A holding company in Estonia is a group of several businesses under the same umbrella and this structure is motivated by a number of advantages received by the contractor.
An Estonian holding company retains its identity and form of organization, as well as its place on the supply and sales markets. The connection between the main company (parent company) and subsidiaries is made in the financial, technology and investment sectors. In Estonia, a holding company establishes the directives for the companies under its control in the financial, management and marketing of products.
By creating a holding company in Estonia the founders facilitate the acquisition of smaller companies and even larger enterprises in the sphere of control.
Our Estonian company formation consultants can guide foreign investors interested in setting up holding companies in this country. Investors can also rely on us for assistance in registering other types of companies.
Requirements for setting up an Estonian holding company
Those who want to set up holding companies in Estonia must keep in mind a few requirements imposed by the Company Law in this country. Among these, we remind the following:
- – a set of documents which need to be lodged with the Companies Register must be prepared;
- – the minimum share capital to be deposited must correspond to the selected business form;
- – residency requirements are no longer required for the shareholders of the company;
- – the company must have a management board, however, no residency requirements apply anymore;
- – a registration fee must be paid upon the incorporation of a holding company in Estonia.
Our experts in company registration in Estonia can guide foreigners who want to establish holding companies in this country. They can assist with the preparation of all the documents needed to be filed with the Trade Register.
How to set up a holding company in Estonia
The Estonian law provides that a holding company can be established here only when it is registered or incorporated in Estonia. An Estonian holding company can be shaped in two business forms, as a private limited company (OU) or as a public company (AS).
The minimum share capital that must be deposited in order to open a holding company in Estonia is EUR 25,000 when it takes the form of an OU or EUR 2,500 when it is registered as an AS. The founders must be aware that these amounts must be paid in full before registration.
The registration of a holding company starts with the drafting and notarization of the Articles of Association, followed by:
- – the reservation of the company name with the Trade Register in Estonia;
- – filing of the Articles of Association and information about the shareholders;
- – appointment of the company’s management board based on the resolution of the shareholders;
- – the opening of the bank account and deposit of the share capital for the company to operate.
There are no specific licenses to be obtained when opening a holding company in Estonia.
The uses of a holding company in Estonia
A holding company can be used for various purposes, which is one of its greatest advantages. Among these, we remind about the possibility of owning and controlling various types of assets in subsidiary companies. Among these assets, real estate and intellectual property are the most common. For these purposes, we can distinguish between pure holding companies which own shares in other businesses and operating holdings which also control and manage other companies in Estonia. However, most of the times, foreign investors set up holding companies in Estonia with the purpose of owning various types of assets.
Holding companies can also be established with the purpose of reducing certain taxes under the EU Parent-Subsidiary Directive.
Under this directive, a holding company must hold at least 10% of the shares in a subsidiary company, in order for the subsidiary to be liable for paying the dividend tax, which can later be recovered by the holding company.
Taxation of holding companies in Estonia
Unlike other EU countries, Estonia does not have a specific tax regime for holding companies, however, it is preferred by foreign entrepreneurs interested in innovation, as the taxation of such investments are quite attractive. Starting with 2015, the corporate tax rate in Estonia has been set at 20%, however, Estonian holding companies which have not distributed any profits are exempt from taxation. In case the holding company distributes some of the profits to resident or non-resident shareholders, the exemption will be applicable to the remaining undistributed profits.
Another important aspect related to the taxation of holding companies is that non-resident shareholders will not be subject to the withholding tax on dividend payments distributed by the holding.
You can rely on various accounting services for your holding company in Estonia if you are a non-resident.
Fiscal advantages of a holding company in Estonia
The fiscal advantages of a holding company in Estonia are the existence of a favorable tax regime, particularly the taxation of dividends received and /or paid, the possibility of implementation of European directives on the taxation of payments of dividends, interest, and royalties between related companies established in the EU. By a holding company in Estonia, there also exists the possibility of applying the avoidance of double taxation, under which the tax rates on dividends, interest, and royalties may be lower than those provided by law. Moreover, resident companies and permanent establishments registered in Estonia are not taxed on their income. These entities are only charged with the corporate distribution tax.
What are the non – fiscal advantages of a holding company in Estonia?
The creation of a holding company in Estonia also offers non-fiscal advantages, for example, the possibility of paying dividends during the year and also financial market stability. Among other advantages, there can also be considered the potential advantages in terms of the foreign exchange regime and the confidentiality regarding the identity of shareholders. A holding company in Estonia also has easier access to financing and listing on mature financial markets and is more stable and predictable. We also invite you to watch our video below:
FAQ on holding companies in Estonia
Estonia is a very appealing country to set up a business in and many investors decide to register holding companies here. However, they also have questions about the procedure of opening such type of company here, which is why our local agents who specialize in company incorporation in Estonia have answered some of these questions:
No, there are no special requirements for opening an Estonian holding company compared to a traditional business.
Yes, you can, however, you will need to appoint a local agent to complete the registration procedure. Our agents in Estonia can help you in this regard.
No, opening a holding company in Estonia is not complicated.
The registration procedure of a holding company takes a few days in Estonia.
Contact our company formation specialists Estonia for further information about the holding companies in Estonia. We can also assist with the creation of cryptocurrency businesses. The Financial Intelligence Unit (FIU) provides for the crypto license in Estonia that is valid for various types of services while the Financial Supervisory Authority is in charge of observing and governing the industry. This implies that the majority of the regulations that are now in place for other financial services, such as payment services, are also applicable to suppliers of virtual currency services.