Branches - Estonia

Updated 07/2012

Legal requirements

When a foreign company wants to provide goods or services in its own name in Estonia on a permanent basis, it must register a branch, which is not a legal person. The Commercial Code provides for the legal grounds for a branch. In cases provided by law, the company must obtain a licence for establishing a branch in Estonia.

Commercial Code

Without registering as a legal person

A foreign company may operate in Estonia through its permanent establishment, which may be any location through which the permanent economic activities of a non-resident are partially or fully carried out, including:

a branch;
central operating point, office, plant, or workshop;
a construction site, a point for building, installation or assembly works;
a location where the examination or extraction of natural resources is carried out and where related supervision is conducted;
a location where services (including management and consulting services) are provided.
Income Tax Act
Taxation Act

Many of the requirements and procedures for opening a secondary establishment are the same as for starting up a business.

Start-ups — Estonia

Administrative procedures

Preliminary procedures

For their branches, foreign companies must appoint a director or directors. The director must be a natural person with active legal capacity. At least one of the director’s place of residence must be in Estonia, in another Member State of the European Economic Area, or in Switzerland. A director cannot be a person on whom a court has imposed a prohibition on activities as a member of the management board or prohibition on businesses, as well as a person who is not allowed to operate in the same field of activity in which the branch is operating or a person who is not allowed to be a member of the management board pursuant to law or a court judgement.

Penal Code

Registration

Branch

The branch of a foreign company is entered in the Commercial Register on the petition of the director of the branch. A branch shall be deemed to be founded as of its entry in the Commercial Register and dissolved as of its deletion from the Commercial Register.

The following shall be appended to the petition:

an official certificate concerning the existence of the company in its home country (extract from a commercial register or a copy of a registration certificate);
the permission to found the branch, if this is provided for by law;
an authorisation document certifying the authority of the director of the branch or a copy of a resolution appointing the director;
a copy of the articles of association or partnership agreement of the company, certified according to the laws of the home country, if submission of the articles of association or partnership agreement to a register is also required in the home country of the company;
information on the planned principal activity of the branch;
data on the telecommunications of the company and the branch (telephone and fax numbers, e-mail and Internet home page address, etc.).

Permanent establishment

Non-residents who are commencing economic activities in Estonia through their permanent establishment, which is not entered in the Commercial Register as a branch, as well as non-resident employers are required to submit an application for registration of a permanent establishment to the Tax and Customs Board within 10 days as of the date on which the tax liability arises.

Non-resident registration applications
Taxation Act

Subsidiary

A subsidiary follows the same requirements and procedures as a businesses when it is being opened.

Setting up a new business – Estonia

Point of single contact in Estonia

For entrepreneurs, the aim of the EU Service Directive is to facilitate the provision of services in other European countries, both domestic and cross-border. The directive defines policies for companies who wish to establish a company or temporarily provide services in EU and EEA countries (in 27 EU Member States and Iceland, Liechtenstein, and Norway). This obligates the Member States to lose unnecessary bureaucracy, facilitates the formalities demanded from entrepreneurs, and makes the work of institutions more effective.

During the application of the directive, in all Member States points of single contact were created – e-government portals that allow the entrepreneurs to solve formal administrative issues electronically. Points of single contact provide comprehensive information in all administrative issues that are associated with the establishing and expansion of the service provider’s business activity in the given country. Including, for example:

which licenses, notifications, or permissions are required for establishing a domestic or cross-border company;
what I should do if I temporarily wish to provide cross-border services;
what I need to do when applying for a license and what institution should I contact;
whether the licenses are priced and what deadlines should I consider;
what laws and regulations apply on my field;
what should I do in order to open a restaurant or shop or to work as a travel agent without actually establishing a company;
who could I turn to in order to get answers to my questions and find additional information.

Thanks to single points of contact there is no need to contact all the different institutions one by one! With the help of single points of contact, you can find all the required information and you can send your web-based applications to liable institutions from one central point of contact. Through a single point of contact, you can fill in the necessary administrative formalities electronically. You only need to contact the single point of contact of the country where you wish to start your business.

All single points of contact are part of the European EUGO network. Via a central website you can easily find all of Europe’s single points of contact. Of course, you are not obliged to use the services of single points of contact. You could contact the relevant institutions yourself as well.

EUGO network
Point of single contact in Estonia

Regular duties

For their branches, foreign companies must keep separate accounting that has to be in keeping with the requirements of the Accounting Act. The director of the branch must, within one month after approval of the annual report of the company or within seven months from the end of the financial year, submit an approved annual report that has been subjected to the company's auditing to the Commercial Register of the seat of the branch. This reporting requirement does not apply to companies of the states which are Contracting Parties to the EEA Agreement if the legislation of the country of the seat of the company does not require the annual report to be disclosed.

Non-residents have obligations similar to those of residents according to their activities. If a non-resident has employees, taxes must be paid on their remunerations, and tax returns must be submitted on a monthly basis. The tax calendar shows when the tax returns must be submitted.

Tax calendar
Forms for non-residents

Check also the legislation on this topic in:

Branches - Estonia