Estonia

The most popular form of commercial companies in Estonia is Limited Liability Partnership (OÜ) with an authorized capital which is divided into shares. The minimum share capital is € 2 500.


The minimum number of founders – 1. Founder can be both resident or non-resident of Estonia, individual person or legal entity.


Taxation:

  • Corporate profit tax – 0 %;
  • Corporate profit tax when the payment of dividends – about 26,6 %;
  • Income tax on individuals – 21 % (to be paid by residents of Estonia);
  • Social tax – 33 %;
  • Turnover tax (VAT) – 20 %. Turnover tax and VAT are equivalent in Estonia. This tax is for sale of goods and provision of services for business in the territory of Estonia and import of goods and services to Estonia;
  • Unemployment tax from the salary of an employee – from 0,3 % to 0,6 % (It applies to residents of Estonia).


Tax-free allowance from the 1st of January 2015 is € 154. Minimum wage from1st of January 2015 is € 390 gross. If the owner of an Estonian company is an offshore company, the Estonian company further withholds the income tax at the rate of 21%.


Submission of accounting reports.


Accounting is submitted to the Department of a Taxation of Estonia if the Estonian company has an individual VAT number or employees working. The income and social tax reporting should be submitted before the 10th day of every month and the turnover tax reporting before the 20th day of every month.

The company should submit the financial report about activities for a past financial year annually before the 30th of June to the Commercial Register of Estonia (from the 1st of January to the 31st of December).


Performance of an audit.


Mandatory audit is required if two out of the three following conditions coincide:

  • Realization or profit from € 2 000 000;
  • Amount of the balance from € 1 000 000;
  • Number of employees no less than 30 people.

or one out of the three following conditions coincides:

  • Realization or profit from € 6 000 000;
  • Amount of the balance from € 3 500 000;
  • Number of employees no less than 90 people.


Information about the owners and directors is available to third parties on the website of the Company Register.


Advantages:

  • There is no need to pay the corporate profit tax until the dividends aren't distributed;
  • Possibility of using an effective system of double taxation avoidance agreements (Estonia has concluded more than 50 agreements);
  • Absence of an additional withholding tax at source of dividends.


Disadvantages:

  • If the owner of an Estonian company is an offshore company, income tax is 21 %;
  • Corporate profit tax when the payment of dividends – about 26,6 %;
  • It's necessary to submit monthly the income and social tax reporting and also the turnover tax reporting;
  • It's necessary to submit annually a financial report to the Commercial Register of Estonia.