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Types of Estonian Companies

Updated on Thursday 30th April 2020

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Foreign investors who want to open a company in Estonia will have many advantages. Apart from the developed economy, entrepreneurs will also be allowed the type of structure they want to use for their Estonian business. From this point of view, there are several types of companies which can be registered in Estonia.

Foreign companies have the possibility of operating on the Estonian market by registering branch offices and subsidiaries. The liaison office can be created with the purposes of exploring the market before starting any type of company here.

 

Our company formation agents in Estonia have prepared a detailed presentation on the main types of companies which can be registered here. We can also assist with professional advice and assistance on company registration in this country.

Estonian companies

 
The types of companies in Estonia are described in the Company Act, the main legislative document that regulates company formation in the country.
 
According to law, the following types of legal entities can be incorporated in Estonia:
 
  • - the general partnership;
  • - the limited partnership;
  • - the private limited company;
  • - the public limited company;
  • - the commercial association;
  • - sole proprietorship.
 
Foreign investors who set up companies in Estonia should be informed about all the types of structures and their particularities. Only by knowing the differences between companies, can investors choose the most suited one for their business. Furthermore, if you need assistance during the company registration procedure in Estonia, our experts can help you.
 

Limited companies in Estonia 

 
The private limited company and the public limited company are the most popular business forms in Estonia. An important difference between the two lies in the minimum share capital needed to incorporate the company. While the private limited liability company is more suited for small and medium sized businesses, the public limited company is usually chosen by large corporations in Estonia. 
 
The private limited company is not able to sell its shares to the public – this is the main characteristic that differentiates it from the public one. A minimum share capital of 2,500 EUR is needed to incorporate this company. Shareholders are liable to the extent of their contribution to the capital of the company. A private limited company must have a management board but a supervisory board is optional (mandatory only if prescribed for in the Articles of Association).
 
The public limited company has larger incorporation costs but its shares are freely transferable and it can be listed on the Estonian Stock Exchange. The minimum share capital for this company is 25,000 EUR. A management board and a supervisory board are directing and supervising the actions of a public limited company. This type of company must observe the accounting requirements in the country and must also appoint an auditor. 
 

Partnerships and other types of business forms in Estonia  

 
The general and limited partnerships in Estonia are formed by two or more partners that have a common business goal. In the case of the general partnership, the founders are solely liable for the obligations of the company. When forming a limited partnership only one of the members is fully liable while the other is only liable to the extent of the contributions made. No minimum share capital is required for partnerships in Estonia
 
The branch is a preferred business form for foreign companies looking to establish their presence on the Estonian market. Unlike the subsidiary, the branch is not considered a legal entity and it relies fully on the mother company abroad.
 
The sole proprietorship is the simplest business form in Estonia and it is established by a natural person who opens a business on his own. No distinction is made between the owner and the company, meaning that the individual is fully liable for the debts and obligations of this company. The sole proprietorship must be registered with the Commercial Register before engaging in any business activities.

If you need more information about the incorporation process for each company type, as well as tax obligations in Estonia and requirements for financial reporting, you may contact our company registration experts in Estonia
 

Small, medium and large companies in Estonia

Even if these are not specific types of companies, the Estonian government decided to distinguish between the sizes of business in order grants various benefits. Limited liability companies are categorized into small, medium and large companies in Estonia. Among these, small and medium-sized enterprises, also known as SMEs, will benefit from several incentives offered by the authorities.

These companies are categorized as:

  • -          micro companies which have assets with a total value of 175,000 euros and an annual income of maximum 50,000 euros;
  • -          small companies which own assets of maximum 4 million euros and annual sales of 8 million euros and an average number of 50 employees;
  • -          medium-sized enterprises which have either the value of assets totaling 20 million euros, or 40 million in yearly sales or an average number of 250 workers;
  • -          large companies which enter the same category with medium-sized enterprises, however, they must meet at least two of the three indicators mentioned above.

Foreign investors can now set up any type of company remotely by applying for e-residency in Estonia.

Requirements to start various types of companies in Estonia

Apart from the share capital requirements imposed to limited liability companies, there are also other requirements which must be respected when opening a company in Estonia. These are:

  • -          at least one manager in the case of private and public companies in Estonia;
  • -          in the case of partnerships and sole proprietorships, the manager will be one of the partners, respectively the sole trader;
  • -          all types of companies must register with the Estonian Trade Register based on specific documents;
  • -          all companies are subject to various accounting regulations and submission of specific financial statements.

Foreign investors can also use limited liability companies to set up other types of businesses such as holding and offshore companies. There are very employed types of companies because of the tax advantages they offer.

Those who do not want to register a new company can simply purchase a shelf company in Estonia.

Our Estonian company formation specialists can guide investors through the registration procedure of any type of company.

Documents related to opening a company in Estonia

Once the type of Estonian company is selected, the most important part will be preparing the documents which will be filed with the Trade Register for the actual incorporation.

No matter the type of structure chosen, the future company owner’s identification papers are required. Then, a specific application form which is released by the Companies Register must be filed in the case of sole traders and partnerships.

When it comes to opening a limited liability company, the Memorandum and Articles of Association must be prepared. These must be drafted in accordance with the requirements of the Company Act and must contain specific information, such as the object of activity of the business, the share capital, the number of shares issued, their value and their distribution among the shareholders. All companies must have a registered address in Estonia in order to be considered a resident business.

Once registered with the Trade Register, the company must also register for taxation and value added tax and obtain the necessary licenses and permits which will allow them to operate on the Estonian market. We can also assist with EORI registration in Estonia. We can also handle the VAT registration procedure in Estonia.

We mentioned earlier the possibility of buying a ready-made company. These companies have all the incorporation documents in place, however, these can be amended in order to comply with the requirements of the new owner. Our company registration advisors in Estonia can offer guidance in all the aspects related to buying a ready-made business, including with due diligence procedures which will help them make the right decision, so do not hesitate to contact us.

 
For detailed legal information and legal consultancy, we recommend our partner law firm in Estonia

Companyincorporationestonia.com is a part of Bridgewest.eu, an international network of specialists in offshore company formation and setting up offshore bank accounts, which has affiliated partners throughout the world, including Dutch lawyers who can provide local legal assistance to foreign investors, and also company formation specialists in countries like Luxembourg, Switzerland, Belarus or Lithuania who can handle all needed legal procedures when opening a company in the related country. We can also recommend our partners from Slovakiawho are experts in company incorporation matters and can help you start a company in this country. In case you are interested in starting a business in an Asian country, such as Thailand or Malaysia, our consultants from ThaiCompanyFormation.com can handle the company formation procedure for you.
 

 

Meet us in Tallinn

Call us now at +372 5089565 to set up an appointment with our consultants in Tallinn. As our client, you will benefit from the joint expertise of local advisors  for opening a company in Estonia.

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-cost-efficiency: competitive company formation prices;

-prompt response to your inquiry (24 hours)

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