Doing Business in Estonia

Doing Business in Estonia

Estonia is located in the continent of Europe. It became an independent state in 1918 after gaining its sovereignty from Russia. Since 2004, the Govt of Estonia has been maintaining liberal policies after joining the European Union (EU). The best part of investing in Estonia is that all the foreign investors have same rights and responsibilities as if he is a local entrepreneur.

Minimum requirements;
- One Shareholder
- One Director
Both persons can be foreigners and can reside anywhere
- Paid up sharecapital to be atleast (=2500
- Registration within 7 weeks

Best feature is NO tax is payable on Profits if it's reinvested the Profits in the same business or keep them in Company's Bank Account. One of the benefits in investing in Estonia is cheap labor and thereby low cost of operations. While the businesses can use and take benefits from Estonia free trade zones.

Income tax in Estonia is at the rate of 20% on the profits distributed as dividends, gifts, expenses. It is mandatory to take registration like Customs Board after registering the business entity like LLC or LLP. Make sure that the businesses set up in Estonia file monthly tax Returns by 10th of the following month.
Just like other countries, Value Added Tax (VAT) is prevalent in Estonia. Like India, GST monthly returns are to be filed by 20th of the following month, similarly in Estonia VAT Returns to be filed by 20th of following month.

There are no Withholding Tax so far on Dividend payments in Estonia. However, it is mandatory to withhold taxes on Capital gains and Royalties.

With low population, Estonia is emerging to be the best destination to do business in.