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Eligibility

Yes, it is completely legal. Estonia is not a tax haven or offshore destination. It is, in fact, a reputable country of the European Union with a corporate tax equivalent to most other EU countries. Estonia has one of the most transparent business systems in the world and all the corporate and tax information of businesses is publicly available.

Under certain circumstances, your company may be liable to fulfill some tax obligations outside of Estonia. That is the case if the majority of the members of the company live on a permanent basis (and thus are tax-resident) in some countries. For more information, ask a local tax advisor or book a consulting appointment with one of our experts.

Fulfillment by Amazon (FBA) is a program – similar to a class dropshipping system) that allows anyone to open an online store and sell products to customers internationally. The only requirement is having a company which serves as a legal framework for the activity.

We support drop-shipping and FBA online shops as long as the Estonian company acts as a digital gateway for the sales. That means that it does not have facilities outside Estonia or warehouses containing the goods, and does not directly import or export the goods. These should be managed and delivered to the customer by the provider itself. The Estonian company acts as a facilitator of the sale, ordering the provider to send the goods to the final consumer directly without its physical intervention.

To learn more about the requirements – and advantages – of opening and operating your FBA company through your Estonian business, click here.

The e-Residency program favors global startups whose members may live different parts of the world or who want to expand internationally, without being limited by geographical limitations.

This is because, as members of the digital nation, the board members of an Estonian company can sign legal validity documents with their e-resident cards. That includes legally binding agreements for your company, hiring people, or making strategic decisions, completely online and distributed. Wherever you are, you can manage your company.

Estonia’s startup ecosystem is one of the richest and most active ones in the world, and Estonia is the European country with the most unicorns (startups with more than 1 billion valuation dollars) per capita. In addition, if your startup is innovating in the area of cryptocurrencies or blockchain, in Estonia you will find a friendly administration and specific licenses to carry out your activity.

An Estonian company acting as a tour agency needs to apply for a specific tour-agent license before being able to start its activity. This license has an extra cost, not included in the company registration price.

If your company is not offering the tours itself but is essentially a reseller of other(s) tour operator(s), you don’t need a license, and there is a special VAT scheme applied to your company.

Read the article ‘travel agency companies in Estonia‘ for further explanation.

Your activity is perfectly valid as long as your services are completely “online”. That is, as long as your activity is not linked to a physical location and cannot trigger a permanent establishment in any other country. Consulting services usually fall into that category.

If your consulting activity is related to medical information, or any other activity that deals with sensitive data, you may face additional challenges when opening a bank account or may need a special license to operate. Contact us if in doubt and we can arrange a consultancy session.

Generally speaking, we don’t support companies dealing, selling, buying, managing, exporting, or importing physical goods. It’s not recommended to have an Estonian company in that case if the goods, warehouses, or facilities of the company are outside of Estonia.

If you have an online shop where you sell physical products, a company in Estonia is usually not a viable option for your business. That’s because having your shop or warehouse outside of Estonia, and importing, exporting, or distributing the goods from that other country would trigger a permanent establishment of your company there. As a result, your company will be asked to pay taxes in that country, not in Estonia.

One solution is if your shop and warehouse are in Estonia.

We also support dropshipping and FBA companies. The main requisite is that the business model follows this “pure” dropshipping model:

  • you DON’T import/export the goods
  • the supplier/provider sends the goods directly to the customer
  • you DON’T keep stock, buy or sell anything directly
  • you don’t have a warehouse (except if the warehouse is in Estonia).
  • your company should act as a mere online sales facilitator.

If your business complies with that, we can support your company. More information here.

Yes, although depending on your activity, your business may need a license to operate. In the context of financial activities, there are two main scenarios:

Scenario 1

Your company is going to offer one or more of the following services to third parties:

  • Foreign currency exchange (or forex)
  • Providing investment advice to clients
  • Performing borrowing or lending operations
  • Performing Leasing transactions
  • Money broking or acting as a broker
  • Offering monetary guarantees or commitments
  • Performing transactions or acts related to the issue and sale of securities
  • Offering services of safekeeping and administration of securities
  • Acting as a savings and loan association

In that case, you need a financial license. This scenario assumes that the activity of the business is being performed by itself, not by means of external brokers, and offered to third parties. If your company is performing any of these activities internally through an external broker (for example, investing in the stock market), but not offering services to third parties, you are in scenario 2.

Scenario 2

In this scenario, your company is not offering any of the services mentioned before to third parties and it’s using an intermediary, broker or agency with the proper license. In that situation, you don’t need the license.

Here, the key question is if your company is offering these services to other parties. If you are offering foreign exchange services to your customers, even if you use a broker, or you are offering financial advice, you should get the license in order to avoid problems with the financial authorities.

What license do I need and how much does it cost?

Licenses for financial activities may be expensive and require a complex application process. Our recommendation is to contact a law firm in Estonia beforehand to get a proper estimate.

Yes, that is perfectly possible. However, you need to be aware of how CFC rules may affect your business.

If you are a tax resident in a country with CFC rules, being the only member of your company (or when a majority of board members live in such countries), it’s considered that the company is performing its activity in that country. Hence, the Tax Office of this country may eventually consider that your company has a “permanent establishment” and therefore has to pay taxes there.

This may happen regardless of where your customers live, or where your company does business in reality. The important triggers for this permanent establishment are having premises and employees in that country or if the majority of the board members of the company live there. In that scenario, your corporate tax, and other taxes related to your activity, should be declared and paid to the local authorities, not to Estonia.

For more information, ask a local tax advisor or book a consulting appointment with one of our experts.

The e-Residency program is open to any citizen of the world, regardless of nationality or country of residence.

The main requirement to open your company in Estonia with us is that your business is completely digital. If you are the only partner, you must ensure that your country of citizenship or residence cannot claim that your company has its permanent establishment in your country of residence. The same applies if your company has multiple board members and the majority of them live in the same country.

If you are a digital nomad or travel regularly without a permanent establishment or tax residence, your situation is perfect.

In addition, we work with companies formed by individuals, not other companies. That is, we do not allow other companies as shareholders or holding structures.

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