Estonia

Starting a Business in

Estonia

Below is a detailed summary of the bureaucratic and legal hurdles faced by entrepreneurs wishing to incorporate and register a new firm in Estonia. It examines the procedures, time and cost involved in launching a commercial or industrial firm with up to 50 employees and start-up capital of 10 times the economy's per-capita gross national income.

This information was collected as part of the Doing Business project, which measures and compares regulations relevant to the life cycle of a small- to medium-sized domestic business in 185 economies. The most recent round of data collection was completed in June 2012.

Compare Estonia to 184 other economies.

YearNew business densityNumber of new limited liability companies
2009 8.107,199

  • Standardized Company

  • Legal Form: Private Limited Company (osaühing or OÜ)
  • Paid in Minimum Capital Requirement: EUR 2,500
  • City: Tallinn

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No. Procedure Time to Complete Associated Costs
1 Check online the uniqueness of the proposed company name

The Commercial Register refuses to register a company if the name resembles an existing company name or registered trade mark. The entrepreneur can check proposed names on www.rik.ee. The law provides that the company business name shall be clearly distinguishable from other business names entered in the Estonian commercial register.
1 day no charge
2 Deposit the initial capital in a bank

The share capital of the case study company measured by Doing Business (10 times the GNI per capita) is higher than EUR 25,000. In this case, the entrepreneur will need to deposit the share capital at a bank.
If the decided share capital of the company is not over EUR 25 000 and if the founders of the company are natural persons, it can be provided in the memorandum of association that the founders are not obliged to make pre-payments for the shares. In such case the shareholders who have not made payments for their shares are personally liable to the company in the amount of their unpaid share contribution. As of October 2011, 61% of the companies were founded without making pre-payments.
1 day no charge
3 Submit online the registration application to the Commercial Register

On 1st January 2011 the official currency of the eurozone, the Euro, became the sole legal tender in Estonia.

The costs of registration into the Commercial Register are EUR 140.60 for regular registration or EUR 185.34 for expedited registration.

A separate registration with the National Social Insurance Board, which gets its information from the National Tax Board, is not required. Health insurance in Estonia is through a compulsory scheme under which employers are obliged by law to pay social tax (the source of revenue for health insurance) for their employees. The rate of social tax is 33% of the taxable amount. This tax must be paid by the tenth day of the month following the taxable period, and the corresponding tax return must be submitted to the local tax board office of the residence or seat of the payers of social tax by the same date.
1 day EUR 140.60 regular registration or EUR 185.34 expedited registration
4 Register for VAT at the National Tax Board

The company must register itself as VAT payer if the taxable turnover of the company, excluding imports of goods, exceeds EUR 16,000 as calculated from the beginning of the calendar year. The company’s management board must file an application for company registration, making the company liable for VAT with the Tax and Customs Board, within 3 days as of the date on which the taxable turnover of the company. Registration shall be completed by the Tax and Customs Board within 3 days of filing the application. Registration may be (and in the practice, often is) effected immediately after establishment because it allows companies to reclaim VAT tax that cannot be offset by VAT charged to purchasers of their goods and services.

Starting January 1, 2009 the application for registration of the company as a taxable person can also be submitted electronically via the electronic system of the Commercial Register.
3 days no charge
5 Register with the Central Sick Fund of Estonia

In Estonia, health insurance is provided through a compulsory scheme under which employers are obliged by law to pay social tax (the source of revenue for health insurance) for their employees. The employer is obliged to register all new employees, contractual workers and board members with the Health Insurance Fund within 7 days from their recruitment date. Health insurance is provided through a compulsory scheme under which employers are obliged by law to pay social tax of 33% of the taxable amount by the 10th day of the month following the taxable period. By the same date, the employer must also submit the corresponding tax declaration to the Tax and Customs Board.
1 day no charge
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