Financial technology or fintech
has become quickly one of the most developed new industries in Europe and the European Union. It has raised so much that national and EU authorities have created legal frameworks that support the creation of various types of businesses in this sector.
Two of the best types of activities that can be completed in the fintech sector are the electronic money issuance and the provision of payment services. These correspond to the Electronic Money Institution (EMI) and the Payment Services Provider (PSP) and Estonia is one of the first European countries to acknowledge their importance.
If you want to open a company in Estonia in this sector, you will need to obtain an EMI license. Our company formation agents can help in this regard.
Legislation on EMI companies in Estonia
Electronic Money Institutions are regulated through two important laws. The first one, created at national level is the Estonian Payment Institutions and E-money Institutions Act (PIEIA), while the second one is EU Directive 2015/2366 also known as the Payment Service Directive 2 (PSD2).
There is only one difference between EMIs and PSPs and that is in favor of the former which implies the issuance of electronic money.
Company registration requirements when applying for an EMI license in Estonia
The steps of opening a company seeking to obtain an EMI license in Estonia are not different from those of any other business operating in a traditional industry. This means that the only requirement will rest on the procedure of obtaining the EMI license.
The business form required for these activities is the public limited liability company
for which the Memorandum and Articles of Association must be drafted alongside information about the shareholders and directors. It is possible to set up this type of company through Estonian e-residency.
The most important requirement to respect when applying for EMI license in Estonia is the share capital which must amount to at least 350,000 euros. Also, only cash contributions are accepted with proof of the legitimacy of the funds.
Once the company is registered, it can apply for the EMI license with the Estonian Financial Supervision and Resolution Authority.
Our company registration agents in Estonia
can assist with the incorporation with the Trade Register
Documents to prepare for obtaining an EMI license in Estonia
copy of the company’s Memorandum and Articles of Association,
proof of payment of the share capital (bank statement),
a plan providing information about the services to be provided,
a business plan showing the company meets of the requirements imposed under the PEIA,
a document indicating the company respects the requirements related to the protection of clients’ assets,
internal rules and accounting policies and procedures documents, as required under PEIA,
information on the IT means and systems used to issue electronic money.
Other documents will also be required, some of them related to the accounting regulations that must be met by public companies with respect to the audit requirements such businesses must meet.
Services that can be provided under an EMI license in Estonia
The following services can be provided by a company holding an EMI license in Estonia
- electronic money issuance, however, certain requirements must be met,
- payment and loans can also be two of the services provided under this license,
- additional services related to electronic money, such as handling payments,
- operation of various electronic payment systems.
One of the best aspects about applying for an EMI license in Estonia is that the company obtaining it will have passporting rights and provide its services in all EU countries without additional authorization requirements.
Why set up an EMI company in Estonia
is one of the most advanced countries in the world in terms of technology. It is also the first country to enable the concept of e-residency
, which makes it one of the best places to create a fintech business.
According to statistics:
- at EU level, there are 500 million consumers of fintech services,
- at the end of 2018, there were 84 fintech companies in Estonia,
- 32% of these businesses were operating in the distributed ledger technology sector,
- 28% of them were operating in the deposit and lending sector.