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Business Formation

Estonia’s business regulation is very flexible, in fact, some call it as the perfect solution for entrepreneurship, for reasons like a flat income tax and no annual corporate tax. The country has been capturing Indian entrepreneur’s attention for its low starting-up and running costs. Recently, we at Wazzeer have notices this pattern – startups working in futuristic areas such as Bitcoins, Internet of Things (IOT), Privatization of Outer Space, Drones, Robotics, Virtual Reality, Med-Tech and Medical Devices, and Nanotechnology are considering incorporating parent company in Estonia and thereafter operate from their desired countries. In this blog, we will be looking into different factors that differentiate Estonia, and compliance involved in starting a business. PS: We will be looking only into Private Limited Company incorporation in Estonia.

 

Why do entrepreneurs consider incorporating a business in Estonia?

 

  1. Profit of an Estonian entity is not taxed until distribution
  2. Flat tax system
    1. Corporate Income tax on profit distribution is 21%
    2. Capital gains tax (paid on distribution) is 21%
    3. Branch tax is 21%
    4. Personal Income Tax is 21%
    5. Royalties paid to non-residents are subject to 10% tax at source
    6. VAT is 20%
    7. Land tax varies between 0.1% and 2.5%
  3. No Annual Corporate Tax
  4. Easy and Quick Company registration process
  5. No need to hire a third-party representative or hire a local director
  6. Digital signing is sufficient to execute compliance requirements remotely
  7. Minimum Capital requirement – EUR 2,500
  8. Estonian workforce speaks both English and Russian
  9. Specific support programs for women entrepreneurs – Quin, ETNA
  10. Strong public and university research system
  11. Protection for minority investors
  12. Ease of cross-border trading
  13. Ease of resolving insolvency
  14. Ease of enforcing Contracts

 

How to Incorporate a company remotely?

 

Step 1: Apply for an e-resident identity – Estimated cost is around EUR 100, and takes about 1 day

  • Apply for e-resident status
  • Get digital ID card

Step 2: Check company name availability –  Estimated cost is around EUR 145, and takes 0.5 days

  • Name availability can be checked on rik.ee
  • The name should be unique and distinguishable
  • Apply to Commercial Register

Step 3: Preparation of incorporation documents – Cost effective procedure that might take 2-3 days

  • Acquiring of required documents
    • Founders Documents – identity proofs and address proofs; Minimum 1 Shareholder (any nationality); Minimum 1 director (any nationality)
    • Details of office location and postal code
    • Company’s email address
  • Details of business activities
  • Drafting of Articles of Association
  • Memorandum of Association
  • Notary of operations

Step 4: Open Bank Account – Minimum cost procedure which will take upto 1 day

  • Bank account is opened in the name of the company
  • Make initial contribution of subscribed shares

Step 5: Register for VAT at Estonia National Tax Board – No cost procedure which will take 3 days

  • Applicable only if taxable turnover of the company exceeds EUR 16K
  • Otherwise, it is not required

Step 6: Register employees with the Employment Register – No cost procedure which will take 0.5 days

  • Register employees with Estonian Tax and Customs Board
  • Should be done simultaneously with previous procedure

We at Wazzeer have developed a tested process which enables us to help Indian entrepreneurs to start and run their business in Estonia seamlessly from India. We have helped startups in virtual currency space in registering a business in Estonia. Our solution is one of a kind reason being we are in your neighborhood and we know we are accountable. We would be happy to help you.

 

 

 

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