Lexon Incorporations: Corporate, accounting, trust
Lexon Incorporations: Corporate, accounting, trust
Estonia: Limited Liability Company

General information about the country

Estonia is one of the three Baltic republics having declared independence on 24th February 1918. After regaining independence in 1991 the country has carried out successful economic reforms. Estonia is currently one of the most economically developed countries in North-Eastern Europe.

Legislative power is vested in the unicameral parliament which consists of 101 members and elected in equal and direct suffrage. The head of state is the President who is elected for five years.

The current Constitution of the country was adopted by a nationwide referendum in 1992.

Estonia joined the European Union in 2004 and adopted the Euro as the national currency in 2011.

Legislation

The legislative system of Estonia is part of the Romano-Germanic legal family which has been developed over the past 150 years as a result of the interaction of different legal cultures being mainly German and pre-revolutionary Russian.

Also, the general principles of European Union law and international treaties are an integral part of the current legislation of Estonia.

The Estonian taxation system has been harmonized in accordance with the European Union general standards whilst at the same time containing beneficial differences that make the country attractive to foreign investors.

Corporate characteristics:

Main:
Company typeLimited Liability Company
Corporate legislationCommercial Law of Estonia 1995
Language of company documentsEstonian
Corporate endingOsauhing, OU
Authorised capital:
Minimum amountEUR 2,500
Standard amountEUR 2,500
Standard currencyEUR
Permitted currenciesEUR
To be paidAt registration
Shareholders:
Minimum number1
Maximum numberNo restrictions
Publicly accessible recordsYes
Directors:
Minimum number1
Local directorNot required
StatusOnly physical persons
Publicly accessible recordsYes
Secretary:
Minimum numberNot required
Local secretaryNot required
Publicly accessible recordsNIL
Reports:
Filing an Annual ReturnNot required
Fiscal yearJanuary 01 – December 31
Financial StatementsYes
Publicly accessible Financial StatementsYes
AuditorDepending on criteria (see below)
Filing a Tax ReturnYes
Corporate taxation:
On trading income0% (see details below)
On passive income0% (see details below)
Double Tax Treaty network:Agreements with more than 40 countries

Additional information on taxation

The main advantage of Estonian companies is the special tax status. In the event that the profit received by the company is not distributed as dividends and is retained by the company, the tax rate for such profit is 0%.

Meanwhile, Estonian companies are not globally treated as tax-free. In the event that the profit is distributed as dividends then the tax will be paid at the standard rate of 21%. The same treatment applies to other payments that may be treated as dividends such as gifts, awards and representational expenses.

In this regard there is no separate withholding tax in Estonia. The tax is paid at the company level regardless of the location and status of the shareholder.

The non-taxation of retained profit also applies to passive income such as:

The financial statements of the company shall be filed by 30 June and must be certified by an auditor if at least two of the following three criteria are met:

In addition, the financial statements of the company must be certified by a licensed auditor if the company meets any of the following three criteria:

Conclusions

An Estonian company is a fully-fledged company which is subject to the EU Parent Subsidiary Directive and the EU Interest and Rоyalties Directive. This status, combined with the possibility to derive profit without assessment to any corporate tax, as well as a wide network of double tax treaties makes an Estonian company a favourable tool for both international trade and holding operations.

A further positive aspect is also the highly developed Estonian banking system which enables the opening of an account for these companies with a bank in Estonia, thus allowing the combination of the advantageous tax regime of this country with the favourable conditions of a highly developed banking system.

http://lexcorp.com/en/jurisdictions/estonia/ - Estonia: Limited Liability Company

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