Accountants and company formation in Estonia

Setting up a company in Estonia

You can set up a company in Estonia without living there, and the whole filing can be done online. The usual vehicle is the private limited company, the osaühing or OÜ. Once you hold a digital ID that the register accepts, filing the application itself takes minutes. The work sits around it: getting that ID, finding a local contact person, paying in the share capital and knowing what you owe the tax office afterwards. This guide walks through each step in order, with the official figures and the dates they apply from.

Set up a company in Estonia: the short version

1. Choose the legal form. For a founder from abroad this is usually an OÜ.
2. Get a way to sign. An e-Residency card, an Estonian ID card, Smart-ID or Mobile-ID lets you file online. Without one, the documents go through a notary in Estonia.
3. Pick a name and your main activity.
4. Arrange a legal address and, if your board is abroad, a contact person.
5. Pay the share capital. The minimum for a single-shareholder OÜ is 0.01 €.
6. File the application in the e-Business Register and pay the state fee.
7. Register for VAT when you must, open a bank account and set up your bookkeeping.

What changes in 2026 and 2027

Three dates matter if you are planning now. The standard VAT rate has been 24% since 1 July 2025, so any older guide quoting a lower standard rate is out of date. Corporate income tax on distributed profit is 22/78 for both 2025 and 2026, according to the Estonian Tax and Customs Board’s rate table, and the e-Residency programme says no change to that rate is planned for 2026 or 2027. The e-Residency card fee rises to a flat €165 from 1 January 2027.

Choose the legal form

Estonia’s Commercial Code recognises five types of business entity, as Invest in Estonia lists them: the private limited company (OÜ), the public limited company (AS), the general partnership (TÜ), the limited partnership (UÜ) and the commercial association. Two other options sit outside that list: the sole proprietor (FIE) and the branch of a foreign company.

Private limited company (OÜ)

The OÜ is the form this guide follows step by step. It can have a single shareholder, and it can be founded fully online. If you are a freelancer, a software business or an online shop, this is almost certainly where you start.

Public limited company (AS)

An AS suits larger ventures that plan to raise capital from many investors or list shares. It carries more governance rules than an OÜ, so few first-time founders choose it.

Branch of a foreign company

If you already run a company at home and want a presence in Estonia, a branch is an alternative. A branch is not a separate business entity: the parent company stays liable for its obligations. Many groups still prefer an OÜ subsidiary, because it keeps the Estonian activity in its own legal shell.

Step 1: Get a way to sign the application

The e-Business Register accepts online applications signed only with an Estonian ID card, including the e-Residency card, Smart-ID or Mobile-ID. For a non-resident without an Estonian ID card, that usually means e-Residency.

e-Residency is a government-issued digital identity, not a residence permit. The state fee is 150 euros under the fees in force from 1 January 2025, rising to €165 from 1 January 2027. After approval you collect the card in person at one of the programme’s pickup locations, so allow time for the background check and the collection appointment.

If you would rather not wait for a card, there is a second route. Without an Estonian ID or e-Residency card, a notary in Estonia verifies the foundation documents. You can authorise a representative to attend the notary for you with a power of attorney. That route adds a notary fee and some extra days.

Step 2: Pick a name and your main activity

Choose a company name that is not already taken, and check it in the e-Business Register before you file. You also declare the main area of activity, which the register and the tax office use to classify the business. If your activity needs a licence or a notice of economic activity, find that out now, before the company exists, because some activities can only start once the permission is in place.

Step 3: Arrange a legal address and a contact person

Every Estonian company needs an address in Estonia where official mail can reach it. Founders abroad usually rent one from a service provider, often together with a contact person.

The contact person is the part people miss. When a company’s management board is located abroad, the company must designate a contact person with a residence and address in Estonia. Only certain professionals can fill the role: a notary, an attorney or law firm, a sworn auditor or audit firm, a tax representative of a non-resident, or a licensed provider of trust and company services. The registrar, not you, decides whether your board counts as abroad. In the founding application itself, an address in a foreign country means a contact person must be added to the “persons” section.

The e-Residency programme puts the cost of a contact person or legal address service at 200 to 400 € per year. This is a fee charged by private providers, not a state fee, so prices vary.

Step 4: Pay the share capital

The minimum share capital of an OÜ with one shareholder is 0.01 €, and each shareholder’s share must be at least 0.01 €. Founders have to pay for their shares in full before submitting the application. Where the capital is no more than 50 000 €, you confirm in the portal that you have paid it. Above 50 000 €, the money goes to a deposit account first and the application waits until the payment arrives.

A token capital keeps the start-up cost down, but banks and business partners do look at the balance sheet. Many founders choose a round figure that matches what the company will actually need in its first months.

Step 5: File in the e-Business Register

Log in to the Company Registration Portal with your digital ID, fill in the founders, the board members, the capital and the articles of association, and pay the state fee. The state fee for founding a private limited company electronically is 265 €. The articles come largely pre-filled: you complete the mandatory fields and edit the options you want to change.

Filling in the form takes from 15 minutes to an hour once you have the card, according to the e-Residency programme. Invest in Estonia states that applications are reviewed in up to one working day, and that actual times may vary. When the registrar approves the entry, the company exists and receives its registry code.

Step 6: Register for VAT when you have to

VAT registration is not automatic. It becomes compulsory when your taxable supply with a place of supply in Estonia exceeds 40,000 euros from the beginning of the year. From that point you have three working days to apply. You can also register voluntarily before you reach the threshold, which some businesses selling to other EU companies prefer. Our page on VAT in Estonia covers how the returns work.

Step 7: Open a bank account and set up accounting

The e-Residency programme lists opening a business account as the last step, ideally with a provider based in the European Economic Area. Banks run their own checks on the owners and the business plan, so have a short description of your activity, your clients and your expected volumes ready. If you expect friction here, firms offering bank account assistance in Estonia prepare the file with you.

Bookkeeping starts on day one. Every Estonian company keeps accounts and files an annual report, even in a year with little activity. Many founders from abroad hand this to a local accountant; see accounting in Estonia for what that covers.

Taxes to plan for

Corporate income tax

Estonia taxes company profit when it is distributed, not when it is earned. The Tax and Customs Board states that profits are subject to income tax at the time that profits are distributed, so profit kept in the company is not taxed in the year it is made. On distributions the rate is 22/78 of the net amount for 2025 and 2026. The lower 14/86 rate for regular dividends was abolished from 1 January 2025.

Where the company is managed

An Estonian registration does not settle where the company pays tax. The Tax and Customs Board warns that income of Estonian companies is also taxed abroad when the company is managed from outside Estonia, and that e-Residency gives no automatic exemption from foreign tax. If you run the company from your home country, take advice there before you register.

Board fees and salaries

Fees paid to management board members are taxed in Estonia: the company pays income tax and social tax on them wherever the board member works. Salaries for work done abroad follow different rules, so check each payment type with an accountant.

After registration: what you have to keep doing

• Annual report. It must reach the registry within six months of the end of the financial year. Late filing can bring a fine, and if the report is still missing six months after the deadline the company can be deleted from the register.
• Beneficial owners. The people who ultimately own or control the company must be disclosed in the register and the entry kept up to date.
• Contact person and address. Keep the service contracts current. A company whose board is abroad and has no contact person risks action by the registrar.
• VAT returns and payroll declarations, once you are registered or start paying people.

Common mistakes

• Treating e-Residency as residency. It gives you a digital signature, not the right to live in Estonia or Estonian tax residence. If you plan to move, look at residency and visas in Estonia separately.
• Ignoring the place of management. Running the company from abroad can make it taxable abroad as well.
• Forgetting the contact person when the board is outside Estonia.
• Missing the VAT threshold. Track turnover from January each year.
• Skipping the first annual report because the company did little. The filing duty still applies.

Getting help to set up a company in Estonia

You can do every step yourself, and plenty of solo founders do. A local firm earns its fee on the parts that carry risk: the contact person, the tax position when you manage the company from abroad, VAT and the first annual report. Accountanty lists 107 firms in Estonia, and 92 of them handle company formation. 93 of them are in Tallinn and 11 in Tartu. English is offered by 86 of them, Russian by 50 and Finnish by 18. To compare providers and what to ask them, read our page on company formation in Estonia. If you would rather describe your plans once, send a free quote request and Accountanty will pass it to suitable firms. Whichever route you take, settle the contact person and the tax question before you set up a company in Estonia, and the registration itself is the easy part.