Choosing the company’s financial structure in Estonia

If you got on this article, then it’s time to register your activity in one of the most popular countries for this? Congratulations!

In this article we will reveal the most important financial nuances of registering a company in Estonia in our opinion.

Who can register a company in Estonia?

A company may be registered by a citizen (resident) of any state without restriction. Regarding the company structure, it implies the presence of founders (1 or more), board members (management board member) – that is, directors (1 and more). The founder can also be a director. The only caveat is that the company in which the founders are non-residents must have a contact person – a resident of Estonia who lives in Estonia.

Its functionality is simple – to receive correspondence from government agencies, and represent the company interests, if necessary. Despite all its significance such important person has no right to dispose of the company and or bank account.

Who can register a company in Estonia?

• The first one is company registration + opening a bank account outside Estonia (for example, Switzerland, Poland, Hungary, etc.). This scenario allows you to use preferential taxation in Estonia and have a working bank account in another country.
• The second is company registration + opening a bank account in Estonia. Until the early 2017, Estonian banks willingly opened bank accounts for Estonian companies that were registered by citizens of the CIS countries (Ukraine, Russia, etc.). They even did it remotely. However, winter of 2017 brought cardinal changes into the Estonian banking environment, which were caused by a series of money laundering scandals with non-residents involved, which resulted in huge fines and a complete transformation of banks’ requirements to corporate clients.

Banks began to demand a strong connection of the company, which opens a bank account, with Estonia. Banks classified the following as such connection:

• presence of an office in Estonia – video confirmation of a lease/purchase agreement for an office in Tallinn. These may be small offices (10.15 m2) at a cost of around 100 Euros per month. Further, the bank will monitor the monthly payment for renting an office from the company’s bank account.
• the fact of a company having employees. In practice, at least 1-2 employees are currently registered, this can be a director and secretary/personal assistant, or an accountant. The minimum tax expense per employee is 150 Euros/month.
• contracts with local Estonian counterparties. This requirement implies that the company should have cooperation agreements with Estonian companies; recently this requirement was supplemented by one nuance that contracts provided to the bank should be concluded with an Estonian company, in whose structure there is a resident of Estonia

And now let us sum it all up

Opening a bank account in Estonia is the most realistic for a company that will actually conduct business there. If you plan to use the company “virtually” without having a real activity, then you should pay attention to the scenario of opening a bank account in other countries where there are no such stringent requirements.

However, if you follow the path of opening a bank account in Estonia, you should look for contractors based on the portrait of your potential customer. You’ll need to rent the office before visiting the bank immediately.

In any case, we recommend consulting with specialists in financial and legal business structuring.

If you have any questions on the topic of the article – just write to us by clicking on the button below and filling out the form.

Good luck!