Business structures - Doing Business in Estonia
Estonia is renowned for its business-friendly environment with a simple tax system and digital-first approach to government services.
Whether you wish to launch a startup, expand your corporation through a local branch, or work here as a freelancer, Estonia offers excellent opportunities and an efficient digital ecosystem.
Here are a few reasons why Estonia is an ideal place to do business:
- A company can be established in a day through a fast and straightforward registration process.
- The minimum share capital of a private limited liability company is 0.01 euros.
- Almost all reports and applications can be easily submitted online.
- Estonia's tax system is simple, with a 0% corporate income tax on undistributed profits.
- There are very few restrictions to foreign ownership or management and foreign entrepreneurs are treated equally to Estonian citizens.
- As an EU member state, Estonia provides access to the European single market and operates under the EU legal framework.
Estonia is also an excellent base for your business, even if you don't plan to live here. With the e-Residency program, you can easily manage your company remotely from anywhere in the world. For more detailed steps on establishing a company in Estonia, please see here.
The following guide will answer common questions that may arise when conducting business in Estonia. We hope to provide an overview of the most important things to expect or keep in mind. For any specific inquiries, please contact our team of expert lawyers who are ready to assist you with any issues you may have.
Business structures
Various company structures through which you can do business in Estonia, such as OÜ (Private Limited Company), AS (Public Limited Company), and more.
Key Features:
- Liability: Shareholders’ liability is limited to their investment in the company. Personal assets are protected from business liabilities.
- Capital Requirements: The minimum share capital is just 1 euro cent per shareholder, but practical operating capital is usually higher.
- Management: Offers flexible management and organizational structure. The transfer of shares typically requires notarization unless the share capital exceeds 10,000 euros.
- Suitability: Ideal for a wide range of business activities and scalable as the business grows.
Pros: Limited liability protects personal assets. Low initial capital requirement. Flexible and suitable for various business sizes and types.
Cons: More regulatory compliance compared to simpler structures. Share transfers might involve legal formalities like notarization.
Key Features:
- Liability: Shareholders’ liability is limited to their shareholdings, protecting personal assets from company debts.
- Capital Requirements: Requires a minimum share capital of 25,000 euros.
- Management: Shares must be registered with the Estonian Central Register of Securities, ensuring transparency and regulatory compliance.
- Suitability: Ideal for businesses that plan to expand significantly and seek to attract substantial investment through public stock offerings.
Pros: Enables raising capital from public investors. Limited liability for shareholders. High credibility and visibility in the market.
Cons: High initial capital requirement. Extensive regulatory and reporting obligations.
Key Features:
- Liability: The owner has unlimited personal liability for all business debts and obligations.
- Capital Requirements: No initial capital requirement.
- Management: The owner has full control over the business operations and decisions.
- Suitability: Best for individuals seeking to start a small-scale business or operate as freelancers.
Pros: Simple and inexpensive to set up and manage. Full control over business decisions and operations.
Cons: Unlimited personal liability poses significant financial risk. Unique taxation issues as business income is treated as personal income.
Key Features:
- Liability: Partners are jointly and severally liable for the partnership’s debts.
- Capital Requirements: No minimum capital requirement.
- Management: Partners share management duties and profits equally.
- Suitability: Suitable for small businesses where partners wish to have equal control and share profits and responsibilities.
Pros: Easy to form with shared management responsibilities. No initial capital requirement.
Cons: Joint and several liability can pose significant personal financial risk. Potential for disputes among partners.
Key Features:
- Liability: General partners have unlimited liability, while limited partners’ liability is restricted to their investment.
- Capital Requirements: No specific minimum capital requirement.
- Management: General partners manage the business, while limited partners typically invest without involving in day-to-day management.
- Suitability: Ideal for businesses where some partners want to limit their liability while others manage the business.
Pros: Flexibility with different levels of liability and involvement for partners. No minimum capital requirement.
Cons: Management complexity due to different liability levels. Unlimited liability for general partners.
Key Features:
- Liability: Members are generally not personally liable unless specified in the association’s articles.
- Capital Requirements: Typically requires a minimum share capital of 2,500 euros, but this can be waived if members assume personal liability.
- Management: Managed collectively by its members, focusing on mutual benefits.
- Suitability: Best for cooperative ventures where members share common economic interests.
Pros: Designed to support members' economic interests. Flexible capital requirements.
Cons: Activities are limited to member-driven purposes, restricting purely profit-driven operations. Requires adherence to cooperative regulations.
Key Features:
- Liability: Members are not personally liable for the association’s obligations.
- Capital Requirements: No initial capital requirement.
- Management: Focuses on non-profit activities with simple governance.
- Suitability: Perfect for non-commercial endeavors aimed at achieving social, cultural, or community objectives.
Pros: Ideal for entities focusing on non-profit activities. Simple to establish and manage without the need for capital.
Cons: Limited to non-profit activities, restricting commercial operations. Funding can be less predictable, relying on donations and grants.
We are a top-rated law firm
A reliable partner in litigation!
Head of Litigation
Our cooperation with the lawyers Lepmets & Nõges has lasted for years and has been very successful so far. In our opinion, they offer the best quality and fastest service on the market at an extremely good price. Highly recommended!
Chairman of the Supervisory Board
I have used their legal advice and assistance on several occasions. Most recently, attorney-at-law Tauri Tigasson positively surprised me with his proactive approach, precise, and determined counseling, even pushing me to act more efficiently. It exceeded my unspoken expectations. Working with them has been a true pleasure.
Very high level, broad-minded, and reliable partner in legal matters. The sense of security is the most important thing I expect from legal assistance as a client, and this is the experience that the law firm Lepmets & Nõges always provides. Legal assistance should be like this – thank you for always being there!
I recently worked with the law firm Lepmets & Nõges, and their professionalism exceeded all expectations. Their lawyers are highly knowledgeable and skilled, offering clear advice and support at every step. I was impressed by how dedicated they were to the client's needs, always keeping me informed and answering all my questions. Excellent service and genuine care for the client make them a top-tier law firm. I highly recommend them!
My family and I are sincerely grateful to the Lepmets and Nõges bureau, whom we found through recommendations from acquaintances. A long and exhausting process had reached a dead end, but thanks to their professional assistance, expertise, resourcefulness, and, more importantly, understanding of the situation and humane attitude, we can now continue with our normal lives.
There is a saying: “promise only what you can deliver. Then deliver more than you promise”. Lepmets & Nõges has always delivered more in our business relationship. Their knowledge, professionalism and talent is what I value most about them. I can honestly say I have always been 100% satisfied with their work.
The solutions have always met and even exceeded our expectations. Pleasant attitude, friendliness and professionalism at each stage of the process. A reliable and necessary partner in all legal issues and litigations!
CEO
ALFA International is a leading network of independent law firms, established in 1980. It is the largest legal network offering effective solutions worldwide. We are the only member of this network in Estonia.
Gazelles are rapidly growing companies that have increased their revenue and profit by over 50% in three years and created many new jobs. Less than 1% of Estonian companies are gazelles. We have won the Gazelle Company title twice.
The Estonian Chamber of Commerce and Industry is the largest and most influential organization representing entrepreneurs in Estonia, with 99 years of activity. The Chamber has over 3,500 members, whose contribution accounts for more than 40% of the net turnover and tax revenue of Estonian companies.