In Estonia it is possible to register two types of companies – Joint-stock company (Aktsiaselts, „AS”) and Limited liability company (Osaühing, „OÜ”). To incorporate companies of both types natural or legal persons are needed, residents and non-residents. The legal address of the registered company has to be in the territory of the Republic of Estonia.
It takes 15 days to register Estonian companies from the moment of submitting all necessary documents to the Estonian Business register. It is impossible to transfer Estonian company to another jurisdiction.
Features of Estonian “OÜ”
The minimum authorized capital of the Estonian limited liability company is 2 500 euro. The capital may not be paid at the time of the registration. The minimum par value of a share is 1 euro. If the par value of a share exceeds 1 euro, it has to make full multiple of 1 euro. Shares can have same or different par value. Each shareholder can own one share. In case of acquisition by shareholder of an additional share, the par value of a share respectively increases. Shares grant shareholders rights to participate in the management of the Estonian “OÜ”, distribute profit and assets, which have remained after the termination of Limited Liability company. Shares are freely alienated. In case of purchase and sale of the share, the contract of the purchase and sale has to be notarized.
Decisions of shareholders are accepted at meetings. Board convokes the meeting of shareholders for the approval of business year report and dividend distributions and in other cases provided by the law. The meeting can accept decisions if more than a half of share votes are present at the meeting.
In Estonian Limited Liability company may be a Council, which consists not less than of the 3 members or more if it is provided by the Articles of Association. However, it is not an obligatory body.
Board carries out daily activity of the company. Board members are not obliged to be shareholders. Board member is elected for five years and is dismissed by shareholders. The minimum number of board members is one person.
Payments to shareholders can be made from the net profit or retained earnings once a year for the previous business years. Shareholder receives the part of profit (dividend) in proportion to the cost of his share.
Features of Estonian “AS”
The minimum number of the owners for Estonian “AS” is one.
The minimum authorized capital of the Estonian joint-stock company is 25 000 euro. The minimum share price is 0,10 euro. Company can issue only registered shares, which can be freely alienated. Shares have to be registered in the Estonian Central Register of Securities. The rights for the registered shares belong to the person specified as the shareholder in the Register of Shareholders.
In “AS” Shareholders carry out the rights at the general shareholder meeting, that is the supreme body of management of the joint-stock company. The next general meetings are held once a year. General meeting can manage decisions if there is more than a half of the share votes are present.
Board carries out daily activity of the company. Board member is not obliged to be a shareholder. Council elects board members for 5 years. The minimum number of board members is one.
Council has to be formed of 3 people. Members of council can be residents of any country. Shareholders can be members of council, but board members cannot be at the same time members of council. Council plans business activity of “AS”, organizes management of it and exercises supervision of board’s activity. General Meeting elects and dismisses the members of council. The decision of council would considered to be accepted if it has got votes of more than a half of the members participating in the meeting.
Shareholder does not bear responsibility according to obligations of joint-stock company.
“AS” bears full responsibility according to the obligations with all its assets.
Taxation of Estonian companies
The tax on retained earnings on legal entities is 0%. If shareholders decide to share profit in the form of dividends, the firm pays additional income tax for shareholders at a rate of 20/80 that makes 25% (since January 1, 2015).
Since January 1, 2015 new income tax rate is 20% instead the old one of 21%.
The rate of VAT in Estonia is 20%. VAT is imposed upon sale of goods and rendering services in the territory of Estonia and also goods and services imported to Estonia. In certain cases rate of VAT is 9% (books, medicine, tickets for concerts) and in the others -0% (export of goods and services from Estonia).
VAT is not applied in case of the sale of goods in the customs territory or in the territory of the European Union.
Accounting and audit of Estonian companies
Accounting and audit are obligatory for all Estonian companies. After the termination of the business year the board prepares the annual accounting report and the business activity report in accordance with the Law on Accounting Financial Reporting, which should be submitted to the Auditor. Report for business year approved by General Meeting should be submitted to Estonian Business Register not later than 6 months from a business year-end.
Our company may provide nominee services for Estonian companies.
Opening a bank account for Estonian companies
Ready-made Estonian companies already have bank accounts in one of the local banks. It is necessary only to re-register an account on a new representative.