A company that selects Estonia as its base of operations can enjoy the following benefits:
- A higher number of reinvestment opportunities. Thanks to an advantageous taxation policy on undistributed profit, you will have more funds to reinvest into the development of your business.
- Lower taxes. As mentioned above, your company’s undistributed profit is tax-exempt. The distributed revenue is taxed at the 20% rate. There actually exist ways to lessen your tax burden even further, but they won’t work in every case.
- Booming economy. As a member of the EU, Estonia participates in many programs that help stimulate the economy and create jobs. At the time of writing, the Estonian economy (especially its digital sector) is performing very well, in spite of the fact that some other countries still haven’t fully recovered from the pandemic.
- Straightforward company formation online in Estonia. You can get your business up and running without ever setting foot on Estonian soil.
- Qualified yet cheap workforce and low operating costs. Your expenses are a large part of the equation when it comes to deciding which country to set up your company in. The good news is that you’ll find Estonia to be one of the most economical countries in the region, especially in terms of low operating costs and qualified manpower.
What Companies Are Better Suited for Estonia Company Registration?
Launching a firm in this country is a great option for startups and small businesses that aren’t tied to a permanent location. It also works well for companies that already have established a great reputation or those that want to attract more attention and new investors. New company registration online in Estonia is a popular pick for digital business at large and especially crypto-related projects. For such ventures, Estonia’s progressive regulatory environment and favorable taxation options are among the deciding factors.
It bears repeating one more time: none of the undistributed earnings are taxed, which means that developing businesses can easily reinvest the funds and grow their company for the long haul. Only when the firm becomes large enough and starts to receive stable profit, the corporate income tax becomes a serious consideration.
There exists a number of tax incentives for larger firms that want to undergo the process of foreign company registration in Estonia. Such organizations can benefit from lowered tax rates if certain conditions are met.
What is the Process of Business Registration in Estonia?
As it was stated before, you are NOT required to travel to Estonia in order to launch your business there. You can take full advantage of the e-Residency program to start a business via the web. Your e-residency card will be safely shipped to you along with all the additional documentation so that you don’t have to pay a visit to Estonia in the first place.
Even before you submit the necessary documents, you have to come up with a unique name for new company registration online in Estonia. To be on the safe side, you need to come up with at least two unique names in case one of them is unavailable due to trademark issues.
Selecting a company name is not the only small hurdle you will have to overcome. You will have to deposit at least 2.5k Euros to your company’s bank account. This deposit, however, can be delayed up to the point when first earnings are distributed between shareholders.
One more key detail of foreign company registration in Estonia: you need to specify which type of business you are registering and which sector the company is supposed to operate in. You must specify one main area but your firm can also branch out into other industries later on if the need arises.
Main Documents Necessary for Setting Up a Company in Estonia
When submitting the necessary paperwork online in Estonia, you have to include the following:
- Certified copy of your foreign passport;
- Proof of residence;
- Founder’s email address and the company’s email address;
- Personal information of the person who’s responsible for Estonia company registration.
This list is subject to change from time to time, but this basic template is usually sufficient for reference. It must be noted that documents acceptable as proof of residence can be any document that can be used to prove you actually reside in your country, i.e. utility bills, tax certificate, rental agreement, bank statement, etc.
Range of Services Related to Company Formation Online in Estonia
- Selecting a better-suited type of business ownership;
- Naming and branding services;
- Assistance with acquiring licenses;
- On-going documentation support, including accounting;
- Tax-related services and consultations concerning compliance issues;
- Acquirement of the VAT number;
- Assistance with finding a suitable commercial property.
All the services mentioned above are provided by various consulting companies operating in and outside of Estoni
Raj Kumar is a qualified business/finance writer expert in investment, debt, credit cards, Passive income, financial updates. He advises in his blog finance clap.