It has been a member of the European Union since 2004. It adopted the euro on January 1, 2011 and the OECD in December 2010. GDP growth for 2019 is estimated at 3.1 percent. The country is 51% covered in ancient forests with lakes, rock beaches, natural parks, lakes plus over 1,500 (very small) islands.

Estonia has a very small population just 1.3m people (in 2018). The country is located on the Baltic Sea and Gulf of Finland. Estonia has one of the highest literacy rates in the world. A surprising 99.8% speaks a foreign language mainly English and Russian. This is a benefit as Estonian is the 5th toughest language to learn for native English speakers. Good news is there are no distinctions of grammatical gender or future tenses.

Politically Estonia is very stable. It is the first country worldwide to offer e-Residency for anyone to base their business in country. The country has the highest amount of startups in Europe – 5 per 100,000 people. It has been a success with digital nomads and start-up companies due to its quickness and ease of setting up a company plus fair low taxes. Start-ups are attracted to Estonia as tax returns are reported to be done in under 3 minutes and dividend paid to non-residents are not subject to withholding tax.

The fastest company to create is a limited liability company (Osaühing or OÜ). The process may be done online with an Estonian ID card or e-Residency card, EU member states’ ID card. The company must an individual or a corporate of any nationality and have 1 minimum shareholder. One natural director must be appointed to the company but does not need to be an Estonia resident. To complete the incorporation process a paid-up share capital of €2,500 is required.

Previously it was harder to open a bank account, a requisite to set up a company. This made it hard to pay funds to complete the incorporation process. In early 2019, an account located in a bank or financial institution of any EEA state maybe used to place monetary share capital down payment will have to be transferred there when establishing a company.

WHY CREATE A COMPANY IN ESTONIA

The country has low cost administration start-up and continuing expenses, its rated 80.50, coming in at 16th in the world for ease of doing business. Estonia’s greatest asset is that a registered company is an EU one, but one which may be administered from anywhere in the world. Quality of life is very high (relative to Scandinavian) with low living costs.

ESTONIA’S BUSINESS ENTITY TYPES

Estonia is likely the most supportive and progressive European countries for international start-ups to form a business entity. The most common business entity to existing in Estonia is a limited liability company known as an Osaühing or OÜ are preferred by lean, tech, digital nomad start-up companies. Public limited liability company known as Aktsiaselts or AS are preferred by determined entrepreneurs with more share capital. Overseas branch offices may be created but they must not be commercial / profit making in nature.

Starting Up an Estonian limited liability company (Osaühing or OÜ)
This company requires at least one shareholder native or foreign national with at least one resident or non-resident director. €2,500 of paid-up share capital is required to finish incorporation.

Establishing an Estonian public limited company (Aktsiaselts or AS)
An AS requires at least one individual shareholder or a legal entity. It must appoint a minimum of one individual director of any nationality. They cannot a company shareholder. For incorporation a statutory auditor needs to be appointed with a minimum of €25,000 of in share capital.

Commencing an Estonia limited partnership
For very small niche and specialised business professions this type of business entity is preferred. As expected with a partnership there is a minimum of two resident/non-resident members. One partner has to be a general partner thus personally liable for the business’ obligations. Unless prescribed in the partnership agreement partnerships have no managerial rights.

HOW TO FORM AN LLC / OSAÜHING OR OÜ COMPANY IN ESTONIA

It has been written it takes 3 hours to create a company in Estonia. If a notary is used a three-day delay is expected. Stakeholders named on company documentation in the company must have of a national Estonian ID card or e-Residency card.

If more than 50% of the board members do not permanently reside in Estonia, the company must pass the Commercial Register a contact name and address in Estonia. Foreign LLC owners have to pass the Commercial Register their address and e-mail address.

A private limited company may or may not have a supervisory board. An auditor is mandatory only when the company surpasses certain values in terms of turnover, number of employees and asset value.