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Company Formation Estonia



Why is Estonia an Attractive Country for Foreign Investors?

Updated on Monday 08th January 2018

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Estonia can be considered an attractive country for foreign investors due to its national economy which has proven its ability to succeed and also due to a business environment based on the principles of flexibility and openness. Estonia can also be considered a country with a friendly economical climate, favorable to business growth and cost advantage.


Estonia’s location in a dynamic and rapidly growing region is beneficial for the development of domestic businesses. Estonian economic environment is characterized by competitiveness and economic freedom indicators, which have shown that this country offers a favorable business climate, which allows for investment in high productivity.


Another aspect that makes Estonia an attractive country for foreign investors consists in the success of building up a conservative fiscal policy since 2009. The Estonian state budget deficit has stayed within the limits allowed by the Maastricht criteria, thereby allowing Estonia to join the euro zone. Thus, the government has declared Estonia ready to adopt the euro as national currency in January 2011.


An entrepreneur willing to invest in Estonia must also know that the Estonian state debt is less than 5% of gross domestic product and the public sector costs are relatively low, with a simple tax system. The Estonian state also encourages investment and the income tax is 21%.

Accession to the euro zone has amplified the business success, especially in the current global economic situation, where the introduction of the euro as national currency provides a clear and concise perspective on the security of the local business environment and increases reliability.


Estonia is an attractive country for foreign investors also due to economy’s flexibility, which plays an important role in the labor market, allowing responding to market signals. The economical restructuration has also accelerated the new Labor Law, applied since July 2009.

The Estonian government provides the basis for the necessary stimulus for the development of human capital and offers good opportunities for the regulation of the labor market, with unemployment insurance and retraining opportunities. In recent years, the Estonia's salary was lower than the EU average and, after the completion of the necessary correction, the average wage is expected to rise in accordance with the development of the overall economy. However, the main purpose is to assure that the Estonian economy remains cost advantage.


Estonia is an attractive country for foreign investors also due to a correct communication between the state and the citizen or business. A foreign investor can create a company online in less than 5 minutes and declare taxes on e-tax office in 10 minutes.


Estonia's economic recovery is based on profound structural changes, with its own strategic directions identified in business, research development, tourism and education (internationalization of studies).


Due to several principles designed with different business grants which have been implemented by the state, Estonia can be considered an attractive country for foreign investors. The state supports by governmental programs several fields and directions: research and development projects, technology development centers, support for Export Marketing, staff development, by supporting the involvement of professionals, supporting the introduction of new technologies, science and technology parks and incubators, start-up assistance and micro-loan guaranty, supporting the tourism sector, support for the creative industries and many others.



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