Сompany formation
in Estonia

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Why Start a Company in Estonia?

Estonia is increasingly becoming a jurisdiction of choice for company formation in Estonia due to its transparent, clear, and optimal tax system. In addition, administrative procedures are highly simplified: all registration and reporting processes can be carried out online thanks to the e-Residency system. Estonia has a stable legal framework focused on supporting entrepreneurship and foreign investors. The country is also a member of the EU, providing access to European markets. As a result, companies gain the opportunity for a fast launch and transparent business operations in a digital environment and beyond.

More details about the types of companies, stages, cost of opening a company, tax and legal aspects, as well as aspects of adaptation will be discussed in the following sections.

Types of Legal Entities in Estonia

In Estonia, there are several types of legal business entities, including:

private limited company (OÜ),
public limited company (AS),
general partnership (TÜ),
limited partnership (UÜ)
commercial association (ühistu).

1) The most popular form for starting a business is the private limited company (OÜ). This type of company is primarily characterized by the fact that its founders are not personally liable for the company's obligations, meaning the company is responsible for its liabilities with all of its own assets. A private limited company can be established by a single shareholder, who may be either a natural or legal person, and the minimum share capital required is 2,500 eur.

The shares of this type of company cannot be freely sold, meaning that transferring shares to another person requires the approval of other shareholders or must follow the conditions outlined in the articles of association. Dividends may be distributed to shareholders only from net profit or retained earnings from previous years.

The management of such a company may be carried out by a Management Board, which can consist of 1 (one) or more persons who do not necessarily have to be shareholders. The Management Board is the executive body that represents and manages the private limited company. The establishment of a Supervisory Board may be provided for in the articles of association, but it is not mandatory.

2) Another common form of company is the public limited company (AS), which is more suitable for establishing a large-scale business. This type of company may also be established by one or more shareholders (natural or legal persons) who, as with a private limited company, are not personally liable for the company’s obligations.

However, unlike an OÜ, the shares of an AS may be freely traded, including on the stock exchange. As for share capital, according to the Commercial Code, it must be denominated in euros and amount to at least 25,000 euros.

The management of such a company is carried out by the General Meeting of shareholders, which is the highest governing body of the public limited company. The General Meeting has the authority to amend the articles of association, increase or decrease share capital, issue convertible bonds, elect and remove members of the Supervisory Board, appoint an auditor, initiate a special audit, approve the annual report, and distribute profits.

Other governing bodies of a public limited company include the Supervisory Board and the Management Board. The Supervisory Board is mandatory and is elected by the General Meeting of shareholders. Its main function is to plan the company’s activities, organize its management, and supervise the activities of the Management Board. The Management Board, in turn, is the executive body of the AS, authorized to represent and manage the company. Neither the members of the Supervisory Board nor the Management Board are required to be shareholders of the AS.

In addition to limited liability companies (OÜ) and joint stock companies (AS), there are other organisational and legal forms in Estonia:

3) General partnership (TÜ) is a form of entrepreneurship where two or more partners carry out activities under joint responsibility. The partners bear full personal responsibility for the obligations of the company.

4) Limited partnership (UÜ) is similar to TÜ, but has two types of participants: at least one general partner who is liable for full responsibility, and one or more limited partners whose liability is limited to their capital contribution.

5) Commercial association (ühistu) is a cooperative association established to satisfy the common economic interests of its members. Participation in management is based on democratic principles (one member, one vote), and profits may be distributed among members or reinvested.

How to Register
a Company in Estonia

The process of Estonia company registration is quite simple and quick, as the entire procedure can be completed remotely. Below, we describe the main steps that will help you successfully register a company in Estonia.

Step 1 – Choose the legal form. As mentioned above, the most popular option is a limited liability company (OÜ) to start a company in Estonia due to its simple structure, limited liability of the founders and low share capital threshold (2,500 eur). However, depending on the goals of your business, you can choose a public limited company (AS), a general partnership (TÜ), a limited partnership (UÜ) or a cooperative association (ühistu).

Step 2 – Obtain e-Residency (for non-residents). If you are not a resident of Estonia, you will need to obtain e-Residency. This is a digital ID that allows you to use the state's online services, including registering a company, opening a bank account, and signing documents. The application is submitted online, and the e-Residency card is sent to your chosen delivery address within 5 weeks after your identity has been verified, which can take up to 30 days. Please note that the official website provides fairly simple and clear instructions on how to obtain an e-Residency card, which you can find at the link. The state fee for submitting an application for electronic residence is 150 eur.

Step 3 – Prepare the necessary documents and information. After receiving your e-Residency card, you need to collect and prepare the following documents for the Estonian business register:

сompany name (must be unique; you can check its uniqueness at this link),
іnformation about the founders and board members,
сontact person.

*Appoint a contact person for the company who will ensure communication between the company manager and the authorities if the manager is located outside Estonia;

сompany charter (you can use a standard template),
legal address.

*Also, if you do not have an office in Estonia, you will have to use the services of a local provider of a legal address and contact person.

information about the size and structure of the authorised capital.

Step 4 – Register your company through the Business Registration Portal and sign your documents. After logging in with your e-Residency ID, you fill out a form, upload documents, and sign them with your electronic signature. If all founders have an Estonian digital signature, registration can be completed entirely online. If not everyone has a digital signature, then you will have to use the services of a notary.

If you do not have an Estonian digital signature or e-Residency, the documents for registering a company can be signed through a notary. This can be done either in person in Estonia or remotely via video link with a notary, provided that your identity is confirmed. Again, you will need to prepare all the documents for registration: the memorandum of association, the articles of association, the application, information about means of communication, a bank statement confirming the payment of the authorised capital,a certificate of payment of state fees. It is also possible to sign the documents at a notary in your country, but in this case, the documents must be apostilled and translated. All documents are submitted by the notary. The registration process through a notary usually takes 1 to 3 business days.

Step 5 – Pay the state fee. To complete the submission of documents and open a company in Estonia, you must pay a state fee. To register a private limited company, you will pay a state fee of 265 euros, and for a public limited company or commercial association, you will have to pay a state fee of 200 euros. To establish an individual entrepreneur, general partnership, or limited partnership, you will have to pay a state fee of 20 euros (source).

Payment is made directly through the portal. When registering through a notary, the fee may be higher (depending on the case).

The cost of a company in Estonia

Name of the service

Basic

Business

Pro🔥

Company registration, including state duty

✅

Notary services

Company contact person

✅

Legal address for 1 year

Remote opening, including translation of the power of attorney

❌

✅

Corporate account

❌

✅

VAT number

On request

1732 EUR

--------------

1325 EUR

2761 EUR

--------------

1840 EUR

Annual renewal

765 EUR

Total cost

2047 EUR

1595 EUR

765 EUR

*The offer is valid until 30/09/2025

Legal and Tax Responsibilities

VAT Registration Threshold and Requirements. When establishing a company in Estonia, you do not automatically become a VAT payer and are not entitled to a refund of input VAT paid when purchasing goods or services for your business. A company is required to register as a VAT payer if the volume of taxable supplies within Estonia exceeds 40,000 euros from the beginning of the calendar year. Such registration can be carried out on the portal of the Tax and Customs Department. Registration must be completed within 3 working days after exceeding the threshold. According to subsection 3 of paragraph 191 of the VAT Act, the following transactions are subject to mandatory taxation:

supply of goods and services, including zero-rated transactions (except for the transfer of fixed assets);
real estate transactions (except for the transfer of fixed assets and one-off transactions);
insurance and financial services, except for one-off services.

VAT rates in Estonia:

24% – standard rate, applicable to most goods and services.

13% – applicable to press, pharmaceuticals, medical goods, etc. (from 2024).

9% – hotel services, books, periodicals (until 2024 – more active).

0% – exports, international transport services, sales of goods within the EU for VAT payers (source)

B2B and B2C transactions:

Within Estonia: local supply of goods and services is subject to Estonian VAT.
Within the EU:
- for B2B, VAT is not charged (reverse charge) if both parties are VAT payers;
- for B2C, VAT is charged according to the rules of the consumer's country (OSS regime).
Outside the EU: exports are usually subject to VAT at a zero rate.

!Please note that VAT payers registered in Estonia are required to submit a VAT return (form KMD) by the 20th day of the following month. In the case of transactions with counterparties within the EU, a summary report (form VD) must also be submitted. All reports are submitted electronically via the the portal of the Tax and Customs Department (source)

Сorporate Taxation Rules in Estonia

The main taxes for companies in Estonia, apart from VAT, are income tax and social tax.

In terms of corporate income tax, the corporate tax system in Estonia has a unique feature, namely that this tax is only payable when it is distributed, i.e. when dividends are paid. This means that undistributed profits that remain in the company or are invested in its development are not taxed. This approach encourages starting a company in Estonia, reinvestment and business growth.

The tax rate on distributed profits is 22/78, which is equivalent to approximately 22% of the net amount paid as dividends. In turn, the obligation to pay tax arises at the moment of actual distribution of profits, regardless of the year in which these profits were received. Income tax is declared through a monthly TSD declaration, which must be submitted by the 10th day of the month following the payment of dividends.

If a company does not pay dividends but only accumulates or reinvests profits, it can operate for a long time without corporate tax obligations, which makes Estonia an attractive jurisdiction for business development and scaling.

In addition to corporate income tax, Estonian companies are also required to pay social tax. So, if your Estonian company hires people in different countries, your social tax obligations may vary depending on the location and legal status of each employee. Companies in Estonia pay social tax on employee payments, including salaries. The social tax rate is 33% and is paid in full by the employer by the 10th day of the following month.

!!!However, please note that when an Estonian company pays a non-resident for work that is not physically performed in Estonia, the company does not have to pay any Estonian social taxes or unemployment contributions, as the income will be taxed where the person lives or is a tax resident (source).

Annual Reporting and Accounting Duties

All companies in Estonia are required to keep accounts in accordance with the Accounting Act and submit an annual report consisting of annual financial statements and a management report. Accounts must be kept regularly in euros, according to the double-entry principle. Companies can keep their own accounts or delegate this to a licensed accountant or an outsourcing company.

Each year, every company must submit an annual report to the Estonian company register (Äriregister), regardless of whether it was actually active during the reporting year. This report must be prepared in Estonian and submitted no later than 6 months after the end of the financial year. For most companies, the financial year coincides with the calendar year, i.e. the financial year itself runs from 1 January to 31 December of the current year, and the deadline for submitting the annual report is 30 June.

The report must contain a balance sheet, a profit and loss statement, a cash flow statement, a statement of changes in equity, as well as explanatory notes to the relevant report. In turn, micro and small enterprises have the right to submit a simplified form of the report.

Tax returns (TSD, VAT, etc.) are submitted monthly through the e-MTA system (the electronic portal of the Tax and Customs Board).

Reports must be signed electronically (using e-Residency ID, Smart-ID or Mobile-ID). If a company fails to submit its annual report on time, it may be fined and even removed from the register (source).

Accessing Estonian Bank and Tax Services

Thanks to e-Residency and full digitalisation, entrepreneurs can manage taxes, banking, and business filings entirely online after they open a company in Estonia. With e-Residency, you can remotely open an account with an Estonian or European bank via e-Banking. Tax returns are submitted online via the e-MTA portal, and access is provided by a digital signature (ID card, Mobile ID, Smart ID). All fiscal transactions, including VAT or TSD, are processed electronically. This system works on a ‘single entry’ principle, i.e. RIHA centralises and reuses information for all services. It is worth noting that access to banking and payment systems also has high cybersecurity standards. In general, this digital service allows entrepreneurs from anywhere in the world to fully manage their company from home or any other convenient location.

So, company registration, tax returns and financial transactions can be completed through a personal account. This level of convenience has become an important factor in the migration of entrepreneurs to Estonia.

e-Estonia, Startup Estonia and Investment Agency

Estonia positions itself as a fully digital state where over 99% of public services are available online through the e-Estonia platform, including e-Residency, e-Identity, Estonian business register. It is one of the most advanced electronic ecosystems in the world, covering everything from electronic voting to access to medical records, tax reporting, business registration and banking operations. For entrepreneurs, e-Estonia means maximum convenience in doing business: a company can be registered in less than 30 minutes, all documents are signed electronically using e-Residency, and tax returns can be filed from anywhere in the world. This digital environment is ideal for remote companies, start-ups, IT businesses and freelancers, as it allows them to operate without the need to be physically present in the country.

The Startup Estonia initiative plays a key role in the development of the digital economy, creating favourable conditions for launching and scaling innovative companies. It offers legal support, acceleration programmes, access to investors, and an international network of start-ups. Combined with e-Residency, this makes Estonia one of the most attractive jurisdictions in Europe for digital entrepreneurs and technology companies. This programme is funded by the EU and promotes the organisation of events and acceleration programmes, provides “startup visas”, and simplifies the hiring of international specialists in various fields.

The Estonian Investment Agency (EIA) is a state agency operating under the leadership of Enterprise Estonia. The agency is responsible for attracting foreign investment and supporting companies planning to start or scale up their business in Estonia. The EIA provides free advice on starting a company, tax issues, access to labour, infrastructure and legal aspects. The agency also helps find local partners, investors or customers. The main focus is on the IT, logistics, financial technology, green energy and high-tech manufacturing sectors.

From the above, we can conclude that the synergy between e-Estonia, Startup Estonia and EIA creates a favourable climate for starting a company in Estonia, existing businesses and talented and ambitious professionals. Thanks to its fully digital environment, support for entrepreneurship, and access to investment resources, Estonia has established itself as a global hub for technology and innovation companies. That is why this jurisdiction consistently ranks among the leading countries where it is profitable and convenient to start a business.

Business Incubators and Local Chambers

Estonia has an extensive network of business incubators that help start-ups grow by offering office space, mentoring support, training programmes and access to potential investors. These incubators often work in partnership with Startup Estonia, universities, and international business support networks. This collaboration allows those who open company in Estonia to receive mentorship, access funding, and scale internationally. All these institutions focus on both general technology projects and specialised sectors, including agrotechnology, green business, deep tech, medical innovations, and more.

The main incubators in Estonia are:

Tallinn Business Incubators (including Tallinn Creative Incubator and Tallinn Design House) supports innovative start-ups in the technology, finance, environmental and other sectors.
Tartu Science Park is a powerful centre for the development of deep tech, IT, biomedicine and smart cities.
Tehnopol Startup Incubator is a large technology park in Tallinn focused on startups in IT, medtech, energy, and smart cities.
Buildit Accelerator focuses on hardware, IoT, and greentech projects.
Cleantech ForEst supports climate and environmentally-oriented innovations.

As for other leading instruments for starting a business in Estonia, it is worth mentioning the Estonian Chamber of Commerce and Industry (ECCI), which is the largest business organisation in the country with over 3,000 members; it represents business interests before the state, conducts training and exhibitions. The Chamber also issues certificates for foreign economic activity, assists in finding business partners and strengthens business ties through missions and training programmes.

In addition, there are industry associations (technology, tourism, export) and regional chambers that help businesses adapt to local conditions. Incubators and chambers cooperate with Startup Estonia and EIA, providing a comprehensive approach: from start-up to growth and international scale.

Short conclusion

Thus, thanks to its unique tax system, diversity of organisational and legal forms of business, combination of digital infrastructure, state support, simplified access through the Estonian company register and an active business ecosystem, Estonia creates a unique environment where businesses can be launched and scaled efficiently. For those looking to start a company in Estonia, it offers an unmatched blend of transparency, speed, and global reach.

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