|Jurisdiction||Terms of registration of the new company||Registration of a company without nominal service||Annual support of the company without nominal service (from year 2)||Accounting and reporting|
Terms of registration of the new company1-2 weeks
Registration of a company without nominal service2 200€
This price includes: registration of the company, payment of the necessary fees upon company registration, licensed contact person, translation of documents into Estonian for 2 founder-shareholders, legal address for 1 year, registration documents, company seal, initial compliance check and KYC procedure (Know Your client). If the company has more than 2 founder-shareholders, an additional fee of 100€ is paid for the translation of documents into Estonian for each founder. The price does not include apostille of statutory documents.
Annual support of the company without nominal service (from year 2)850€
Accounting and reportingfrom 550€
The Republic of Estonia is a state located in Northern Europe. Estonia joined the European Union on May 1, 2004, and on January 1, 2011,it also joined the Eurozone. Estonia is one of the three former Soviet republics that have managed to integrate into the Schengen area and the European market.
You can often find such a term as "offshore Estonia", which is erroneous. The reason why Estonia sometimes is called as “offshore” is 0% income tax, in case if the Estonian company does not withdraw profit, but invests it further into the business. It is the 0% rate that is very often perceived as tax evasion, although in fact it is not a tax-free jurisdiction or "offshore", because dividends in Estonia are subject to taxation. In our material, the phrases "offshore" are used in quotation marks, showing their figurative meaning in relation to the jurisdiction.
Estonian business registration is governed by the country's Commercial Code.
The most common and convenient form of setting up a company in Estonia is a LLC (OÜ).
1) The company's turnover (sales income) per year is over 4 million EUR.
2) The assets of the company as of the balance sheet date are 2 million EUR.
3) The average number of employees is 50 people.
Or, at least one indicator for the reporting year exceeds:
1) The company's turnover (sales income) per year is over 12 million EUR.
2) The assets of the company as of the balance sheet date are 6 million EUR.
3) The average number of employees is 180 people.
1) The company's turnover (sales income) per year is over 1,6 million EUR.
2) The assets of the company as of the balance sheet date are 0,8 million EUR.
3) The average number of employees is 24 people.
Or, at least one indicator for the reporting year exceeds:
1) The company's turnover (sales income) per year is over 4,8 million EUR.
2) The assets of the company as of the balance sheet date are 2,4 million EUR.
3) The average number of employees is 72 people.
Corporate income tax is 0% (applied if an Estonian company does not distribute profits at the end of the reporting period, as well as if it is decided to invest the profits in the business or reinvest).
If the company fails to prove the reality of the transaction or the company with which it cooperates is classified by the Estonian tax authorities as offshore then in this case from the amount that the Estonian company will transfer to the account of its “offshore” partner, 20% tax will have to be paid.
This is due to the fact that such expenses will be regarded as not related to entrepreneurial activity. Among the states and territories for cooperation with which the Estonian Tax Department may be of particular interest are: Andorra, Bahamas, Belize, BVI, Costa Rica, Gibraltar, Hong Kong, Cayman Islands, Liechtenstein, Marshall Islands, Mauritius, Panama, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, Seychelles, etc.
A tax rate of 25% (20/80) applies only in case if dividends are paid to non-residents and if a company in Estonia operates in the country.
The preferential rate for regularly paid dividends is 14/86.
Income tax paid on distubuted dividends in Estonia are paid by a legal entity that is a payer of dividends.
It is necessary to pay tax on dividends by the 10th day of the next month after the month of payment. The tax is paid only when the profit is distributed, there is no tax on retained earnings.
For the first payment of dividends, the authorized capital must be formed (deposited) and registered in the Commercial Register. Also, to pay dividends, you must submit an annual report for the previous year.
In addition to tax on dividends, a company may incur other taxes in the course of its activities, for example, VAT on imports of services (from a company that is not subject to VAT), tax on expenses not related to business, tax on expenses for which there are no primary documents, tax on received services from low-tax jurisdictions. VAT on imports of services arises when you receive services such as consulting, IT, electronic from non-resident firms and non-resident individual entrepreneurs. It is necessary to register it within 3 days after receiving such a service, without waiting for the preparation of the annual report.
Social tax is 33% (deducted when calculating wages and withheld by the company from the payment to the employee).
Personal income tax is 20%.
VAT is 20%, within the EU is 0%. Companies registered in Estonia have the right to obtain the status of a VAT payer. The need to obtain such a number depends on the turnover and territory of the company. A VAT number is required if an Estonian offshore company operates in Estonia and within the European Union, and the turnover in Estonia reaches 40 000 euros.
Today Estonia has an extensive list of signed agreements, including with Ukraine.
If you are planning to open a company in Estonia or buy a company in Estonia, please contact our lawyers for advice:
+38 (098) 737-88-88
We will assist you with buying an offshore company in Estonia or any other jurisdiction of your choice.