Estonia LLC (OÜ)
Formation of a Private Limited Company in Estonia
Estonia is considered the most appropriate corporate structure for tax optimisation in the EU. An Estonian LLC is the ideal corporate entity for a European trading company, since profit can be accumulated tax-free. Estonian companies are also frequently used for tech startups, where business can be done remotely from any part of the world.
FACTS & INFO
The most common form of legal entity in Estonia is a limited liability company (Osaühing - OÜ) which is suitable for most kinds of activities. The advantage of a limited company is that the shareholders are responsible for the obligations of the company only for the value of shares they hold.
An Estonian company name can be in any language but must be unique. A registered name can be changed upon request and certain names are prohibited by Estonian company law. Once it is confirmed that your chosen name is available in the commercial register, you will be provided with a certificate of name reservation.
MEMORANDUM AND ARTICLES OF ASSOCIATION
A company is incorporated in Estonia by an application submitted to the Estonian commercial register. The memorandum and the articles of association must be logged with the registrar. The memorandum specifies the activities in which the company may engage and the articles of association specify the rules governing the internal management of the company.
Shareholders can be legal or physical persons of any nationality and residence. The minimum number of shareholders is one. There is no upper limit to the number of shareholders.
The minimum share capital required to establish a limited liability company is €2,500 which may be contributed by shareholders in cash or in kind before the company registration with the commercial register. The minimum nominal value of a share is €1.
It is possible to establish a company without prior payment of contribution since January 2011. However, the share capital mentioned in the articles of association should be paid at a later stage within a specific period of time. OÜ without contribution is not a new form of LLC and the regulation for general OÜ will apply. The commercial register will make a notice in the company's official extract that the company is established without contribution.
Requirements for LLC without contribution:
- Shareholders may be natural persons only.
- Articles of association shall include the term during which the share capital is covered.
- Until the contribution is made, the shareholders are personally liable for the company's activities.
- Until the contribution is made, it is not possible to distribute dividends.
- The maximum share capital of an OÜ without contribution is €25,000.
DIRECTORS AND COMPANY SECRETARY
Only physical persons can be appointed as directors of the company and directors do not have to be shareholders. All of the management board of the company can be non-residents of Estonia or any other EU member country with a contact person appointed.
There is no requirement to appoint a local secretary.
Every company must have a registered office and address in Estonia which should be notified at the commercial register.
Board meetings can be held anywhere as per the convenience of the board.The articles of association or a resolution of the management board (or supervisory board) may prescribe that the meeting shall be transmitted in full or in part, in real time via the Internet, using two-way communication or any other technically secure manner.
It usually takes 1 - 2 weeks for the incorporation of an Estonian LLC.
RECURRING MAINTENANCE FEES
As from the second year, there are recurring maintenance fees of $1,200. These include:
- Provision of registered address and registered agent.
- Annual government fees.
Corporate income tax: The rate of corporate income tax is 20%. Residents are taxed on worldwide income. Non-residents are taxed only on income derived from Estonian resident companies and to permanent establishment of foreign companies. Estonia levies a corporate income tax on a company’s distributed profits (in lieu of an annual corporate tax). Retained earnings are not taxed until profit distributions are made. Profit distributions may be specific (i.e. dividends, share buybacks or profit distributions via capital reductions) or deemed (which include expenditure and payments unrelated to business activities, as well as gifts and donations).
Incoming Dividends: Dividends are treated as regular income and are taxed upon distribution.
Capital gains tax (CGT):Capital gains are treated as regular income and are taxed upon distribution.
Withholding tax: As corporate tax applies only upon distribution of the profit, there is no separately charged withholding tax.
Value-added tax (VAT): In line with the EU VAT regime, the standard rate for inland sales is 20%.
AUDIT AND ACCOUNTING
Accounting is obligatory for all Estonian companies and audit will depend on income, turnover and number of employees. After the termination of the business year, the board prepares the annual accounting report and the business activity report in accordance with the law on accounting financial reporting, which should be submitted to the auditor and presented to the commercial register. The report for the business year approved by the general meeting should be submitted to the Estonian business register no later than 6 months from business year-end.
Our Services and Requirements
OUR SERVICES INCLUDE:
- Name check and approval
- Prepariation of company registration forms and translation services
- Provision of registered address and registered agent for one year
- Provision of resident company secretary for one year
- Provision of virtual office for one year
- Notary public fee
- Government license fee
- Provision of a bank account (personal presence is required at the bank for the opening of the account)
- Submission of monthly report - TSD form (for 12 months)
- Submission of annual report (for 1 year)
- Rubber stamp
- A standard set of apostilled originals of corporate documents:
- Articles of association
- Extract from commercial registrar in Estonian language
- B-card (an extract from the Estonian commercial register, containing the main details on the company)
- Bank account details including digipass (pin calculator)
Please note: If applying for a corporate bank account outside of Estonia you will need to order a full set of apostilled company documents duly translated and certified in English.
Please provide the following documents for all directors, shareholders, beneficial owners, and authorised signatories:
- Notarized copy of valid passport.
- Original or Certified copy of utility bill / bank statement (as verification of residential address, dated within three months).
- Original or certified copy of Banker’s reference letter (dated within three months).
- In cases where shareholders and/or directors are corporate bodies, full apostilled set of corporate documents and certificate of good standing (for companies registered more than one year).
IMPORTANT NOTE: LICENSABLE BUSINESS ACTIVITIES
If you conduct any activity without the required license or authorisation granted by a relevant authority in any jurisdiction, Starting Business will not be able to assist you with the company formation or bank account opening related to such unlicensed activity.
Licensable activities include, but are not limited to: provision of financial services involving trading/brokerage in foreign exchange, financial and commodity-based derivative instruments and other securities; offering investment advice to public; insurance and banking; operation and administration of collective investment schemes and mutual funds; payment processing services; money exchange, money transmission or money brokering; asset management; safe custody services; gaming, gambling and lotteries.
Please contact us if you need assistance in the licensing of your financial, Forex brokerage or gambling company.
Shipping of corporate documents or banking kits to your destination requires an extra charge and will be automatically added to your order during checkout. Shipping costs for international courier services are set automatically depending on geographic zones.