Estonia is a jurisdiction where you save not only your team’s time but also your money. An interesting fact that supports this claim: in 2023, Estonia ranked #1 in the International Tax Competitiveness Index (ITCI) for the 10th consecutive year. On average, companies in OECD countries spend 42 hours annually on corporate tax payments alone. In Estonia, companies spend just 5 hours.
Choosing a business structure in Estonia
It is important to choose the right legal form before registering a company in Estonia. Common options include OÜ, AS, TÜ, and UÜ.
- OÜ — Limited Liability Company:
The most common form of Estonian businesses, especially for e-Residents and Finevolution clients. In 2022, 20,933 firms were registered by e-Residents, with 20,690 as OÜ. This accounts for 99% of all entities set up by e-residents. Our material provides more details on the OÜ structure
- AS — Public Limited Company:
Suitable for large businesses looking to attract investments or go public. Benefits include easy access to capital, limited liability for shareholders, and flexible management. The minimum capital is €25,000, which paid during registration. An AS requires at least one founder, three directors, supervisory board, and an auditor.
- TÜ — General Partnership:
Similar to General Partnerships in other countries, this format suits entrepreneurs relying on mutual trust. Advantages include easy setup and no capital requirements. It requires at least two partners willing to share unlimited liability.
- UÜ — Limited Partnership:
An alternative to UÜ, suitable for businesses seeking investment while limiting risk. UÜ allows partners to invest without full liability while general partners manage the business. Registration and reporting are more complex, requiring two partners: one with full responsibility and one with limited liability.
Why choose an OÜ business structure in Estonia?
OÜ are not subject to double taxation. Profits are passed directly to members, who pay taxes individually. Additionally, there is no federal or local income tax on OÜ Estonia company. Legislative requirements for OÜ management are flexible. Owners can manage the business themselves or appoint a manager, and there is no need for a board of directors or mandatory annual meetings.
These features and a favorable tax environment make OÜ an ideal choice for entrepreneurs.
