FAQ
E-residency is a digital identity issued by Estonia’s government that gives foreigners the opportunity to get access to Estonia’s transparent and zero-bureaucracy infrastructure and use Estonian e-services. Until 2014 these services were accessible only to local residents, for example, the opportunity to provide digital signatures and do paperless business. Furthermore, e-Residency allows people across the world to register an EU company in Estonia and do business remotely from wherever they are in the world.
Since Estonia regained its independence in early 90s, there has been a huge technology boost, which has led people to believe that Estonia is a country where five-year olds cannot properly read yet but are already coding. Its highly advanced infrastructure is innovative and super simplistic. Residents of Estonia have been voting, claiming taxes, banking, digital document signing and running their business completely online for decades. Now, in 2014 Estonia’s government launched the e-Residency Program that allows foreigners across the world to get access to its well-advanced and transparent infrastructure. The main purpose of the program was to increase the number of active enterprises in Estonia.
E-residency is literally for EVERYONE! For people who love fast and simplified solutions. For people who love technology and innovation. People who wish to do business in a transparent and zero-bureaucracy environment. People who wish to work remotely from anywhere in the world such as digital nomads. People who need a solution after Brexit to continue working with their EU partners and clients. People who like to save money on taxes. People who want to become more environment-friendly and run a paperless business. People who wish to spend more time making money and less time on admin. People who wish to take advantage of a completely digital online world and e-services. People who wish to sign, authenticate, send, and encrypt documents digitally. And last but not least, for people who are fans of Estonia, its infrastructure and wish to join the community with people from more than 195 countries!
Being an e-Resident of Estonia gives people anywhere in the world an opportunity to start a company in Estonia with an EU identity. This gives a chance to do borderless business remotely from wherever you are in the world; Breaks down the barriers around Brexit and helps to continue working with EU partners and clients; An opportunity to spend minimal time on administration; Run a business that can be more environmental-friendly than anywhere else by taking advantage of being 99% paperless, just like Estonia’s government; Possibility to save money on taxes – as an Estonian e-resident, there is a chance that you would not have to pay corporation tax as long as the profits are not taken out, but reinvested or retained. Please note that the taxes and circumstances differ for each and every e-resident. We strongly advise to speak to our partners in taxation before starting your new EU company.
Your e-Residency digital ID card is not a travel document and does not have a physical identification photo on it. Your status as an e-resident does not give you a permission to travel within the EU or to Estonia without a visa, should one be needed.
Being an e-Resident of Estonia does not necessarily mean that you will pay all your taxes in Estonia. Typically personal taxes still have to be paid to your country of residence. Other taxes depend on your particular circumstances. At the present moment Estonia has effective double taxation treaties with 61 countries, including the UK. Since the circumstances of each e-resident and company are different, we strongly recommend speaking with a tax specialist to get as accurate information as possible.
The e-Residency Program of Estonia gives access to Estonia’s infrastructure, which offers a wide range of innovative benefits. Besides giving the ability to register a business with an EU identity and run it online from anywhere in the world, it also allows people to use a variety of Estonian public and private e-services such as signing and verifying authenticity of documents digitally as well as sending and encrypting them securely. Furthermore, being granted Estonian e-Residency allows you to apply for EU grants, helps you with digital business banking options and simplifies the process of getting started with online payment services. One of the big advantages of e-Residency is also the tax benefits that indicate no corporation tax until the money is taken out of the business (circumstantial). Like everything else in 99% paperless Estonia, your business could also become environment friendly, and you can even declare your taxes online. Moreover, granted e-Residency status gives you admittance to a community of like-minded fellow e-residents from more than 195 countries.
In order to become an e-resident of Estonia, you need to fill in an application. You need a copy of a valid photo ID and a short paragraph where you state your reasons for applying.
You can apply for e-Residency as long as you have a passport and do not have a criminal record. The Estonian Police and Border Guard Board conducts a background search on every applicant before the e-Residency is being granted. In order to apply for the e-Residency, you also need to have a valid reason for applying.
E-Residency kit consists of three parts: e-Residency digital ID-card, card reader and pin codes. It is crucial to keep them safe and to not share the pin codes with anyone. The e-Residency kit is the key that gives you the access to Estonia’s e-services as well as the kit will be used to sign, authenticate, send and encrypt documents.
When applying for e-Residency, you need to fill in an application by answering questions and providing necessary documentation. Once the application has been submitted, it can take up to 4-6 weeks to process, during this time The Estonian Police and Border Guard Board conducts a background search as well. Once the e-Residency has been granted, the e-Residency kit (digital ID card, card reader and pin codes) will be shipped out to your chosen embassy (2-5 weeks). When the kit has arrived at its destination, you will be contacted by the embassy. Arrange a collection time and make sure you will not be late. You can pick it up during the next 6 months after it has arrived. You need to bring with you your passport or the same photo-ID you used for your application in the first place. ONLY you can collect your kit since you need to give fingerprints.
Your e-Residency kit will be delivered to your chosen country/embassy that needs to be collected in person. In the United Kingdom it is the Estonian Embassy in London, with the address: 44 Queen’s Gate Terrace, South Kensington, London, SW7 5PJ, United Kingdom.
If you are not based in the UK, have a look at the other locations across the world that are best suited for you.
https://e-resident.gov.ee/pick-up-locations/?_gl=1*160fotx*_ga*MTIxMTcwMzMyNi4xNjMzNjc4NTIx*_ga_99WHM64VPV*MTYzNDU1ODAxNC40LjEuMTYzNDU1ODYxMi42MA
E-Residency is granted for life, but the e-Residency card needs to be renewed in every five years. The expiration date is written on your e-Residency card and it is advised to apply for the extension at least 2-3 months before the card is out of date.
Now you can access Estonia’s public and private e-services, sign, send, encrypt, and authenticate documents online. You can register your company and start trading with your new paperless European business. You can save money on taxes and declare them online as well as join the e-Residency community! To top it all off, you can run your business remotely in the most simplistic way possible, where you need to spend very little time on administration tasks, which gives you more time to work with clients and bring in the revenue!
In Estonia, when you register a private limited company, you are also required to register the minimum share capital. A private limited company’s minimum share capital can be as low as €0.01 per shareholder.
Make sure that once you are making the transaction you will put share capital into reference.
You can register your Estonian business online either on our website with our guidance and help or you can do it yourself on Estonia’s e-Business Register platform.
The businesses registered in Estonia by e-residents are mainly limited companies, which in Estonian is Osaühing (OÜ).
To register your company in Estonia, you will need: an e-Residency kit, a legal address, contact person, a business name, at least one board member, certificate of application and articles of association.
There are no on-going fees after registering your business in Estonia. However, different state fees will be applied if you wish to make changes to your business.
We strongly advise to invest into local accountants, solicitors, and tax specialists to make sure that you are updated and aware of all your rights and responsibilities.
A legal address in Estonia and a contact person are required by the Commercial Code if the management board of your Estonian business resides abroad.
Your contact person is liable for getting and sending any procedural reports/documents or letters addressed to your business – while Estonia highly esteems being digital, some authoritative records might in any case be followed through on paper. A procedural document or declaration of intent is considered to have been delivered to your company when it is delivered to the contact person.
The contact person does not have be an investor, board member, or a staff member, and you do not have to give any rights to them.
There must be at least one shareholder assigned to a company, but there is no limit to how many there can be altogether.
Included in our packages is having one shareholder and adding every additional shareholder costs £50.-
Yes, all board members/stakeholders need to have e-Residency, unless you work with a resident of Estonia.
To register a business in Estonia or in any other country, it can not be done without a legal address, it is a part of the registration process and there is no way around it.
When registering a company in Estonia, you need an actual Estonian address. A post box address is not enough. A contact person and address are suggested to be connected because the contact person might need access to that particular address. We strongly recommend using a service provider such as ourselves, who can offer you both these services simultaneously.
Yes, you can. It can be done on Estonia’s e-business register platform, and you will need your digital ID-card, card reader and pin codes for it. To change your company’s legal address you must pay state fee of €25 after signing the document.
Closing down your Estonian company is a process that takes between 6-9 months. Voluntarily the company dissolving can be started with a resolution of shareholders where at least ⅔ of shareholders have to approve. Thereafter the management board should submit a formal request to the Commercial Register, from where the liquidation proceedings can begin.
We strongly advise to get a service provider involved who can help you throughout the process.
An obligation to register for VAT shall arise for the person as of the date on which the taxable supply of his or her transactions exceeds €40 000 as calculated from the beginning of a calendar year.
A person is required to submit an application for registration as a VAT payer to the Estonian Tax and Customs Board within three working days as of the date on which the registration arises.
Registration for the VAT is done in the e-MTA – “Submitting applications for registration as a person liable to value added tax (KMKR)”
For the administration of access permissions, a legal representative of a company enters in the e-MTA in the role of a representative and chooses “Settings” > “Access permissions” > “Access permissions of representatives”. To give the access permission, the personal identification code of the user is to be entered and the access permission “Submitting applications for registration as a person liable to value added tax (KMKR)” is to be chosen.
In section “My access permissions” you can view your access permissions (rights for using the e-MTA services), discard and delegate your permissions (provided that the access permission is delegable). Delegation means that you give your access permission to another person so that this person can represent you in the e-MTA.
For the submitting of the application as an authorized person, choose in the e-MTA “Registers and inquiries” > “Registration” > “Registration of the VAT liable person” > “New application” > “Application for registration as a person liable to VAT” or “Application for registration as a person liable to VAT with limited liability”.
Instruction video https://www.youtube.com/watch?v=CzsSprWa2GA&feature=youtu.be
– Annual report every year for the e-Business Register.
– Income and social tax declarations must be submitted through the EMTA (Estonian Tax and Customs Board website) environment by the 10th of each month at the latest. This applies only if the business has employees or if the business owner is taking out a salary.
– VAT Declarations, if the company is subject to VAT. The VAT Declarations must be submitted by the 20th of each month, unless the 20th falls on a weekend, it may also be submitted by the following Monday.
– The employees have to be registered as employees on EMTA-s website.
Depending on who receives income from the company and on their tax residence, if the e-resident withdraws dividends from the company and is not an Estonian tax resident, he/she must declare income in his/her country (in the country where he / she is a tax resident).
Dividend income is taxed differently all over the world, it must be declared according to the requirements of your country and what is the tax rate. If dividends are taken out in an Estonian company, the tax rate on the dividend is 20/80.
Annual report must be submitted within six months of the company’s financial year ending.
Access for electronic submitting of annual reports and its notes is allowed for the following persons: Board Members, general partners, limited partners with the right of representation, subsidiary managers, liquidators and bankruptcy trustees. At the same time, a person with the right of representation may grant e.g. the accountant(s) the right to enter and submit a report. The accountant can enter the data, keep an eye on the signing of the annual report, and observe when the auditor signs the auditors’ report.
A Board Member can add the sworn auditor before preparing the report, so that the sworn auditor can observe the entry of data, or during the preparing of the report or only after all persons with the right of representation have signed the report.
https://www.rik.ee/en/company-registration-portal/annual-report
First comes the reminder and the extra deadline. The registrar may impose a penalty payment or delete the company from the register if no additional term has been submitted. Deleting a business could be a matter of years. Liquidation should not bring any financial costs unless the registrar decides differently based on the information they have.
https://www.rik.ee/en/company-registration-portal/annual-report
There is no legal requirement to have an accountant in Estonia. However, we strongly recommend using one, especially once you become subject to VAT.
Registered company does need a bank account, but it does not have to be a physical bank in Estonia. It could be a fintech company offering online banking services such as Wise.
Due to internal regulations of physical banks, it is necessary to visit Estonia. Even when visiting, it could still be difficult, which is the reason we advise to be fully prepared before the travels. The banks need assurance of what kind of business you are running, you probably need to show the transaction statements of the past few years as well as what helps is having further ties to Estonia than just the business. Contact us and we will give you guidance and do groundwork with your chosen bank for you.
Passport or EU national ID card;
Proof of address or Estonian e-residency;
Proof of connection to Estonia for non-citizens or residents for example signed lease agreement or employment contract.
Up to seven (7) working days, depends on the bank. Opening your online banking account on Wise platform takes a lot less. All you have to do is fill in the application, provide them with necessary documents and a copy of your ID. The verification usually takes 1-2 business days.
– VAT is 20%
– There is no corporation tax in Estonia as long as profits are reinvested or retained
– Dividend income in Estonia is – 20/80
– Taxes on salaries if the company has employees (social taxes). Social tax 33% + unemployment insurance tax 0.8%
Paying taxes is very circumstantial for every business. We strongly advise you to speak to a tax specialist.
Regardless of your e-Residency status, you must always pay personal tax in the country where you reside and are a tax resident in.
Paying corporation tax is shifted until the distribution of profits in Estonia. Period of taxation for legal entities and non-residents with permanent establishments in Estonia is one calendar month.
The tax year in Estonia follows the calendar year: 1st of January to 31st of December.
The money can be withdrawn as dividends if:
– The share capital has to be paid up
– There is a certified annual report
– Dividends may be paid up to the amount of retained earnings indicated in the annual report
– The payment of dividends must not impair the company’s solvency, this is the responsibility of the board.
20/80 can be withdrawn as dividends at the end of the year. Dividends can be withdrawn during the year and the distribution is taxed. However, the same 20/80 applies to Estonians as well as to e-Residents.