Estonia has ranked first in the International Tax Competitiveness Index for 10 consecutive years, as the country with the best conditions for business, investment, and economic development. This has led to company registration in Estonia becoming a popular request for entrepreneurs who want to take their business to the next level.
Estonia is the world’s first fully digital country. Digitalization in this jurisdiction is highly developed, which is one of its main advantages. With an e-Resident card, you can fully manage your company remotely, gain access to state registers, conduct registration actions independently, sign documents, and much more without needing to visit the country.
A unique advantage of Estonia is its favorable tax system. Corporate income tax is only paid when profits are distributed. This approach helps attract startups from around the world, as long as you do not distribute profits but only reinvest them, the tax rate is 0%.
Company registration in Estonia is ideal for IT businesses, startups, technology and innovation companies, e-commerce, SaaS, logistics, and other sectors. There are no restrictions, and all types of businesses can benefit from Estonia’s tax system.
Advantages of Company Registration in Estonia
Thanks to its progressive approach, Estonia has a number of advantages that make this jurisdiction stand out favorably for registering and conducting business.
Let’s list some of the advantages:
- 0% tax on reinvested profits.
- 0% on dividend withdrawals with some exceptions.
- Minimal share capital requirements. You can contribute as little as 1 euro.
- A foreigner can be both the founder and the director at the same time.
- Fully remote company management.
- Access to the European market.
- Estonia has ranked first in the Tax Competitiveness Index for 10 consecutive years.
- Fast and clear communication with government agencies.
- Benefits for startups and innovative companies.
- Opportunity to obtain a residence permit for business purposes.
- A large number of double taxation treaties – 60 agreements.
Forms of Company Registration in Estonia
The Estonian Commercial Code provides for the following types of business registration in the country:
- Limited Liability Company – “OÜ”
- General Partnership – “TÜ”
- Limited Partnership – “UÜ”
- Public Limited Company – “AS”
The most popular form of company registration in Estonia is a Limited Liability Company, because the founders are only liable to the extent of their contributions to the company. This helps to minimize risks.
The other forms of company registration are specific and only suitable for certain activities. For example, if you plan to raise funds by issuing shares, a Public Limited Company might be right for you, while for setting up a family or project-based business, a Limited or General Partnership could be considered.
Taxes for Companies in Estonia
Estonia’s loyal tax system is the main advantage of registering a company in this jurisdiction. Corporate income tax is only payable when profits are distributed. Until profits are distributed, the company pays no income tax, so the tax on undistributed profits is 0%.
After the changes that came into effect on January 1, 2025, the tax rates in Estonia have been updated. The current corporate income tax rate is 22%.
It is important to note that the tax is calculated using the formula 22/78. This means the effective corporate income tax rate is 28.2%.
For example, if you want to distribute €10,000 in company profits as dividends, the following formula applies: €10,000 × 22 / 78 = €2,820 must be paid as corporate income tax.
The reduced rate of 14%, which was applied to regularly distributed dividends (i.e., for at least 3 consecutive years and provided that the distributed profit did not exceed the average amount of dividends paid in the previous 3 years), will remain in effect until the end of 2025 for profits earned in previous periods. Starting January 1, 2026, the 14/86 tax regime will be abolished.
The dividend withholding tax for non-residents of Estonia is 0%. However, if the reduced corporate income tax rate was applied to the distributed profits, a 7% dividend withholding tax will apply. This also only applies during 2025 when distributing profits from previous periods.
The value-added tax (VAT) in Estonia has been 22% since the beginning of 2024. Starting July 1, 2025, this tax will increase by another 2 percentage points, bringing it to 24%. The VAT registration threshold for companies is €40,000 per year.
Bank Account for a Company in Estonia
Although the e-Resident card allows you to register and manage your company remotely, opening an account remotely in a traditional bank is almost impossible. Banks set their own rules for onboarding clients and almost always require a connection to the jurisdiction through the presence of a physical office, local employees, Estonian counterparties, and similar factors.
Swedbank dominates the banking market in Estonia, followed by SEB, LHV, Luminor, and others. To open an account in a traditional bank, the director must visit the bank branch in person. Banks charge fees for processing applications, but you cannot get a guarantee of account opening. Sometimes banks refuse without explaining the reason, most often citing insufficient ties to Estonia.
A great alternative to a traditional bank account is online solutions such as Payoneer, Wise, Paysera, and others. Opening an account in a payment system can be done fairly quickly, and it can all be done online. The solution should be chosen depending on the location of your future clients, the currencies you plan to work with, the system fees, and other factors. We can help you select the most suitable payment system for you.
Company Registration Process in Estonia
There are several ways to register a company in Estonia.
- Online registration with an e-Resident card. This is a convenient way to register a company, but it requires obtaining an e-Resident card, which usually takes 1-2 months and requires visiting the Estonian embassy or the Police Department. This method may not be suitable for everyone as it takes a relatively long time.
- Registration with personal presence. If you have the opportunity to visit our office in Estonia, this can simplify the paperwork and allow for quick company registration. It usually takes 1 day. The only drawback is the need for personal presence. If you are in another country, this may not always be convenient.
- Registration by proxy. This is often the most convenient and optimal method of registration. All you need to do is issue a notarized power of attorney and provide some additional documents. We will prepare all the documents, organize the visit to the notary, and arrange the shipment of documents to the Estonian office. Registration takes up to 5 business days.
Documents we will need from you:
- Scan of internal passport or ID card;
- Scan of a document with your residential address;
- Scan of your international passport;
- Information form for company registration (sample provided);
- Notary form PEP (sample provided);
- Power of attorney (sample provided);
Scans should be made in color, high quality, and in PDF or JPEG format.
Tax table
| Type of tax | % |
| Corporate Income Tax | 0/22 |
| Tax on Undistributed Profits | 0 |
| VAT | 22/9/5/0 |
| Dividend Tax | 0/7/22 |
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Price table
| Service | EUR |
|---|---|
| Company Registration with E-Residency Card | 850 |
| Company Registration with Personal Visit | 950 |
| Company Registration by Power of Attorney | 1200 |
| Legal Address for 1 Year | 300 |
| Contact Person for 1 Year | 400 |
| Opening an Account in a Payment System | 250 |
| Accounting Services | 100 |
You can view the full list of jurisdictions where we offer registration services at this link.
If you are considering a company registration in Estonia to expand your business, submit a request on our website or contact us in any way convenient for you.
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