The advantages of obtaining company in Estonia
Estonia is considered the first «digital country» in the world for many reasons. Most of the state is digitized: education, immigration, state apparatus, healthcare, banking system, etc. that, according to experts, saves Estonia 2% of annual GDP on salaries and expenditures. This means that the country’s residence can be obtained entirely online. Register a company within 24 hours from your country, get a bank account, go through bureaucratic procedures. Estonia has another big advantage: its progressive tax system. The corporate income tax in Estonia is one of the most attractive in the European Union, not only because of an efficient low-tax system, but also because it is easy to use.
The features of company formation in Estonia
Sometimes it’s hard to pick a good firm name. From a legal point of view, it is important to know that the company name in Estonia must meet the following requirements the name should include the letters of the Estonian or English alphabet. The name should not repeat or resemble the name of already registered companies and contain specific words. Most likely, you will benefit or even need to register the company as a VAT payer. You can apply for VAT numbers together with documents for open a company in Estonia.
Choosing the method of payment of the authorised capital of company
Among the registration documents in the Register of Enterprises it is necessary to submit a certificate of payment of the authorised capital. The minimum authorized capital for SIA is 2,800 euros. Before submitting the documents to the Register of Enterprises, the authorized capital can be paid either in full or in the amount of 50%, and the remaining amount can be paid within a year after registration. Being an individual, you can open a LLC with reduced charter capital. Its amount may even be 1 euro. In this case, it is not necessary to open a temporary account in the bank and credit the amount of fixed capital. If you decide to register a company with full capital, it is necessary to open a temporary account in the bank and to deposit or transfer the amount of authorized capital. You can open a temporary account in person, or our employee can do it by proxy. From the bank it will be necessary to obtain a special certificate of payment of the authorised capital, which the bank issues immediately after receiving funds on the account.
Taxation of company in Estonia
The State taxes a company’s profits at 20 per cent only when it is distributed among its shareholders and not when the profits are reinvested in the company or are awaiting distribution. Companies may compensate for taxes due on their currently distributed profits for both past and future losses.
This is if the company suffers losses in the future and has paid taxes on profits in the past, the taxes paid are returned until the offsetting occurs. That is, the state helps the entrepreneur when he suffers losses, and at the same time wins when he has a profit. As for the income tax for those who decide to live in Estonia, it is also simple.
There is a single rate of 20%, i.e. all natural persons in the country will pay the same nominal rate. In Estonia, unlike many tax havens or places with low taxation, there are no significant benefits or deductions for real estate income, so ownership of investment portfolios in this country is not attractive, as part of the taxation of non-residents or the international tax system.