In Estonia, a notary plays a crucial role in the company formation process, ensuring that all legal requirements are met and that the incorporation documents are properly executed. Here's an overview of the notary's role:
Verification of Documents: The notary verifies the authenticity of the documents required for company formation, including the Articles of Association and the identification documents of the founders and board members.
Execution of Notarial Deed: A notarial deed of incorporation is required to legally establish a company in Estonia. The notary prepares and executes this deed, which includes essential details such as the company name, registered office, share capital, and the identities of the founders and board members.
Legal Compliance: The notary ensures that the company's Articles of Association and other incorporation documents comply with Estonian corporate law. This includes verifying that the company name is unique and that the share capital requirements are met.
Registration Assistance: After executing the notarial deed, the notary submits the necessary documents to the Estonian Commercial Register. This step is essential for the official registration and recognition of the company.
Advisory Role: Notaries can also provide legal advice on the company formation process, helping founders understand their rights and obligations under Estonian law.
Overall, the notary acts as a legal facilitator, ensuring that the company formation process is conducted smoothly and in accordance with the law. This role is vital for establishing a legally compliant and operational business entity in Estonia.
To register your company in Estonia with the Estonian Business Register (Äriregister), follow these steps:
Choose a Company Name: Ensure the name is unique and not similar to existing companies. It should not be misleading or offensive.
Prepare Necessary Documents: Gather essential documents such as the Articles of Association, founders' resolution, proof of address, and identification documents for all founders.
Open a Bank Account: Establish a bank account for depositing the share capital. For a private limited company, the minimum share capital is €2,500.
Notarize Documents: Visit a notary to authenticate the incorporation documents. All founders must be present or represented by a power of attorney.
Submit Application: File the registration application with the Commercial Register. This can be done electronically through the Company Registration Portal.
Pay the State Fee: Pay the required registration fee, which varies based on the type of company and registration method.
Await Confirmation: The Business Register will process your application, typically taking 1-3 business days.
Obtain Registration Number: Once approved, receive your company's unique registration code, which is used for all official purposes.
Register for Taxes: Register your company with the Tax and Customs Board within three days of registration.
Set Up Accounting: Establish an accounting system for your company, which can be managed in-house or through a service provider.
These steps ensure that your company is legally registered and compliant with Estonian regulations.
In Estonia, the minimum share capital required for establishing a private limited company, known as Osaühing (OÜ), is €2,500. This requirement is designed to ensure that the company has a sufficient financial foundation to support its initial operations and obligations. The share capital can be contributed in cash or, in some cases, as non-monetary contributions, provided they are appraised and accepted by the company.
The share capital must be fully paid before the company can be officially registered with the Estonian Business Register. This involves depositing the amount into a bank account opened in the name of the company. The bank will issue a certificate confirming the deposit, which is then submitted as part of the registration process. This step is crucial as it demonstrates the company's financial readiness and commitment to its business activities.
While €2,500 is the minimum requirement, many entrepreneurs choose to invest a higher amount to provide more flexibility and resources for their business operations. A higher share capital can enhance the company's credibility with potential partners and clients, as it reflects a stronger financial position. However, the decision on the amount of share capital should align with the company's business plan and financial strategy.
In Estonia, a private limited company (OÜ) has several key tax obligations. Firstly, Corporate Income Tax (CIT) is unique in Estonia, as it is only applied to distributed profits at a rate of 20%, or 14% for regular dividend distributions. This means that retained earnings are not taxed, encouraging reinvestment into the business. Secondly, if the company's annual turnover exceeds €40,000, it must register for Value Added Tax (VAT), which is generally charged at a standard rate of 20% on goods and services. Additionally, there is a Social Tax of 33% that is levied on employee salaries, which the company is responsible for paying. Lastly, Personal Income Tax, withheld from employee salaries, is set at a flat rate of 20%. These taxes are typically filed and paid monthly, and companies are encouraged to use the e-Tax Board system for efficient electronic filing. Understanding and complying with these obligations is crucial for maintaining good standing with the Estonian tax authorities.
A private limited company (OÜ) in Estonia must adhere to several ongoing compliance requirements to maintain its legal standing and ensure smooth operations. Here are the key obligations:
Annual Report: Every OÜ is required to submit an annual report to the Estonian Business Register. This report includes financial statements and must be filed within six months after the end of the financial year.
Accounting Records: The company must maintain accurate and up-to-date accounting records in accordance with Estonian accounting standards. This includes keeping track of all financial transactions and preparing necessary financial statements.
Tax Filings: Regular tax filings are mandatory, including Value Added Tax (VAT) returns if applicable, and corporate income tax on distributed profits. These filings are typically done monthly or quarterly, depending on the company's tax obligations.
Employment Regulations: If the company has employees, it must comply with employment laws, including registering employees with the Tax and Customs Board, withholding and remitting personal income tax, and paying social tax.
Shareholder Meetings: The company must hold an annual general meeting of shareholders to discuss and approve the annual report, financial statements, and other significant matters.
Data Updates: Any changes in company details, such as changes in the board of directors, registered address, or share capital, must be promptly updated in the Business Register.
Compliance with Legal Obligations: The company must adhere to all relevant legal and regulatory requirements, including those related to data protection, environmental regulations, and industry-specific laws.
These compliance requirements are essential for the legal operation of an OÜ in Estonia and help ensure transparency and accountability in business practices.
It's important to note that requirements can change, and some activities may have additional local regulations. Always check with the relevant authority or consult with a local business advisor to ensure full compliance with current Estonian regulations.
With a combined twelve years of expertise, the House of Companies team has been helping Estonian entrepreneurs launch their businesses.
Did you know that a branch may be registered in as little as one day?
Can you tell me if a notary is needed to register a branch or not?
Anyone starting a business in Estonia using our Entity Portal may be certain that they will be able to create an IBAN payment account.
Forming a local company, such as an OÜ (osaühing), is losing ground to registering a branch in Estonia. One of the pioneers in enabling this empowerment for entrepreneurs throughout the world is House of Companies. House of Companies can help you establish your Estonian firm with less reliance on costly advisors and notaries.
How about we discuss your choices?
Of course! A great thing about Estonia is that you don't have to live there to start a business. Yes, you can definitely start a business in Estonia as long as you have a real address there and can meet all the legal requirements. As part of this, you need to have a formal agent in the country and register your business with the Estonian Business Register.
At first, the steps may seem challenging, but with the right help and direction, you'll be able to get your business up and running in no time. Entrepreneurs from all over the world want to move to Estonia because it has a strong economy, is well-positioned, and is friendly to business.
But don't let the fact that you're not a local stop you—take advantage of the opportunities available and make your business dreams come true in Estonia!
How about we discuss your choices?
An efficient alternative to forming a full-fledged Estonian corporation is to set up a representative office to represent your interests in the country.
When doing business in Estonia, a representative office might act as an intermediary between your present firm and prospective partners or customers.
It opens doors to networking, market research, and potential business prospects. Even though a representative office can't generate income, it's a safe way to enter the Estonian market.
Once your representative office is prepared to start making money, we can transform it into a full-fledged branch. This will grant it the authority to register for VAT, become an Employer of Record, and do much more besides.
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