Open a company in Estonia (EU)
with VAT for only
8.000 €

Are you a company or something?
An independent contractor?
Is it a private one?
Open a company in Estonia.


——— 01

Opening a company in Estonia: advantages

The main advantages of a company in Estonia are:

  • Fast and streamlined bureaucracy
  • Light taxation
  • Low taxation

I’m sure you’ve heard about the fact that Estonia was the first country in the world to set up digital residency to attract brains from all over the globe and encourage the opening of new digital businesses. e-residency allows you to acquire, in certain respects, the same rights as a resident: start a business in Estonia, submit applications and applications for certificates to the public administration, pay taxes, etc.

Estonia ranks first in Europe, among the countries with the highest number of active startups. In short, e-residency in Estonia has been a major reform.
Here are some data that demonstrate the success of the initiative:

  • 98% of the companies are started online;
  • 99% of banking transactions are carried out electronically
  • 95% of tax returns are submitted online in just 3 minutes!

02 ———

Tax advantages of a company in Estonia

Opening a business in Estonia allows you to benefit from one of the most favourable tax regimes in the world:

  • if the corporate profits are reinvested in the company, without the profits being distributed to the shareholders, the income tax rate is 0%.

However, when profit is received as a dividend, a tax of 20% is levied during the tax period in which the distribution took place.

Does 20% tax on dividend distribution alone pay?

This feature of the Estonian tax system is especially beneficial for new companies, which are about to launch a new brand and increase it. Similarly, those who have started a new business in Estonia, with the strategy of exploiting an economic scale, also benefit.

This is the case, for example, of a company that sells Chinese imported products on The company in question, at least in the initial phase, will have all the interest to beat the competitors on the price and, in order to implement such strategy, it needs to have the lowest possible level of taxation, reinvesting the corporate profits.

The standard VAT rate applicable to business activities in Estonia is 20%..

There is a reduced rate of 9%, which applies to the sale of hotel services, books and pharmaceuticals.
It should be remembered that Estonia is part of the European Union, therefore, all goods and services sold to other Community companies located outside the country are not taxable for VAT purposes.

In Estonia, there is the possibility of opening a company in Estonia without registering it for VAT purposes, with total exemption from value added tax also on sales in Estonia. However, this advantage is granted only to those providing for the opening of an Estonian company, with an annual turnover not exceeding Euro 40,000..

Among other things, opening a company in Estonia with a turnover not exceeding the above mentioned threshold allows for huge simplifications in accounting and tax matters. It is like opening an individual company in Italy (with an annual turnover not exceeding € 65,000) or a small ltd in England (with an annual turnover not exceeding £ 85,000).

La differenza sostanziale con il regime forfettario in Italia però consiste:

  • the fact that a genuine limited liability company with one or more members may be established in Estonia;
  • the possibility of transferring from corporate income the actual amount of costs incurred (instead of flat-rate costs);
  • the possibility of saving social security contributions, which are not compulsory for directors of companies in Estonia.
Do not forget the most important aspect:

taxation at 20% only if the profits of the Estonian company are actually distributed to shareholders.

We have said that an Estonian company is subject to income tax at a rate of 20% only if the profit achieved by the company is distributed in the form of a "dividend". Distribution means: the physical transfer of capital from the company account of the Estonian company to the members' personal accounts.

So, all remaining profits at the company are tax-free.

This exemption covers both types of income (commercial income, for example) and liabilities (such as dividends, interest, royalties) as well as gains from the sale of all types of assets, including shares, securities and real estate.

Specifically, Estonia applies a 20% substitute tax only on profits distributed as dividends, share repurchases, capital reductions, liquidation proceeds or expected profit distributions. Income taxes at the rate of 20% are charged on the gross dividends.


Taxation is an essential aspect that every company wishing to establish itself in Estonia needs to know. BSD will guide you through the Estonian tax world, showing you the most suitable choices for your business, thanks to our experts who are always up to date on the latest developments in tax matters.

In the list a summary on taxation in Estonia:

  • Tax on the company
    A company registered in Estonia is not required to pay this tax (which is 0%), if profits are reinvested in the company or for transactions related to it, it will be if those sums are intended to be destroyed among the partners. If you decide to allocate the profit among the members of the same, a 25% tax on dividends is applied. In addition, any expenses not directly related to the activity, such as those of representation, gifts, and donations, are subject to this tax.
  • VAT
    This tax concerns the sale of all goods and services, and also the import of goods from non-EU countries. The rate is 20%, while for books, medicines and hotel services is 9%. Items not subject to VAT include medical care, postal services, insurance and international transport operations.
  • Taxes on income
    The rate for income tax in Estonia is 20%. The minimum amount that is not subject to it in the year 2016 is 170 euros per month.
  • Social tax
    The rate for this tax in Estonia is 33%. You are required to pay this tax when you receive payments or there is revenue. The social tax for employees of a company is paid by the employer.
  • Taxes on land
    The rate is 0.1 – 2.5% per year and is influenced by the cost of the land. The natural or legal person, who owns the land, is obliged to pay this tax contribution (real estate is not subject to any tax).
  • Disaster insurance for workers
    The rate is 1.6% for the employee and 0.8% for the employer
  • Social security contribution
    The rate is 2% or 3%.

Fill in the form
our team of specialists will contact you