Start-ups - Estonia
There are two ways of doing business in Estonia: self-employment or establishing a company. In both cases, registration is carried out pursuant to the requirements of the Commercial Code. In order to operate in Estonia, persons from foreign countries may in addition register their companies' branches in the Commercial Register or register their permanent establishment with a regional Service Bureau of the Tax and Customs Board.
Legal forms of business
A sole proprietor (FIE) is a natural person whose permanent activity is the sale of goods and services. A private limited company (OÜ) is a company that has share capital divided into shares. The shareholder is not personally liable for the obligations of the private limited company. Share capital must be at least EUR 2,500. A public limited company (AS) is a company that has share capital divided into shares. The shareholder is not personally liable for the obligations of the public limited company. Share capital must be at least EUR 25,000.
A general partnership is a company in which two or more partners operate under a common business name and are jointly and severally responsible for the liabilities of the partnership with all of their assets. A limited partnership is a company in which two or more persons operate under a common business name with at least one of them (full partner) being responsible for the liabilities of the partnership with all of his/her assets, and at least one of them (limited partner) being responsible for the liabilities of the partnership to the extent of his/her contribution.
A commercial association, the activities of which are regulated by the Commercial Associations Act, is an association with three or more members whose objective is to support the household or other activities of the members by providing services, and to receive revenue.
Business activities and related rules
Register of Economic Activities
Undertakings operating in areas of activity subject to special requirements are registered in the Register of Economic Activities in the areas of activity the list of which can be found on their homepage.
To succeed, a new business needs a sound commercial strategy and secure financing.
Some standard requirements to be completed when setting up a business are the same as when opening a branch.
Registering a company
Companies and business of sole proprietors must be registered in the Commercial Register. Registration is free of charge and you must take your personal ID with you. In order to do so, a notarised application must be submitted and the prescribed state fee must be paid.
The registration procedure depends on the company’s form of business. The Commercial Code also provides for an expedited procedure for the initial entries of private limited companies, sole proprietors, general partnerships, and limited partnerships, and for the transformation entries of sole proprietors and companies. For an expedited procedure, the registration applications are reviewed within the following working day at the latest.
The holder of an Estonian ID card can set up a company electronically via the Company Registration Portal of the Commercial Register .
Social tax registration
Social tax is paid in full by the employer to the Tax and Customs Board. Sole proprietors also pay social tax. Companies and registered sole proprietors do not have to register separately as persons liable to social tax. Non-residents who have no permanent establishment in Estonia but who are employers in Estonia are registered with the Northern Service Bureau of the Tax and Customs Board for social tax to be paid before their tax liability arises.
Companies and sole proprietors registered in the Commercial Register do not have to register separately as taxable persons with the Tax and Customs Board. Non-residents who operate in Estonia through a permanent establishment and who are not registered in the Commercial Register, or as non-resident employers, are required to register themselves as taxable persons.
Registration as a person liable to value added tax is carried out with the Tax and Customs Board, though it may also be performed with the Commercial Register or through a notary.
For many areas of business, you need to apply for an activity licence. The classification of economic activities can be used to find out whether the chosen activity has special requirements and which activity licences should be obtained.
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 to 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.
Useful information on how to draw up business plans can be found on the following webpages:
Check also the legislation on this topic in: