Why Estonia
Estonia is a pioneer of the digital state. Its defining feature is a unique tax system: while profits are reinvested, corporate tax is 0%. The 20% rate only applies when dividends are distributed. The e-Residency programme enables fully remote company management.
Tax System
| Type | Rate |
|---|---|
| Corporate tax (retained profit) | 0% |
| Corporate tax (dividend distribution) | 20% |
| VAT (turnover > €40,000/yr) | 22% |
| Personal income tax on salary | 20% |
e-Residency Programme
e-Residency is a digital ID card that allows you to:
- Register and manage an Estonian company online
- Sign documents with a digital signature
- Access Estonian government e-services
Cost: €100–120. Issued through Estonian embassies or Partner Locations.
Who It Is For
- Digital nomads and freelancers from non-European countries
- IT companies with a reinvest-to-grow model
- SaaS startups that need an EU jurisdiction
- Companies planning EU market expansion
Cost & Timeline
| Item | Amount |
|---|---|
| OÜ registration | €190 (state fee) |
| e-Residency card | €100–120 |
| Annual maintenance | from €500/yr |
| Share capital | from €0.01 (minimum) |
| Registration time | 1–5 business days |
Pros & Cons
Pros:
- 0% tax on reinvested profit
- e-Residency — full remote company management
- EU jurisdiction with Stripe, Wise, PayPal access
- Advanced digital government infrastructure
- Simple registration, minimal share capital
Cons:
- 20% tax on dividend distribution — higher than Cyprus/Ireland
- Post-2022 banks (LHV, SEB) are cautious with Russian founders
- Physical contact person in Estonia recommended
- 22% VAT when turnover threshold is exceeded
FAQ
Can I open an Estonian company without e-Residency?
Yes. But e-Residency significantly simplifies the process — without it, documents require notarisation.
When is the 0% rate beneficial?
If you reinvest profits back into the business, you pay no tax. Ideal for startups and growing SaaS companies that do not pay dividends.
How do I open a bank account for an Estonian company?
Banks: LHV, SEB, Swedbank (require Estonian presence). Fintech: Wise Business, Revolut Business — can be opened remotely.