Start a Company

The best suited businesses for e-Residency are those that can be run completely online independent of location, for example consulting or freelance services in IT and communications, professional and scientific activities, and administrative and support service activities. We are increasingly seeing e-residents setting up small to medium eCommerce and dropshipping businesses, as well as larger companies manufacturing and/or selling physical goods wanting to set up a subsidiary in Europe. Read more on our Knowledge Base.

There are a variety of business forms in Estonia, including sole proprietorships, private or public limited companies, and non-profit associations. By far the most commonly used form, and generally the most suitable for e-residents, is a private limited company (OÜ or “osaühing” in Estonian), which is easy and quick to set up online, has a low share capital requirement of €2,500, and limits shareholders’ liability.

Once you have received your e-Residency digital ID, you’re ready to create your Estonian company online.  Online registration can be done through the government owned Company Registration Portal, or via Business Register API services that some service providers have on their websites.The state fee to register a private limited company (‘osaühing’ or ‘OÜ’ in Estonian) is €190.  

You must use a licensed service provider to fulfil the legal address and contact person legal requirements. You may also need help from your service provider with accounting, tax, legal matters, and business banking in  Estonia, the EU, or your own country. Read more about choosing the right service provider and then follow our step-by-step instructions to register your company. 

Costs of starting and running your business will vary depending on the business form, volume of activities, the fees of your service providers, and the types of services you need. 

At a basic level for a private limited company (OÜ), the costs will include:

1. E-Residency application state fee = €100-€130, depending on pickup point 
2. Company registration state fee = €190 
3. Fee for legal address + licensed contact person in Estonia =  €200-400 per year, on average
4. Fees for additional services (e.g. bookkeeping, accounting) start at €50 per month 
5. Minimum share capital contribution = €2,500 

Read more about costs and fees of starting a business in Estonia on our Knowledge Base.

If you manage your Estonian company from abroad, then the Commercial Code requires your company to have a legal address in Estonia and a specially licensed person to be a designated contact person here. 

Your contact person is responsible for receiving and forwarding any procedural documents or letters of intent addressed to your business. The contact person does not need to be a shareholder, director, or employee and you do not need to grant any rights to act on behalf of your company.

Read more about the requirement to have a contact person and legal address. You can find a virtual office service provider on the e-Residency Marketplace, who has the necessary operating license to be a contact person for your business.

When you establish a private limited company in Estonia, you must register its minimum share capital of €2,500. This contribution is not a fee. It belongs to your company and can be used to pay for business activities.

The minimum share capital contribution can be deferred for up to ten years. But, until the minimum share capital contribution is registered, shareholders are personally liable up to the amount not paid in and the company cannot issue dividends. 

Read more about the minimum share capital contribution and how to register it.

Yes. If a company has several co-founders, it is considered a multi-shareholder company. A company with one founder is considered a single-shareholder.

If all co-founders of a multi-shareholder company are able to give digital signatures (they have an e-Residency digital ID card or an Estonian, Latvian, Finnish or Belgian ID card), then company formation can be done online. If at least one of the co-founders does not have a digital ID or one of the shareholders is another company, it must be registered through a notary in Estonia.

For more information about multi-shareholder companies, visit our Knowledge Base.

E-residents have a range of banking and payment options available for their business, including: a business banking account with an Estonian bank, such as LHV, a bank in another EU/EEA country, or a business account with a fintech. The solution they choose varies based on physical location, business needs, and prior experience using payment institution services. Compare banking options here.

Fintechs take applications online and generally provide more flexibility to e-resident business owners. The most popular fintechs used by e-residents for business banking are: Wise, Paysera, Payoneer, Intergiro, and Payhawk. 

Estonian banks will require you to make at least one physical visit to their office to set up your business account and also generally require business clients to have some connection to Estonia. An account with a bank in another EU/EEA country could also be a great option for some e-residents with longstanding banking relationships with such institutions.

E-Residency does not guarantee a business banking account. Opening an account is at the sole  discretion and KYC requirements of banks or fintechs. E-Residency also does not give people the ability to open a personal  bank account in Estonia or in other European countries.

Personal Income Tax

E-Residency will not affect where you pay your personal taxes. So if you receive a salary from your company, you should continue to declare and pay personal taxes on this income in the country where you are a tax resident. The only exception here is when you pay yourself a board member’s fee – this is taxed in Estonia at 20% of net income, plus social taxes of 33%.

Corporate Income Tax

Companies registered in Estonia are automatically considered tax residents in Estonia. Here, companies do not pay taxes on profits that are reinvested into the company. Only profits that are distributed or other taxable expenses are taxed. The tax rate is 20% of net distributed profits. But if dividends are regularly distributed over a 3 year period, this tax rate decreases to 14% of net distributed profits. 

But, there might be circumstances when a Tax Authority in another country(ies) may consider your Estonian company liable to pay corporate taxes there too – meaning it has dual tax residency. For example, if you spend a lot of time in one country or conduct most of your activities for the company there (e.g. do client work, hire staff or maintain an office), a Tax Authority may consider that your company has formed a Permanent Establishment (PE). E-Residency does not exempt your company from creating PEs in other countries. However, Estonia has double tax treaties with over 60 countries around the world so it is unlikely your company will pay double taxes. 

VAT

Value Added Tax (VAT) may also apply depending on your company’s activities. If your annual taxable turnover is below €40,000, VAT registration in Estonia is not obligatory. Please keep in mind that  there might be an obligation to register your company for VAT in the country where final consumers are located and to comply with local VAT rules.

There are no restrictions on becoming an e-resident or opening a company in Estonia based on your country of citizenship or residence (unless you are an Estonian citizen or have a residence permit in Estonia!).  However, if you’re based in a country where there is no e-Residency card pickup point, a lack of experienced service providers to support setting up your business, or barriers to banking or taxation, e-Residency may not be suitable for you right now.

Further, people who are unable to obtain international financial services because they live within a jurisdiction categorised as ‘high risk and non-cooperative’ by the Financial Action Task Force (FATF) may be limited from enjoying the advantages offered by e-Residency. Note that this is based on residency, not nationality, so people from these countries living abroad may still successfully benefit from e-Residency.

Read more on the e-Residency blog.

There are no restrictions for e-resident companies in terms of business activities as long as they are legal and comply with local regulations. Some areas of activities are more regulated than others, hence if your company will be active in financial services (including virtual currency services like cryptocurrencies), tourism undertakings, educational activities or construction you will need to obtain a necessary licence or submit a respective notice of economic activity after company formation, but before you start any business activities in that field. 

Read more in our Knowledge Base article on this subject.