or yearly fee.
Contact person
it is allowed by law to use a foreign address as your company’s legal address. If your company’s legal address is located outside of Estonia, it is mandatory to have a contact person, a local juridical body who acts as the first contact for all public institutions. This service is usually offered together with the legal address service and all the physical letters your company receives will be scanned and uploaded to a secure portal for you to read.
Accounting
Another thing you should think about is accounting. The rule is – if your company doesn’t have a VAT number or employees, you have to do accounting only once a year as an annual report.
3. How long does it take to open a company in Estonia?
in Estonia almost everything can be done online. Therefore, processes are unbelievably quick.
Already an e-resident?
If you already have an e-Residency card, the process times go like this:
- Filling in all the forms for registering a company – 15-30 minutes
- Entering the company to Estonian Business Register – up to 1 business day
Not an e-resident yet?
Of course, if you are not an e-resident yet, the process times will be much longer:
- Filling in the forms for becoming an e-resident – 15-30 minutes
- Receiving the e-Residency card to the pick-up location you chose – 4-6 weeks
4. What are the different company types in Estonia?
The main legal business forms in Estonia are :
- Private limited company (OÜ)
- Public limited company (AS)
- General partnership (TÜ)
- Limited partnership (UÜ)
- Sole proprietorship (FIE)
- Commercial association (ühistu)
- Non-profit organization (NPO/MTÜ)
- Branch of a foreign company
5. Does e-residency = tax residency?
Unfortunately not. E-residency does not provide tax residency. The thing is that a company registered in Estonia will automatically become a tax resident in Estonia, but e-Residency will not change your personal tax residency in any way. Therefore, your personal residency may trigger tax residency for your company in your place of residence as well.
there are cases when an Estonian company established by an e-resident also gets to use the benefits of the Estonian tax residency. You can have a look at this full guide to taxes in Estonia. But to determine if your company is eligible or to even make your company eligible before starting the business activities, we really recommend speaking to a local tax advisor who can take a look into your case and bring out the best opportunities.
6. Do I have to travel to Estonia & do I need to understand Estonian to run the company?
No, of course not. It’s location independent which means that you don’t need to travel to Estonia to establish the company. You don’t even need to come later on when something needs changing or submitting. Just give some digital signatures and you are ready. That is the beauty of e-Residency and doing business in Estonia.
In conclusion
After reading this full guide you should be ready to decide if company registration with Estonian e-Residency is a perfect solution for you. If it is, then we are more than happy to help you in the process. Just start the process below by contacting us if you have more questions. Consult J K Management Consultancy today.
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