The Ultimate Guide to Estonian E-residency, Banking, and Taxes

Hi, I want to know if there is a minimum share capital requirement for opening a private LLC company in Estonia.

thanks.

Yes, assuming you’re referring to an Estonian OÜ (private corporation), the minimum capital is €2,500, although you don’t have to pay it upfront (it can be delayed for several years).

Several years? Are you sure?

Leapin says it’s one year.

Yes, it’s 10 years to be exact. See e.g. https://learn.e-resident.gov.ee/hc/en-us/articles/360000798017-Share-capital-contribution

It is possible to defer the payment of share capital up to 10 years. However, when doing so, all founders of the company will be held personally liable for the deferred amount.

You also cannot pay dividends until the capital in contributed (but you can pay yourself a salary).

Awesome

Can anybody tell me about starting a new construction company in Estonia.I am already running a construction company in Pakistan,with successful completion of various projects.E-Residency will be helpful in this regard?
Thanks

Starting a new construction company in Pakistan with Estonian corporation based on e-Residency card? This will be impossible. As Eesticonsulting.ee - we do not recommend this solution, because the solution may be risky - ready bilateral agreement concerning “Permament Estabilishment”. Your company can constitute PE in Pakistan when the place of business activity will be in Pakistan ( bulding, construction activities ).

I recently applied e residence program waiting to pick up my card. Thanks for sharing useful information I just want ask you. in my residence country I’m not obligated to pay any income tax. Will I need to prove that for Estonian tax officials ?

Hi, did you figure out what the answer is on your question? I believe you’re referring to the (social) contributions an employer normally has for an employee, right?

I’m also really curious to know what happens with this part?..

Thank you for an informative article.

Quick question: If a company is paid in other value than cash (like options or shares in return for consulting services), would there be any corporate tax payable by the company at the end of its fiscal year, based on the value of the shares (the value is likely determined by a third party)?

If I understood the article correctly, you only pay corporate tax on distributed profits. Since options or shares cannot be distributed in cash per say, is it correct that the company would not pay corporate tax for “revenue” of non-cash character?

Thank you.

I also want to know an answer on this question. Tia

Yes tax is charged on the value of consideration received in return for services provided, irrespective of the nature of consideration. For further reading kindly refer here

What if you are currently not a resident in any country?

Hi Thomas,

I hope you can help me. I am part of an Estonia company. We have been dormant last year.

The annual return is due on 30 June 2020. We have some very serious problem at the moment
and may not be able to submit the tax return by the 30 June.

I read from reliable source that a late submission penalty will probably be applied. Would
you happen to know approximately how much the penalty is? There are probably two elements.
A fixed penalty and/or then a penalty with a percentage of the due cooperation tax.

I did my best to google but only managed to find the late submission for VAT for Estonia companies which is a max of 2000 euros.

Thank you for your help.

I’m not sure how much the penalty would be, but failure to submit the annual report could eventually lead to forced closure of the company.

Note that the annual report is not a tax return, those are submitted on a monthly basis, and only when corporate income tax is due (e.g. after distributing dividends).

Generating and submitting the annual report only takes a few minutes to do online, and for a dormant company I think you’d be able to do it yourself. Worst case you hire someone to do it for a few dozen euros.

Hi Thomas,

Thank you for your very quick response. I was under the impression that only the VAT returns
is done on a monthly basis and not the corporate tax.

We were advised that we could not submit the tax returns ourselves as we
are not Estonian citizens (or e-residents)

Thanks again.

Hello Community,

I have some questions regarding Xolo, in case any one knows. Xolo don’t seem very responsive by email. Maybe they only respond to their established customers? Anyway, my questions:

  1. Their FAQ says they only accept business bank accounts with their banking partners (presumably just Wirecard, TransferWise, and LHV). How would that prevent a company from opening a business account with, for example, Revolut Business?

  2. Anyone know why the regular Leap service is limited to only one bank account? And what would prevent a company from opening another account itself anyway?

  3. Their FAQ states that a company owner can pay himself a salary when operating from outside Estonia. However it also states that an Estonian company can not employ anyone outside Estonia on a permanent basis. Do these rules not conflict at all?

Thank you in advance for any insight!

Hi Everyone!
New to the community but already have an established company in Estonia with the E-residency program.
There are some really useful info here in the thread!

I am now trying to find a service provider for accounting/bookkeeping.
Anyone has any good experience with any of the service providers? I got an offer from 1Office that almost made me fall off my chair.
The company is pretty new and small but growing. (not reached VAT threshold yet)
Anyone has experience with doing their own accounting/submitting annual report? Is it worth trying with limited accounting background?
Thanks in advance!

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Hi, I’m looking to establish a company some place and a friend sent me this article Running a business in Estonia and the UK - I’m wondering if anyone has experience in the UK and Estonia. Would you recommend one over the other? Is it really that inefficient to take out a wage from an Estonian company?

Great article Thomas, plenty of useful information.

I’m still working in some alternatives and studying if Estonian e-residency would be beneficial on my needs. I was hoping you could shed some light after yours years using it.

I’m a permanent traveller, usually spending no more than 3 months on each country I visit performing my activities of independent consultant.

As consultant I get paid on my TransferWise account by companies in “X” countries to perform activities on another countries. So in the end I have no ties with any country.

As I live nowhere, I’m planning to maybe get an e-residency on Estonia more to have a Legal Address and use it on TransferWise, so I could use more of their tools, which I currently can’t as my registered address is on my home country that allows me only Borderless account, and perhaps use this address for everything I may need address to.

Based on your experience, would be possible and even valid, to have e-residency and legal address, to act as Freelancer for my independent consultancy? I assume I would have to open a company where I’m the only employee, and then all income I receive on my TransferWise account could be left on TransferWise, or even moved to my home country for monthly expenses, but any idea how would be Estonia taxation in this scenario?

Thanks a lot!
Henry