Doing business in Estonia

There are seven forms of for-profit legal entities in Estonia:

• full partnership (täisühing);
• limited partnership (usaldusühing);
• private limited company (osaühing);
• public limited company (aktsiaselts);
• commercial association (tulundusühistu);
• European company (societas europea);
• European co-operative society (societas cooperativa).

In addition to those, for-profit activities may be carried out by sole traders (füüsilisest isikust ettevõtja) and by foreign entities, whether acting through a branch registered in Estonia (filiaal) or not.

By a large margin the most common forms are private limited company and public limited company. The share-capital of a private limited company must amount to at least 2,500 €, while that of a public limited company to at least 25,000 €. The share-capital of a private limited company need not always be paid up upon establishment (that of a public limited company must be paid up upon establishment), but various restrictions, including on distribution of profits, apply until it is paid up.

Establishment of a private or a public limited company generally requires a visit to a notary. The company will, in general, be entered into the register within five business days of submission of the application to that effect. However, if the founder has an ability to sign documents digitally (e.g. via an Estonian or Finnish ID-card or mobile-ID), a private limited company with so-called default articles of association may established online (i.e. without the services of a notary) in no more than one business day (in practice it takes no more than a few hours). State fees apply.

All the aforementioned persons who are registered in Estonia are under a duty to keep accounts of their business. Most, although not all, entities may choose between two sets of accounting standards: the Estonian Accounting Standards and the IFRS as adopted by the EU.

Financial statements must, as a rule, be filed with the relevant register once a year. They are ordinarily compiled online (in a special system managed by the register) and submitted electronically. Their complexity depends on this size of the entity preparing them. All tax returns are likewise submitted electronically.

Annual financial statements of (i) public limited companies as well as of (ii) any Estonian for-profit legal person

• whose annual revenue exceeds twelve million euros or whose assets as at the balance sheet date exceed six million euros or which has at least 180 employees or
• which meets two of the following three criteria: annual revenue of four million euros, assets as at the balance sheet date of two million euros and at least 50 employees,

must be audited.

Annual financial statements of any Estonian for-profit legal person which does not meet those requirements, but

• whose annual revenue exceeds 4.8 million euros or whose assets as at the balance sheet date exceed 2.4 million euros or which has at least 72 employees or
• which meets two of the following three criteria: annual revenue of 1.6 million euros, assets as at the balance sheet date of 0.8 million euros and at least 24 employees,

must be reviewed.

Special rules on audits or reviews may apply, for instance in the non-for-profit sector or to public interest entities.