Estonia is one of the most prolific economies in the Baltic region and its accession to the European Union opened the doors to important trading relations with other EU states. As a matter of fact, imports and exports represent an important portion of Estonia’s Gross Domestic Product (GDP).
Foreign investors can set up trading companies in Estonia through which importing and exporting goods into/outside the country is possible.
Below, our company formation agents in Estonia explain the import/export procedures and the steps for opening a trading business in this country. You can rely on our experience if you want to open a company in the import/export sector in Estonia.
General aspects of Estonia’s foreign trade
With a very active trade market, Estonia represents a good target for any foreign investor interested in opening a trading company, because of the friendly economic environment in Estonia. Furthermore, the country’s geographic location between Finland, Sweden, and Russia plays an important role in the development of its trading market and economic growth. Estonia has a liberal and flexible economy system with an export of goods and services that exceeds 95% of GDP. Its trading market is considered one of the fastest growing in Europe, due to the advantages the country provides for foreign investors.
The Estonian international trading is established by the EU Common Commercial Policy starting from May 2004, when this country became a member state of EU, and on the obligations stated by the World Trade Organisation Organization (WTO). Furthermore, Estonia became the 34th member country of the Organization for Economic Cooperation and Development (OECD) in 2010.
Estonia’s main trading partners are the countries nearby: Finland, Sweden, Russia, Latvia, and Lithuania. Last year a very high percentage of the country’s trade (77%) was with states members of the EU. The goods that were exported from Estonia to the EU countries summed 8.7 billion euro, representing 71% of the total exports amount.
If you want to open a company in Estonia and need information on the trading procedures you need to comply with, our agents are at your disposal for guidance.
Opening a trading company in Estonia
Importing and exporting goods into/out of Estonia can be completed by both natural persons and legal entities, however, it is much simpler to set up a company and obtain the necessary trading licenses from the Estonian Customs Authorities in order to engage in such activities.
Registering a trading company in Estonia does not imply any special requirements, however, the business owners need to company with the regulations imposed by the Customs Authorities. Trading companies need to apply for import-export licenses and must obtain VAT and EORI numbers for the activities they will compete with other EU or non-EU countries. Certain special licenses will be required when importing or exporting specific categories of goods in Estonia.
According to the Company Law in Estonia, both local and foreign investors are welcome to open trading companies and conduct import/export activities.
The steps for starting such a business in Estonia are:
- registering the selected legal form with the Trade Register in Estonia (the procedure is very easy);
- registering for taxation and VAT is mandatory when starting a trading business in Estonia;
- registration with the Customs Authorities and obtaining the EORI number is also mandatory for trading within the EU;
- applying for import/export licenses for special products is also necessary after completing the company registration procedure.
It is possible for foreign companies to set up trading businesses in Estonia under branch offices and subsidiaries. However, in order to complete such activities, the subsidiary is recommended because it can engage in various operations.
If you are interested in company registration in Estonia and need advice on the best legal structure to operate, our local consultants can advise you. Our company formation agents in Estonia can help foreign investors who want to set up trading companies in this country.
Import and export activities in Estonia
As a member of the European Union, import and export procedures completed by Estonian companies are subject to simple requirements. The goods originating from other EU member states do not require any special license and are not subject to customs declarations with the Customs. These also benefit from various advantages under the intra-Community VAT and Intrastat regulations.
Even so, Estonian companies will be subject to simplified procedures based on their EORI numbers. Foreign companies can also obtain EORI numbers in Estonia provided that their first customs operations on EU territory are completed in Estonia.
When it comes to importing or exporting goods originating from non-EU states in/out of Estonia, different requirements apply in terms of licensing. In most cases, specific documentation must accompany the merchandise.
Among these we mention the following the Entry Summary Declaration (ENS) and the Single Administrative Document (SAD). It is also possible for the merchandise to be stored in Customs warehouses until the documentation is issued.
For certain products, such as perishable foodstuff and meat products, certificates of origin are required. In certain cases, the invoices and information about the quantity of products must be declared with the Customs. It is also important to note that where special import or export activities are required, the licenses that accompany the merchandise must be obtained for every operation.
Estonian import/export procedures are completed in accordance with the Union Customs Code which also implies supervision of the merchandise from the entry to the exit in/out of the country. Also, customs and excise duties must be considered when importing or exporting goods in/from Estonia.
If you need more information on import/export procedures applicable here, our Estonian company formation representatives can guide you.
Estonia’s exports
Estonia exports both services (representing about a third of all exports) and goods. Among the most popular such services are transportation, travel, business, IT and communication services. The Estonian exported goods vary from food products to machinery and equipment, mineral products, agricultural products, wood (wood products) and metals (metal products).
The top products exported by Estonia are telephones (15%), refined petroleum (12%), cars (2.0%), scrap iron (1.8).
The most significant export partners for Estonia are the Scandinavian countries: Finland and Sweden, covering 18% and 14% of the Estonian trading market. Most exports go to Germany, Russia, Latvia, Lithuania, and the US. According to the National Statistics Office, Estonia’s exports increased to 12,861 million euros at the end of 2017. The first half this year brought more than 11 million euros to the country’s economy.
Export procedures in Estonia
With respect the export procedures Estonian companies must respect, we remind the following:
- – the company must file a declaration related to the exported products with the Customs;
- – the products must also be accompanied by the certificate of origin and commercial invoice;
- – certain products are exempt from customs duties if exported to EU countries;
- – the company will need to obtain special export permits for certain categories of goods.
Estonia is a member of the World Trade Organization which implies various benefits to local trading companies. These companies are also required to apply for Estonia VAT registration.
Importing in Estonia
Same as in the exports case, the Estonian imports include food products, engineering and machinery products, mineral and agricultural products; as for services the transportation and travel ones are the main imported services.
The top imported products are: refined petroleum (17%), telephones (5.1%), cars (3.5%), integrated circuits (1.6%) and packaged medicaments (1.5%).
The main importing partners for Estonia are Finland (13% of the total), Latvia and Sweden (11% from each). Imports in Estonia had a total value of 14,733 million euros, while during the first half of 2018 imports have reached more than 13 million euros.
Import procedures in Estonia
As mentioned above, Estonian trading companies must comply with certain procedures related to the import of goods into the country. The Estonian Customs authorities will apply certain tariffs, depending on the types of goods imported by companies, however:
- – no customs duties apply for goods from other EU countries entering Estonia;
- – an intrastate declaration must be filed by the company with the Customs;
- – the Common Customs Tariff will apply for goods imported from non-EU countries;
- – the customs duties applied to goods imported from non-EU states are quite low.
The following documents must accompany imported products in Estonia:
- – the commercial invoice of the product must be delivered by the importer;
- – the certificate of origin is also required when importing goods into Estonia;
- – the specific duties must be paid by the importer.
Among the duties to be paid, we remind the VAT, the customs duties and the excise duties.
Trading statistics in Estonia
2019 was a good year for the trading sector in Estonia. According to the Statistics Office, in 2019:
- – the goods imported into Estonia were valued at 16.1 billion euros;
- – the value of the goods exported form Estonia was 14.4 billion euros;
- – 70% of the goods exported from Estonia were directed to other EU states (including the UK);
- – 79% of the good imported into the country came from other EU member states;
- – Estonia exported goods to 183 countries and imported from 145 countries all over the world.
For further details about the possibilities of investment in Estonia please contact our company formation specialists.