Business and Entrepreneurship - Settle in Estonia programme

Business and Entrepreneurship

HANDBOOKS

Estonia: State, Society and Language

Private and Public Services

Working and Labour Market

My Rights and Responsibilities

Networking, Volunteering and Leisure time

Kindergarten and Schools

Higher Education and Research

Children and Family

Residence and Citizenship

Business and Entrepreneurship

Introduction

1. Economic and Business Environment

1.1. Benefits of starting a company in Estonia

1.2. Economic structure

1.3. Organizations supporting entrepreneurship

Estonian Business and Innovation Agency

County development centres

Tallinn Enterprise Development Department

Enterprise networks and clusters

1.4. Startup ecosystem

Incubators, accelerators and events

1.5. Social economy

2. Setting up a Company in Estonia

2.1. What legal forms are there for me as a founder?

Resident permits for business, startups and investors

Startup Visa

Digital Nomad Visa E-residency

2.2. Registering a company

2.3. What legal forms are there for companies?

Private Limited Company

Public Limited Company

Sole Proprietorship

Partnerships

Branch of Foreign Company

Entrepreneur Account Non-profit association

2.4. Activity licenses and notices

2.5. Premises

3. Legislation, Taxation, Accounting and Financing

3.1. Most important legislation related to entrepreneurship

3.2. Most important taxes for companies

3.3. Accounting requirements

3.4. Financing

4. Being a Good Employer

4.1. How to find suitable staff?

Enterprise Estonia foreign recruitment grant

4.2. How to register employees?

How to register an employee for short-term employment?

How to formalize my employee’s health insurance?

4.3. How are work relations regulated?

INTRODUCTION

Dear reader,

Thank you for participating in the “Settle in Estonia” programme. Our programme has been designed for foreigners who have decided to move to Estonia and our courses have been available to new arrivals since 2015. Whether your reason for choosing Estonia is based on your family connections, work, study or business interests, our programme is here to help you settle in and nd your feet in a new country.

The handbook you currently have in front of you is designed to act as a reference point you can use even after the course has nished. We hope it will be useful to you during your rst years in Estonia and will help you nd the correct and up-to-date information on the subject you are interested in. The handbook is updated on a regular basis to make sure the information contained in it is accurate. You can nd the details of the current issue on the back cover. When new versions become available, you can nd them on the website: issuu.com/settleinestonia

This handbook provides an overview of the Estonian economy and business environment. You can read about the bene ts of opening a company in Estonia as well as get a basic overview of the economy. The vibrant startup ecosystem and its relevant stakeholders are introduced – the conditions that have fostered the creation of ten Estonian unicorns! You can nd out how to start your own company and how Enterprise Estonia, county development centres and enterprise networks can help you start and grow your company.

The handbook also introduces the opportunities to come to Estonia as a founder. You can learn about the di erence between residence permits, the Startup Visa, the Digital Nomad Visa and E-residency.

This handbook is suitable to you if you want to know about the Company Registration Portal and nd out which company form is most popular among foreigners in Estonia. You can also nd out how to work as a sole proprietor or what is the potential of the Entrepreneur Account. The handbook also introduces the social economy in Estonia and steps needed for registering a non-pro t association.

If you have already established your company in Estonia then this handbook provides the most essential information related to legislation, taxation, accounting, and auditing. A signi cant section focuses on various nancing opportunities available to companies. Finally, the handbook provides advice on how to be a good employer.

Tere tulemast Eestisse! Welcome to Estonia! Head lugemist! Have a good read!

1. ECONOMIC AND BUSINESS ENVIRONMENT

1.1. BENEFITS OF STARTING A COMPANY IN ESTONIA

Estonia has an excellent business environment to start and grow your business. Estonia has an investment-friendly taxation system. Estonia has one of the most liberal tax systems in the world with zero corporate income tax!

You can establish a company online in 15 minutes and do the taxes in 3 minutes. As a business owner you can run your business online, report automatically pre- lled taxes and use a digital-ID or a Mobile-ID to sign contracts. Estonians have digitally signed binding documents since 2002. Basically, you can use Estonia as your base for anything that does not need your physical presence elsewhere.

Interaction with authorities is swift and mostly online. Government services are meant to run in the background and stay out of your way. The guiding principles are the once-only principle and digital by default.

Public services are transparent and secure. Estonia was the rst country in the world to deploy blockchain technology in production systems in 2012. Estonia uses blockchain technology for integrity veri cation of government registries and data. It guards the integrity of the e-Health portal, Business Registry and Property and Land Registry to name a few. All while retaining 100% data privacy.

Economic environment in Estonia is the most transparent and the least corrupt in Central and Eastern Europe (Transparency International Corruption Perception Index 2022, 14th out of 180 countries).

Estonia’s economic freedom is regarded as one of the highest in the world and the best in the Central and Eastern Europe (Economic Freedom World Ranking, 6th out of 176 countries).

Estonia is the rst country in the world to have an e-Residency programme. This transnational digital identity is available to anyone across the globe interested in setting up a location-independent business online. The country also welcomes foreign founders with the Startup Visa and the Digital Nomad Visa.

The local startup scene is vibrant, agile and with many success stories as is illustrated by later chapters of this handbook.

Estonia has a highly developed telecommunication and IT infrastructure. A bre optic backbone network connects all Estonian county centres. Almost all Estonian households, enterprises and institutions have access to broadband with a data connection speed of up to 1000 Mbit/s (1Gbit/s). Estonia is completely covered by digital networks providing wireless internet. A network of Public Access Points covers most cities and towns.

Estonia belongs to the eurozone and is part of the European Union – this opens further possibilities for smooth business activities in Europe.

The fact that Estonian banks are mostly owned by well-known Nordic banks, such as Swedbank, Nordea and SEB, also speaks in favour of the reliability of Estonia’s business environment. Additionally, there are banks that are partly or fully Estonian owned, for example LHV and Coop Bank.

Estonia is a cashless society with over 99% of nancial transactions occurring digitally. Electronic ID and blockchain are widely used in FinTech applications.

Life quality in Estonia is high but the living costs are relatively low. Estonia has been ranked #5 in global air quality.

1.2. ECONOMIC STRUCTURE

Since regaining its independence, Estonia has been one of the fastest-growing economies in the region. Quick reforms, westernisation of the economy, innovation and openness to foreign capital have attracted numerous international companies to Estonia.

Estonia combines elements of both the old and new economy – while the success of the technology sector has made the startup scene blossom, the country is also moving up in the value chain in sectors such as forestry, manufacturing and oil shale.

Estonian economy is quite diverse and one single area cannot be brought out as the key industry. As of 2023, 26% of all employees in Estonia were working in the industrial sector. Other large areas of employment are manufacturing 17%, whole-sale and retail trade 14,9%, education 9%, construction 7,6%..

Most added value is created in the processing industry (the proportion of industry to the entire economy is higher in Estonia than on average in the EU and the OECD countries), followed by trade and real estate activities.

Estonia also ranks among the top countries in Europe for the number of startup companies per capita.

Most companies in Estonia are either micro or small and medium-sized enterprises.

Number of employees

Number of companies (2020)

The most important export markets in 2022 were Finland with 14.5%, Latvia with 14.1%, Sweden with 9.2%, Lithuania with 6.1%, Germany with 5.7% and USA with 5.5%. Not surprisingly the most important export destination countries are situated near Estonia. Among goods groups, the most important export sector of 2022 was mineral fuels with a 18,5% share in total export. Electrical equipment and timber products exports came second and third. There is also signi cant export of machines, mechanical appliances and their parts from Estonia. In addition to goods, Estonia is also an active exporter of services in the elds of tourism, construction, transport and others.

Invest in Estonia website provides a comprehensive sector-based overview of the Estonian economy. Visit at: investinestonia.com/business-opportunities

1.3. ORGANIZATIONS SUPPORTING ENTREPRENEURSHIP

There are several organisations in Estonia that have the goal of supporting entrepreneurship – both companies only starting and those already active and expanding. These organisations o er entrepreneurs counselling, help in nding contacts and under certain conditions also various kinds of material support (e.g. guarantees, funding support, loans, etc)

1.3.1. Estonian Business and Innovation Agency

Estonian Business and Innovation Agency (EE: ) o ers di erent support measures and services to help a starting entrepreneur kick-start their business. Estonian Business and Innovation Agency is a national foundation that aims to develop Estonian economy through three principal areas of activity:

Developing Estonian enterprises and boosting export capacity

Bringing high value-added foreign investments to Estonia

Increasing tourism revenue

One of the biggest challenges for the Estonian economy is to move from among countries with average added value towards countries with high added value. To this end, Estonian enterprises need to develop more sophisticated products, provide more expensive services, and expand their operations in foreign markets. Therefore, Estonian Business and Innovation Agency is addressing two major market failures, which are limited product development of enterprises and concentrated exports to a few speci c markets. Exporting enterprises serve as the main basis of the Estonian economy, as exports account for 80% of the total output thereof.

The Estonian Investment Agency (investinestonia.com) is primarily focused on attracting development centres, highly automated industry, and smart capital to Estonia. The aim is to seek more foreign investments in Estonian rural areas in order to revitalise Estonian life as evenly as possible.

To ensure the quality and competitiveness of Estonia as a tourist destination, it is important to ensure the comprehensive development of the sector. For this purpose, Estonian Business and Innovation Agency is engaged in the development and introduction of Estonian tourism products to foreign tour operators, as well as the training of Estonian tourism enterprises. It is also important to promote Estonia as an attractive holiday destination through campaigns and the website of Visit Estonia visitestonia.com.

Estonian Business and Innovation Agency o ers consultancy and assistance services, ranging from nding the company’s rst customers or subcontractors, to intellectual property strategy management and IP commercialization, accompanied by product development funding and other support instruments.

With services, Estonian Business and Innovation Agency aims to:

Raise the companies’ awareness of the opportunities available in the high added-value, innovation driven business world.

Give companies the tools and skills necessary to develop new innovative tools, business models and products.

Help companies to fund their innovation and product development.

In addition, companies can apply for direct nancial aid from Estonian Business and Innovation Agency (read more about it in the chapter on nancing).

Find out more about the terms and conditions of the Enterprise Development Programme at: eas.ee

Did you know?

Estonian Business and Innovation Agency has a main o ice in Tallinn, a regional representation o ice in Tartu and Pärnu, along with nearby cooperation partners, county development centres and tourist information centres. Enterprise Estonia has a wide network of local business representatives in 16 countries, from North America, through Europe to Asia and Africa.

Find out more at: eas.ee

1.3.2. County development centres

The Network of County Development Centres is the largest counselling network in Estonia. The County development centres (EE: ) support the development of businesses with consultations and trainings. CDCs are present in all counties and o er free information to companies. CDC services are aimed at both enterprising people as well as active entrepreneurs.

Consultancy is provided in the following elds:

Starting a company

Financing and writing of a business plan

Developing business

Involving enterprise support

Starting exportation

For already established companies the CDC can also provide information on where to nd project funding and what are the conditions for support applications, especially regarding the Start-up Grant (see Financing chapter).

The county development centres arrange, in cooperation with Enterprise Estonia, basic trainings for start-up companies, which take place in each county at least once a year, depending on the size of the county. The trainings are provided in Estonian and Russian. The practical trainings cover:

Development of business models

Design of products and/or services

Market and sale of products/services

Financial management and planning

Management of company and team

The CDCs coordinate mentorship programmes where successful and experienced entrepreneurs provide advice to startups. Participating in the mentorship programme helps entrepreneurs to expand their contact network. Mentorship programmes take place in Harju and Ida-Viru counties in Estonian and Russian.

The CDCs also organise visits to international trade fairs, which entrepreneurs can attend. Visiting fairs, entrepreneurs can get a wider view of what is happening in various markets so that the experience gained will motivate them to promote product development in their own businesses in order to enter new markets. NB! The visits are paid by the participants themselves.

The county development centres have grown into development organisations which operate in all counties and, with the support of the state, European Union and local partners, contractually provide information and counselling service as well as development support for companies, non-governmental organisations and local authorities. Read more about the services at arenduskeskused.ee

1.3.3. Tallinn Enterprise Development Department

Tallinn as the capital and largest city in Estonia also provides its dedicated services to companies. The Tallinn Enterprise Development Department (EE: tallinn.ee/et/tallinna-ettevotlusteenistusetutvustus) provides:

Business-related advisory services related to business start-ups and consulting on the preparation of business plans and nancial projections

Advisory services related to labour laws for both employees and employers

Tallinn business grants (trade fair grants, foreign trade fair grant for small enterprise, grants for trainee instructors)

Information days and training

Information on business grants

Find out more at: tallinn.ee/eng/business

1.3.4. Enterprise networks and clusters

Ega üksi lauldes või elada

One cannot live alone

Estonia has a very active entrepreneurship scene where many enterprises have created various networks and umbrella organisations. The main goal of such organisations is to promote the development of its members and the speci c sector of the economy, discuss common problems, nd solutions to those and exchange experiences.

Enterprise networks can be general (e.g. the Chamber of Commerce and Industry) or speci c to an industry i.e. clusters (e.g. the Estonian Association of Information Technology and Telecommunications), but can also represent speci c groups of people active in entrepreneurship (e.g. the Estonian Employers’ Confederation).

There are also a number of organisations and associations with a more social direction, connecting people with a similar worldview, often for the purpose of charity (for example, Rotary or Lions).

One of the important goals of all such organisations is networking and thereby helping along their members’ economic and other activities. The rules for becoming a member are di erent in di erent organisations. For more information it is recommended to contact them directly.

Some of the more important enterprise organisations:

Estonian Chamber of Commerce and Industry – koda.ee

Estonian Employers’ Confederation – employers.ee

Estonian Service Industry Association – teenusmajandus.ee

Estonian Association of SMEs – evea.ee

Estonian Trade Union Confederation - eakl.ee

Finance Estonia – nanceestonia.eu

Examples of sector-speci c enterprise organisations:

Estonian Association of Information Technology and Telecommunications – itl.ee

Estonian Circular Economy Industries Association (ECEIA) - rmel.ee

Estonian Forestry and Timber Association – empl.ee

Estonian Association of Construction Entrepreneurs – eeel.ee

Estonian Traders Association – kaupmeesteliit.ee

Estonian Banking Association – pangaliit.ee

For a full list of sector-speci c professional associations please visit either the state portal eesti.ee/en/institutions-contacts or the Tallinn City cluster database: tallinn.ee/eng/clustersinestonia

1.4. STARTUP ECOSYSTEM

Estonia isn’t your market. We’re your accelerator Startup Estonia

Estonia is the rst in Europe for the number of startup companies per capita. So far, Estonia has produced ten billion-dollar unicorns: Skype, Playtech, Transferwise, Bolt, Pipedrive, Zego, ID.me, Gelato, Veri and Glia. A dozen home-grown startups are valued over $100m each. Currently startups employ 1% of working population.

Estonia’s two top cities, Tallinn and Tartu, host full-blown startup ecosystems with 500+ annual online and o line events, 100+ community organizations, experienced mentors, and 250+ business angels. Pärnu and Ida-Virumaa are also up-and-coming startup hubs. The Estonian startup scene is supportive, tight-knit, and eager to learn by sharing.

Startup Estonia is a governmental initiative aimed to supercharge the Estonian startup ecosystem in order to be the birthplace of many more startup success stories to come. Startup Estonia organizes community building events, provides training programmes for startups, attracts investors, brings more money to the local ecosystem and works to eliminate regulative issues and barriers to operating a startup. In other words, Startup Estonia is working on making Estonia one of the world's best places for startups. Find interesting events and useful service providers on their website: startupestonia.ee

Did you know?

Startup Estonia also manages the Estonian Startup Database which is the most extensive source for Estonian startups. The database enables you to get an overview of Estonian startups by ranking and ltering them by sectors, technology, stage, employee count, turnover, etc. Accessible at: startupestonia.ee/startup-database

Estonian Founders Society (EE: ), formerly known as Estonian Startup Leaders Club, works to boost the local startup community, strengthen direct relationships between founders, share experiences and empower new young founders. In the past decade the organization has evolved from purely networking activities to wider representation of startups in Estonia and beyond. Find out more: asutajad.ee

1.4.1.

Incubators, accelerators and events

As described before, the Estonian startup scene is vibrant and active. There are many important players and yearly events in the ecosystem. There are also various co-working and o ice space providers. Some of the better-known stakeholders are listed here:

Coworking spaces

SPARK HUB (sparkhub.ee) - a startup & technology community centre in Tartu connecting 200 innovative and creative entrepreneurial people in IT and hardware

sTARTUp HUB (startuphub.ee) - a startup and technology community centre at Tartu Town Hall Square for teams, startups and freelancers

Spring Hub (springhub.org) - a coworking space located in Tallinn that provides a work space for freelancers, small businesses and teams

Palo Alto Club (paloalto.club) – creative hub in Tallinn that provides private rooms for startups, hot desks for freelancers and meeting rooms

Lift99 (lift99.co) – a coworking space that puts emphasis on community

Ülemiste City (mainorulemiste.ee) - a modern district located in the immediate vicinity of Tallinn Airport that houses a large number of innovative enterprises

Workland (wrkland.com) – provides private o ices and coworking spaces in Tallinn

Forwardspace (forwardspace.ee) – rst coworking space in Pärnu

OBJEKT multimedia future hub (objekt.is) – a creative incubator and the rst coworking space in Narva

Incubators and accelerators

Tehnopol Science and Business Park (tehnopol.ee) – science and business campus for innovative tech companies

Tartu Science Park (teaduspark.ee) – oldest science park in the Baltics, provides rental space and infrastructure, business support and incubation services

ESA BIC Estonia (esabic.ee) – incubator focused on space technologies, part of the Europe-wide ESA BIC network

Tallinn Creative Incubator (inkubaator.tallinn.ee) – provides a 24 month development programme to companies

Tartu Biotechnology Park (biopark.ee) – provides physical infrastructure as well as business development and consultancy services to companies and R&D institutions in the elds of biotechnology, medicine and veterinary medicine

Startup Wiseguys (startupwiseguys.com) – one of Europe’s oldest and most experienced startup accelerators on B2B SaaS, CyberTech and sustainability verticals located in Tallinn

Buildit (buildit.lv) - an accelerator that supports hardware and IoT startups in turning an idea into a tangible, market-worthy product

Prototron (prototron.ee) - helps turn smart and innovative ideas into tangible prototypes

The University of Tartu sTARTUp Lab (startuplab.ut.ee) – a subunit of the School of Economics and Business Administration that provides hands-on entrepreneurship education and pre-incubation services for all Tartu students across disciplines and early-stage student start-up teams

Mektory (taltech.ee/en/cooperation/innovation-centre-mektory/ contacts) – an innovation and business centre a iliated with the TalTech university that provides services and activities to companies, students, young entrepreneurs and children

Events

Latitude59 (latitude59.ee) — a large startup and tech event held in Tallinn every May.

sTARTUp Day (startupday.ee)— the biggest business festival in the Baltics held in Tartu every year.

Robotex International (robotex.international) — worlds biggest robotics festival, usually held in Tallinn in November.

Garage48 (garage48.org) — hackathon series in Estonia and Eastern-Europe.

“Entrepreneurship week” (EE: ) (ettevotlusnadal.ee) – a nation-wide week long entrepreneurship event organized every October.

Startup Estonia – Startup Estonia Facebook page lists various events regularly facebook.com/startupestonia/events

1.5. SOCIAL ECONOMY

Estonia boasts an enormous number of registered non-pro t organizations - more than 41 000 in 2020, the number including also about 23 000 housing associations. It is estimated that about 28 000 people or 4-5% of the Estonian workforce is employed in the non-pro t sector.

However, according to an OECD in-depth policy review carried out in 2020 there are only 125 social enterprises in Estonia. There is no separate legal structure for Estonian social enterprises. The three main legal forms for today’s social entrepreneurial activities are: non-pro t association, foundation, and private limited company. Therefore, the social economy in Estonia is still developing.

Relevant organizations in the Estonian social economy:

National Foundation of Civil Society (EE: ) is a state nanced civil society fund in Estonia. kysk.ee

The NULA incubator is a development programme created by the National Foundation of Civil Society to o er support for smart, e ective, and innovative ideas that resolve acute problems in the Estonian society. nula.kysk.ee

The Network of Estonian Nonpro t Organizations (EE: ) is the single and largest Estonian organization uniting public bene t non-pro t organizations. heakodanik.ee

Estonian Social Enterprise Network (EE: ) is a non-pro t organization that advocates social entrepreneurship and represents social enterprises in Estonia. The mission of ESEN is to increase the number, capacity, and societal impact of social enterprises in Estonia. sev.ee

2. SETTING UP A COMPANY

IN ESTONIA

Igaüks on oma õnne sepp

Everyone is a blacksmith of their happiness

2.1. WHAT LEGAL FORMS ARE THERE FOR ME AS A FOUNDER?

If you are an EU citizen then you are entitled to set up your own business (even as a sole proprietor) or to register the branch of your company in Estonia and to provide services through your company without registering a new company or branch in the EU.

If you are from a third country, i.e. a non-EU or EEA country, then there are plenty of legal statuses that you can obtain as a businessperson. You can either qualify for a residence permit for business, startup or major investor or you can apply for a Startup Visa, Digital Nomad Visa or E-residency.

Did you know?

Information on starting up and developing a business across the European Union and beyond is o ered by the Your Europe Business portal. This site helps entrepreneurs with practical information on their rights, obligations and opportunities when doing business in the EU. Your Europe Business portal includes topics about VAT rules and rates in each EU country, E-commerce, product requirements, posting sta abroad, access to nance, etc.

Access the portal at: europa.eu/youreurope/business/index_en.htm

Furthermore, the Enterprise Europe Network (EEN) can help your business nd international partners to grow and expand abroad. You can get free access to a range of advisory services. Find out more at: een.ec.europa.eu

2.1.1. Resident permits for business, startups and investors

A temporary residence permit for business may be issued for up to ve years.

Residence permit for business

You are eligible for a temporary residence permit for business if you have a holding in a company or you operate as a sole proprietor and you have invested in business activity in Estonia at least 65,000 euros of capital (in the case of a self-employed person (EE: ), 16,000 euros). The company’s equity capital, subordinated liability and the amount of registered xed assets can be regarded as constituting investment.

After the lapse of one year or when applying for the extension of residence permit, the investment requirement may be replaced by the sales income (at least 200 000 euros per year) or by the social security tax paid in Estonia (in each month the company needs to pay social tax equal to social tax that would be paid from ve average Estonian salaries).

PAY ATTENTION!

Residence permits for business go under the yearly immigration quota. The Estonia immigration quota cannot annually exceed 0.1% of the resident population of Estonia. Over the last few years, the immigration quota has been met within the rst months of a year. The residence permits for start-up entrepreneurs and major investors do not fall under the quota.

Residence permit for start-up entrepreneurs

A startup company is de ned as a company aiming at developing and launching a business model that is with such great global growth potential, innovative and reproducible that it shall make a substantial contribution to Estonia’s business environment.

For prospective startup entrepreneurs, who have established their startup in Estonia and wish to stay longer, it is possible to apply for a temporary residence permit for entrepreneurship. For startups, the general investment requirement does not apply. To qualify as a startup, a business plan needs to be reviewed and approved by an expert Startup Committee.

PS. The temporary permit for startup entrepreneurship are for the founders of the startup only.

Residence permit for a major investor

The residence permit for major investors is to encourage investments in such business activities in Estonia, which are in public interest and shall signi cantly contribute to the development of the Estonian economy.

You are considered a major investor if you have made a direct investment of at least 1,000,000 euros in an Estonian company or in an investment fund which mainly invests in Estonian companies.

As a major investor you are not required to have an actual place of residence is Estonia and you have no obligation to register your place of residence in the Population Register.

Where to get more information

For more information on how to apply for the aforementioned residence permits, please visit: www2.politsei.ee/en/teenused/residence-permit/ tahtajaline-elamisluba/ettevotluseks/

2.1.2. Startup Visa

The Estonian Startup Visa helps non-EU founders grow their startup in Estonia. The Startup Visa gives foreign entrepreneurs the opportunity to settle in Estonia for up to 18 months to establish their startup. The main purpose of the stay has to be related to the establishment of a startup. In Estonia, a company may also be registered digitally, which you may do by becoming an e-resident (read more below).

Am I eligible for a Startup Visa?

The Startup Visa is for the founders of the startup only.

To be eligible, you need:

A technology-based, innovative and scalable business. Your business model is expected to pack global growth potential. The Startup Visa is aimed at tech-driven startups that solve big problems, disrupt massive industries, and will serve millions of people.

Approval from the Startup Committee stating that your business meets the de nition of a startup and can pursue the Startup Visa. Your application will be reviewed by people who work with startups daily. They will review the application and make a decision within 10 working days.

At least €800 for every month you want to spend in Estonia. This translates to €9600 for a one-year visa. It is the bare minimum required by law. That said, with decent rental ats costing €500+ a month, plus other living expenses, you'll need more money to enjoy a comfortable life in Estonia.

Get more details about the application process on the Startup Estonia website: startupestonia.ee/visa

PAY ATTENTION!

A long-stay visa, such as the Startup Visa, must be applied for in person at an Estonian representation which handles visa applications or at a service point of the Police and Border Guard Board in Estonia.

See more at: vm.ee/en/consular-visa-and-travelinformation/visa-information/application-long-stay-d-visa

Digital Nomad Visa

The Digital Nomad Visa is suitable for you if you can work independent of location and perform your work duties remotely using telecommunications technology. With the Digital Nomad Visa, you can live in Estonia and legally work for your employer or your own company registered abroad. This visa is also suitable for you if you work as a freelancer for clients mostly outside of Estonia.

This visa allows you to stay in Estonia temporarily for up to 12 months. There are set of requirements for applying for this kind of visa. First, the amount of su icient funds for applying for a digital nomad visa is 150 euros per day. It is not expected that you have that money when submitting the application. It is expected that you should have nancial means for the rst month which makes 4500 euros per 30 days. Second, you also have to provide evidence of su icient legal income within the past six months. The amount of the previous income that is su icient is based on the €150 per day / €4,500 per month benchmark but based on that it is estimated whether you are able to ful l the requirement of su icient nancial means. Read more on Digital Nomad Visa at the website of e-resident.gov.ee/nomadvisa

E-residency

Estonia is the rst country to o er e-Residency, a government-issued digital identity and status that provides entrepreneurs with access to Estonia`s transparent digital business environment. e-Residency enables secure and convenient digital services that facilitate credibility and trust online.

Did you know?

Since the establishment of e-Residency over 108 500 people have become e-residents and established companies in Estonia that provide jobs for 28 000 people.

e-Residency is a transnational digital identity available to anyone in the world interested in administering a location-independent business online. By o ering e-Residents the same services that have been available for Estonians over a decade, Estonia is pioneering the idea of a country without borders.

e-Residency is especially suitable for digital nomads, freelancers, startup founders and digital entrepreneurs as it makes you location independent. You can start and manage a paperless EU-based company 100% online from anywhere in the world. You can travel and operate your business remotely and move abroad without the need to re-establish your company. You can own the company without the need to appoint a local director. And you can join a global community of other e-Residents.

e-Residents can:

Digitally sign documents and contracts.

Verify the authenticity of signed documents – sign, authenticate, encrypt and transmit documents securely.

Establish an Estonian company online within a day.

Administer the company from anywhere in the world.

Conduct e-banking and remote money transfers.

Access online payment service providers.

Declare Estonian taxes online.

PAY ATTENTION!

Please be aware that e-Residency does not confer citizenship, tax residency, residence or right of entry to Estonia or to the European Union. It is not a visa or residence permit. The e-Resident digi-ID card is not a physical identi cation or a travel document, and does not display a photo.

How to apply?

All the details and application form can be found at e-resident.gov.ee/become-an-e-resident

In short – you need to ll in an electronic form that includes personal, contact and identi cation details. You will also need to provide a CV and a motivation letter for applying for the e-residency. The Police and Border Guard Board performs background checks on all applicants. You also need to pay a state fee between 100-130 euros depending on the chosen pickup location.

The application review process generally takes 6-8 weeks. Please note that you are required to collect your e-Residency digi-ID card in person from one of the Estonian foreign representations or the Police and Border Guard Board service points in Estonia. You will be required to present a valid travel document and give your ngerprints when collecting your e-Residency digi-ID card.

e-Residents receive a smart ID card which provides:

Digital identi cation and authentication to secure services

Digital signing of documents

Digital veri cation of document authenticity

Document encryption

2.2. HOW TO REGISTER A COMPANY?

It is easy to start your own company in Estonia. You can do this in person at a notary or online through the Company Registration Portal. The paperwork takes only a few days. The process of registering a business is unbelievably quick, hassle-free, and understandable thanks to Estonian e-services and low level of bureaucracy.

The process of establishing a company:

1. Choosing a unique name. Availability of business names can be checked from the Commercial Register ariregister.rik.ee/eng/name_query.

2. Choosing an area of activity and deciding the form of business.

3. Registering the company (two options):

- Online via the Company Registration Portal ariregister.rik.ee/eng – Available for private limited companies, general partnerships, limited partnerships, and sole proprietors.

- Veri cation of foundation documents by a notary who will present those to the Commercial Register – Public limited companies and commercial associations need to be registered through a notary.

4. Opening a bank account.

5. Acquiring licenses (if the area of activity is subject to special requirements).

6. Registering the company as a VAT payer at the Estonian Tax and Customs Board (if necessary).

7. Registering employees in the employee registry at the Estonian Tax and Customs Board.

Good to know!

Startup Estonia has made available many templates for relevant documents such as the Founders Agreement, Articles of Association, Employment Agreement and many more. These documents have been compiled with the help of Estonian law rms and can help speed of the process of founding your own company. The templates are available at: startupestonia.ee/resources

Company Registration Portal

The Company Registration Portal (EE: ) is an Internet environment that allows entrepreneurs to submit electronic applications, documents and annual reports to the Commercial Register. The Company Registration Portal can be used to establish new businesses and non-pro t organizations, and to submit applications to amend, liquidate or delete registry data.

For the electronic registration you need an ID-card, Smart-ID or Mobile-ID. The Company Registration Portal also recognizes many foreign ID-cards.

The portal also includes a simple web-based accounting software e-Financials, which helps start-ups and small businesses to organize their accounting comfortably. Access the portal at: ariregister.rik.ee

Good to know!

The Estonian citizen portal eesti.ee provides a very thorough and up to date step-by-step overview of establishing a company in Estonia. The website helps you understand which form of company to choose, which preparations should be made, how to register the company online or in person at a notary and much more.

2.3. WHAT LEGAL FORMS ARE THERE FOR ME AS A FOUNDER?

The Commercial Code (EE: ) regulates establishing a company. According to the Commercial Code there are ve forms of companies: private limited company, public limited company, general partnership, limited partnership, or commercial association. In addition, any natural person may be a sole proprietor.

2.3.1. Private Limited Company

Estonia is the rst country to o er e-Residency, a government-issued digital identity and status that provides entrepreneurs with access to Estonia`s transparent digital business environment. e-Residency enables secure and convenient digital services that facilitate credibility and trust online.

The most popular type of legal entity being set up by foreigners in Estonia is the Private Limited Company (EE: ). A private limited company is a company that has its share capital (EE: ) divided into private limited company shares (EE: ). A private limited company is liable for the performance of its obligations with all of its assets. A shareholder is not personally liable for the obligations of the company.

However, the company can be established without contributing to the share capital. If the founders are private persons and the share capital is less than 25,000 EUR then the founders can decide that the contribution must not be paid upon the establishing of the company. Until the whole sum has been paid, the founders are personally liable for the obligations of the company within the amount of the missing contribution.

A private limited company must have a management board. The management board is a directing body of the private limited company that represents and directs the company. The management board may have one member (director) or several members. A member of the management board need not be a shareholder. A member of the management board must be a natural person with active legal capacity. If more than half of board members are not residing in Estonia, then the company must give the Commercial Register a contact in Estonia where necessary documents can be sent.

A private limited company can have a supervisor board if prescribed by the Articles of Association. But it is not mandatory by the law. An auditor is only mandatory when the company surpasses certain threshold values in terms of turnover, number of employees and asset value (see the chapter on auditing).

To establish the company, the management board must submit a petition to the Commercial Register. If registered electronically, a company can be established in just a few hours. Registering through a notary will take up to 3 days. The state fee for registering a private limited company is between 200 – 265 EUR, depending on the registration method.

PAY ATTENTION!

The Commercial Register’s information system allows free queries about companies, non-pro t associations and foundations. Entries in the Commercial Register are public. Everyone has the right to examine the registry cards and the business les, and to obtain copies of registry cards and of documents in the business les. Read more here: ariregister.rik.ee/eng

In addition, everybody can see the list of legal entity debtors on the webpage of the Tax and Customs Board’s: emta.ee/eng

2.3.2. Public Limited Company

A public limited company (EE: ) is a company that has a share capital (EE: ) divided into public limited company shares (EE: ). A public limited company is liable for the performance of its obligations with all of its assets. A shareholder is not personally liable for the obligations of the public limited company. One or more natural or legal persons with or without share subscription may found a public limited company.

The minimum nominal value of a share should be 0.1 EUR. Shares must be registered and entered in the Estonian Central Register of Securities. The rights attached to registered shares belong to the person who is entered as the shareholder in the share register.

A public limited company must have a management board and a supervisory board. The management board is a directing body of the public limited company that represents and directs the company. A member of the management board need not be a shareholder. The management board may have one member (director) or several members. A member of the management board must be a natural person with active legal capacity. A member of the supervisory board must not be a member of the management board. If more than half of board members are not residing in Estonia then the company must give the Commercial Register a contact in Estonia where necessary documents can be sent.

The supervisory board must plan the activities of the public limited company, organise the management of the public limited company and supervise the activities of the management board. The supervisory board must notify the general meeting of the results of a review. The supervisory board must give orders to the management board for organisation of the management of the company. The supervisory board must have three members unless the Articles of Association prescribe a greater number of members. A member of the supervisory board must be a natural person with active legal capacity.

A public limited company must appoint an auditor.

2.3.3. Sole Proprietorship

A sole proprietor (EE: ) must be entered in the Commercial Register on his or her petition.

There is no minimum capital requirement for a sole proprietor. A sole proprietor can use cash-based accounting meaning there is no need for balance sheets or pro t and loss statements. The company address can be the person’s registered place of living in Estonia.

Sole proprietorship carries a higher personal risk. A sole proprietor is liable for his or her obligations with all of his or her assets. This means that in case of unmet obligations or bankruptcy, all property belonging to the sole proprietor can be used as collateral regardless of whether that property was used for business or private purposes.

There are also special rules regarding the payment of social tax in the case of sole proprietorship. Sole proprietors pay social tax on their business income. Sole proprietors need to pay social tax four times during the year as advance payments – by the 15th day of the last month of each quarter.

2.3.4. Partnerships

There are two types of partnerships in Estonia: the general partnership and the limited partnership. The main di erence between the two legal entities is given by the liability of the shareholders.

A general partnership is a company in which two or more partners operate under a common business name and are both fully liable for the obligations of the general partnership with all of their assets. There is no minimum capital investment, and the pro ts are divided amongst the partners according to their share, unless the partnership agreement speci es otherwise.

A limited partnership is a company in which two or more partners operate under a common business name and where at least one of the partners is fully liable for the company’s legal obligations while the limited partner is liable up to their amount of investment.

2.3.5. Branch of Foreign Company

If a foreign commercial undertaking wants to permanently o er goods or services in its own name in Estonia, it should enter its branch in the Commercial Register. A branch is not a legal person. The company is liable for the obligations arising from the activities of the branch. In the cases provided by law, a company must obtain a licence in order to establish a branch in Estonia.

A foreign company must appoint a director or directors for the branch. A director must be a natural person with active legal capacity. The residence of at least one director must be in Estonia, in a member state of EEA or in Swiss Confederation. If several directors are appointed for a branch, each of them may represent the branch unless it is speci ed that the directors or some of them may represent the branch jointly.

A foreign company must maintain separate accounts concerning the branch. Accounts concerning the branch must be maintained pursuant to the requirements of the Accounting Act.

2.3.6. Entrepreneur Account

A natural person has the opportunity to open an Entrepreneur Account (EE: ). The Entrepreneur Account is intended to simplify the tax liability for the payments received for the provision of services from one natural person to another natural person or for the sale of goods to a natural or legal person. A person who has opened an entrepreneur account is not obliged to register as an entrepreneur and to calculate revenues and expenses. The owner of the entrepreneur account cannot be a VAT payer or be acting as a self-employed person in the same or similar area of activity.

Accounting and tax reports are not required when using an entrepreneur account because the tax liability is calculated on the basis of the payments to the entrepreneur account. An entrepreneur account owner does not issue invoices because he or she is not an entrepreneur or accounting entity. An entrepreneur account owner can provide services or sell goods by a verbal contract.

An entrepreneur account is useful for a person who provides services to other natural persons in the areas of activity that do not involve any direct expenses, or for a person who sells self-produced goods or handicraft goods or the goods with low costs of materials or acquisition.

Examples where the Entrepreneur Account is suitable include babysitting, housekeeping, gardening, repair or construction services that do not involve direct costs or in which a customer pays for the costs. For example, a customer orders the repair or construction service and has bought the tools and materials for the repair himself or herself. It is also an appropriate solution for new forms of entrepreneurship, such as the payments received from the provision of services from one natural person to another natural person through ride-sharing service platforms.

More information about the Entrepreneur Account can be found on the Tax and Custom Board website emta.ee.

2.3.7. Non-pro t association

A non-pro t association (EE: ) is a voluntary association of persons which cannot have the earning of income from economic activity as its objective or main activity. Non-pro ts in Estonia are regulated by the Non-pro t Association Act (EE: ).

The main purpose of a non-pro t association is not to earn an income from economic activity. However, it can be economically active, hold a (bank) account, enter into contracts and pay salaries. The income may be used only to achieve the goals speci ed in its articles of association. A non-pro t association does not distribute pro ts among its members.

A non-pro t association is governed collectively, its management bodies are the general meeting of members, and the management board is elected at the general meeting.

Non-pro t organizations can be registered via the Company Registration Portal or at a notary o ice.

In order to establish a non-pro t association you need:

At least two members (natural or legal persons)

At least one board member - only natural persons

Registered address in Estonia

Foreigners are allowed to be founders and members of non-pro t associations. In case the entire board live abroad then a local representative must be appointed.

Accounting for non-pro t organizations is similar to the private limited company. Financial support to non-pro t associations is mainly provided for covering occurring costs, but not for investments as is the case with companies.

A thorough guideline for establishing and managing a non-pro t association can be found at MTÜabi portal: mtyabi.ee

Find out more about non-pro ts and civil society organizations at the Good Citizen portal: heakodanik.ee

Did you know?

The Network of County Development Centres also supports Estonian civil society. The centres counsel and help non-governmental organisations to establish and develop their organisations.

2.4. ACTIVITY LICENSES AND NOTICES

When founding a company, keep in mind that there are elds of activities with special requirements where you will need to apply for an activity license or submit a notice of economic activity.

Activity licenses are required for example for the following activities: agriculture, construction, nancial services, energy, media services, trade (inc. selling alcohol and tobacco) and transport. For a comprehensive list of areas of activities subject to licences and notices please consult the Register of Economic Activities (EE: ), available at: mtr.ttja.ee

The registration forms are also available on the Register of Economic Activities website. The recipient of your forms depends on the eld of activities. You also need to pay a state fee dependant on the type of activity.

If you are active in a eld with special requirement, your activity must always comply with the requirements that were the basis for applying for an activity license or for sending an activity notice. If your company does not comply with the requirements, the authority co-ordinating the granting of licenses may refuse to grant the activity license, may suspend the license or revoke it.

Food safety

In case your business involves the handling of food then you also need to follow the requirements of The Food Act and be approved before commencing activities. Basically, it means that you will need a permit from the Agriculture and Food Board (EE: ). This includes activities related to food preparation, selling and catering (including public events). Find out more on the Agriculture and Food Board website: pta.agri.ee

2.5. PREMISES

There are no restrictions for foreigners acquiring immovables in Estonia. The same restrictions apply to all.

There are two types of general restrictions: restrictions arising from the acquisition of 10 hectares or more of agricultural or forested land and restrictions arising from national defence reasons. The Government may grant authorisation to foreigners for the acquisition of an immovable in one of the two categories above for reasons signi cant to the State.

To nd a suitable premise for your company, contact a real-estate rm or consult the list of co-working spaces under the startup ecosystem chapter.

3. LEGISLATION, TAXATION, ACCOUNTING AND FINANCING

3.1. MOST IMPORTANT LEGISLATION RELATED TO ENTREPRENEURSHIP

There are many laws that can be relevant to your business activities. All legislations in Estonia are publicly available Online on the State Gazette (EE: ).

The State Gazette also provides consolidated texts of English translations of most important Estonian legislation. However, the translations published are uno icial texts – they do not have legal force and you cannot rely on them in judicial or any other o icial proceedings.

PAY ATTENTION!

In Estonia, legislation has legal force only in Estonian.

Some of the most important legislations related to entrepreneurship are:

Commercial Code – regulates entrepreneurship

General Part of the Civil Code Act - general principles of civil law.

Law of Obligations Act – regulates employment contracts and other multilateral transactions

Law of Property Act – provides for real rights, their content, creation and extinguishment

Employment Contracts Act – regulates employment contracts.

Occupational Health and Safety Act – regulates occupational health and safety requirements set for work

Accounting Act – regulates accounting functions in all business entities registered in Estonia

Bankruptcy Act – regulates the insolvency of a debtor declared by a court ruling

3.2. MOST IMPORTANT TAXES FOR COMPANIES

Estonia has the European Union’s lowest tax rate on business income and capital. The share of taxes on capital in Estonia’s entire tax revenue is approximately 7%, while the EU average is about 21%. Taxes on capital make up 2.3% of the GDP, placing Estonia the last in the EU.

How to declare taxes?

Tax declarations can be led electronically through the e-Taxation portal or by contacting a regional tax centre of the Tax and Customs Board.

All the taxes in Estonia can be declared via E-tax/e-customs, which is an electronic service desk of the Estonian Tax and Customs Board. E-tax/e-customs works 24 hours a day and 7 days a week. Via the e-tax-/e-customs it is possible to:

Submit declarations and notices

Perform customs operations

Be aware of one’s tax operations

Securely communicate with the Tax and Customs Board

To start using the e-Taxation portal as a company, you will need to register your company as a user of the e-Taxation portal. The relevant information can be found on the website of the Tax and customs Board: emta.ee

What taxes are related to employment costs?

Social tax is paid for the employee by his or her employer. Social tax is used for pension insurance and state health insurance. An entrepreneur must pay social tax on both salaries and fringe bene ts.

The social tax rate is 33% (20% for social security and 13% for health insurance) of the employee’s gross salary. The taxation period is one calendar month and the entrepreneur must declare the social tax and pay it to the Tax and Customs Board by the 10th day of the following month.

For example, if your employee’s gross salary is 1,000 euros, you will pay 330 euros of social tax for the employee.

In some exceptional cases, the Estonian state pays the social tax – for example for a parent of a child under 3 years of age and for persons receiving various care-taker bene ts and families with many children. Also, the state pays the social tax for employees who have certi ed 40% loss of work capacity if the employer les the relevant application.

In 2024, the minimum monthly salary taxable by the social tax is 725 euros, i.e. the minimum social tax obligation for an employer is 239,25 euros per month.

Income tax in Estonia is 20%. The employer withholds their employee’s income tax from their gross salary each month. Read more about the income tax in the handbook “Working and labour market”.

What do I need to know about company income tax?

Corporate income tax is 0% on retained and reinvested pro ts. The speci c feature of company income tax in Estonia is that only distributed pro t is taxed. Pro t reinvested into the company is tax-exempt.

A company must pay income tax on: distributed pro t, expenses and payouts unrelated to business, and gifts, donations, hosting expenses, fringe bene ts to employees. Additionally, decrease of a company’s capital, buyback of company shares or units, and payout of liquidation shares in the extent exceeding the monetary and non-monetary contributions made into the company’s equity capital are taxable by income tax.

A company pays corporate income tax at the moment of payment, while the tax rate is calculated from net amount, 20/80 of the payment. The taxation period is one month.

What do I need to know about value added tax?

Value added tax is accounted for goods and services sold in the course of business, import of goods from countries outside the European Union and purchases of goods from countries within the European Union. Value added tax is a tax on added value and it is paid by the end consumer.

Value added tax must be added to its products and services by an entrepreneur registered as a value-added taxpayer. If a company’s taxable annual turnover exceeds 40,000 euros counting from the calendar year’s beginning, then the company must be registered as a value added taxpayer in the Tax and Customs Board. If the turnover is less, the registration is not obligatory.

As a value-added taxpayer, you will have to:

Add the value added tax to the sales price when selling goods or providing services

Keep value added tax accounts

Calculate and pay the value added tax amounts

Preserve the documents related to the transactions and issue invoices compliant with requirements

The general value added tax rate since 2024 is 22% of the taxable value of an item or a service.

Some goods and services are subject to the tax rate of 9%, for example books, study workbooks, periodicals, medicines listed by the Ministry of Social A airs, sanitary and hygiene products, and medical devices intended for personal use by disabled people.

The value added tax rate is set to 0% for several goods, including exported goods, consultation services provided to a taxpayer of another EU member state, but also watercraft and aircraft used in international tra ic. Services subject to 0% value added tax are e.g. those provided outside Estonia, several services related to water and air transport, and freight carriage services. The turnover of several social-oriented goods and services is tax-exempt, for example postage, insurance, healthcare and social services.

You can reduce the taxable turnover by the value added tax paid on the acquisition of goods or services used for the taxable turnover (input value added tax).

The taxation period of value added tax is one calendar month. The value added tax declaration must be led and the tax must be paid to the Tax and Customs Board by the 20th day of the month following the taxation period.

To register your company as a value-added taxpayer, you must le an application (in Estonian) with the Tax and Customs Board together with the required documents.

What are the deadlines

10th day of every month - deadline for submission of The Income Tax and Social Tax Declaration: declaration of income and social tax, unemployment insurance premiums and contributions to funded pension.

20th day of every month - deadline for the submission of the Value Added Tax declaration.

3.3. ACCOUNTING REQUIREMENTS

The Accounting Act (EE: ) regulates basic accounting functions in all business entities registered in Estonia. It does not regulate accounting for taxes, which are regulated by other laws and acts. The essence of the law is framed in compliance with International Accounting Standards.

Almost all Estonian companies can choose whether to prepare their consolidated and annual accounts in accordance with International Financial Reporting Standards (IFRS) or in accordance with the Estonian accounting standards (“Estonian GAAP”). Listed companies and nancial institutions are required to prepare their accounts in accordance with IFRS.

The length of the nancial year is 12 months. At the end of each nancial year, an accounting entity is required to prepare an annual report that consists of the annual accounts and the management report. The pro t distribution proposal for the nancial year should be annexed to the annual report. The auditor´s report must be annexed to the annual report if it is mandatory for the company. The annual report should be led at the Commercial Register during six months after the end of the nancial year.

Did you know?

e-Financials is a simple web-based accounting software that assists companies to manage their book-keeping themselves. The software is in the Company Registration Portal and both entrepreneurs and authorized persons (e.g. accountants) can use it.

Access the software from: rik.ee/en/e- nancials

3.3.1. Auditing

The nancial statements should be audited for all public limited companies and foundations. In addition to that an accounting entity, i.e. other forms of companies such as private limited companies, should be audited or reviewed if, at the balance sheet date of the accounting year, it meets speci c criteria.

Even if the law does not require an audit or review, it is recommended to do so as banks, foreign investors, international nancial organizations, and state procurements might require an audited nancial statement.

In Estonia, certi ed auditors are members of the Estonian Auditors' Association (EE: ), nd out more at: audiitorkogu.ee

3.4. FINANCING

3.4.1. Debt nancing

Julge hundi

rind on rasvane

The brave wolf's chest is greasy

Debt nancing is basically an acquisition of funds by borrowing. In Estonia, debt nancing is mainly provided by commercial banks. Major banks of Estonia o er a large range of services, whereas smaller banks concentrate on a speci c range of services. In addition to debt nancing, banks also provide car and equipment leases and factoring services.

In total there are nine licensed banks and four branches of foreign credit institutions in Estonia. The Financial Supervision Authority (EE: ) also provides quarterly reviews on the Estonian credit market, see more at: f i.ee

Debt nancing can be divided into two categories, based on the type of loan you are seeking: short term debt nancing and long-term debt nancing.

Short-term debt nancing (EE: ) is essentially to provide capital de cit businesses funds for a short-term period of no more than a year. The most common short-term loans are overdrafts and working capital loans. Banks might also o er other such loans.

Overdraft (EE: ) is a short-term credit that is bounded to the company’s current bank account. It allows the company to withdraw or spend more money than it has, up to an agreed limit, known as the “overdraft limit”. An overdraft is designed to meet the liquidity needs and balance irregular cash ow.

Working capital loan (EE: ) is a special purpose loan for short-term nancing of additional needs in working capital. It is also meant for nancing short-term investments.

Long-term debt nancing is a form of nancing that is provided for a period of more than a year. Long- term nancing services are provided to those business entities that face a shortage of capital.

Investment loan (EE:

) is meant for nancing new projects such as the acquisition of xed assets or building o ice, warehouse, or production facilities. The nanced period for investment loans varies depending on the credit institution, but usually does not exceed 15 years.

Start-up loan is meant for companies just starting that often have no strong assets. A start-up loan enables an entrepreneur to manage the business- and loan-related risks, as in comparison with ordinary loans they can take smaller risks with their own property.

Most of these loan types require collateral in order to secure the credit institution’s nancing; in addition to a mortgage, the company can apply to KredEx for supplementary collateral to the extent of up to 75% of the credit amount.

KredEx helps enterprises develop faster and expand safely to foreign markets, by o ering loans, venture capital, credit insurance and state-guaranteed collaterals. KredEx o ers solutions for enterprises just starting, in a growth phase or already proven themselves.

KredEx secures and funds investments that help enterprises develop quickly. Read more: kredex.ee

3.4.2. Equity nancing and venture capital

Equity nancing is an alternative to debt nancing and is basically an acquisition of funds by selling common or preferred stock to an individual or institutional investors. In return for the money paid, shareholders receive ownership interests in the corporation. A company can nance equity through private equity companies nanced by institutional investors (such as investment banks, funds etc) and private investors. There is a wide array of private equity types and styles and the term ‘private equity’ has varying connotations. In general, private equity investments are made into relatively mature companies in traditional business sectors with already proven business models. These are companies that are able to generate revenue and pro ts but don't have su icient funds to expand and restructure operations.

Venture Capital is a type of private equity focused on start-up companies. Venture capital funds back entrepreneurs with innovative ideas for a product or service who need investment and expert help in growing their companies globally. Investors who invest in high-risk, high growth potential tech companies with scalable business models are Venture Capitalists, or VCs. They manage funds and have the capacity to invest large sums throughout the di erent stages of a company’s development. VC-s take a very active role in the companies they invest as they expect high returns on their shares they got in exchange for the funding.

Estonian Private Equity and Venture Capital Association (EstVCA) is the representative body of Private Equity & Venture Capital Industry in Estonia. Find out more at: estvca.ee

Estonian Business Angels Network is an umbrella organization for business angels and business angel groups seeking investment opportunities in Estonia with an aim to grow the quantity and quality of local seed stage investments. Find out more at: estban.ee

But there are also other venture capital funds available, see organizations such as Karma.vc, Superangel, Trind.vc, United Angels, Change Ventures, Contriber Ventures, Tera.vc, Lemonade Stand.

3.4.3. Business start-up subsidy

The Estonian Unemployment Insurance Fund (EE: ) provides nancial backing i.e. the business start-up subsidy to registered unemployed persons and non-working retirement age people registered as a jobseeker to start new enterprises. A business start-up subsidy is nancial aid whose objective is to provide motivation and support in starting a new company or working as a sole proprietor. The subsidy is not meant for expanding or enhancing an existing economic activity or for investing in an existing company.

In order to receive the business start-up subsidy, you must be at least 18 years old, and be able to demonstrate some experience in running a business. That experience can be shown by referring to your past activities or education, or by completing a speci c business training.

If you lack quali cations or experience, you can enrol in a speci c training programme provided by the Unemployment Insurance Fund. This business training includes teaching you how to develop a good business plan and helps you to meet the criteria in order to apply for the business start-up subsidy.

The Unemployment Insurance Fund also provides business mentoring and coaching for those who have received the business start-up subsidy. The aim of the mentoring is to support the implementation and sustainability of the company’s business plan.

The maximum amount of the subsidy depends on the available budget and on the needs of your new business. In 2023, the maximum subsidy is 6000 EUR.

Find out more about the business start-up subsidy at tootukassa.ee/en/services/starting-business

3.4.4. Estonian Business and Innovation Agency nancial support measures

For new companies the most suitable Estonian Business and Innovation Agency support measures are the following:

Innovation voucher (EE: ) - The innovation voucher enables a SME to cooperate with a higher education institute, test laboratory, or intellectual property experts. The purpose is to develop new innovative solutions, carry out tests with new materials, gather knowledge on technolo-

gies, conduct studies in intellectual property databases etc. Maximum grant is 7500 EUR, and the own contribution is at least 20%.

Development voucher (EE: ) – The development voucher is a supporting measure for preliminary research. The results of the development voucher should enable the entrepreneur to gain comprehensive knowledge on whether their development idea has the potential necessary for continuing the development process in other stages. Maximum grant is 35 000 EUR and the own contribution is at least 30%.

Find out about eligibility criteria and application forms on the Estonian Business and Innovation Agency website eas.ee Please note that Estonian Business and Innovation Agency measures are subject to change over time.

3.4.5. Tallinn Enterprise Development Department grants

Digital solutions grant – This grant makes it easier for Tallinn-based small enterprises to adopt necessary digital solutions to improve the e icacy of production and service provision activities and increase competitiveness. The maximum grant is 6000 EUR, the maximum grant limit is 70% of the actual eligible expenditures.

Trade fair grant – The measure is aimed at SMEs and sole proprietors of Tallinn, who intend to participate in trade fairs taking place in Estonia, which are aimed at establishment of business contacts, locating new distribution channels and promotion of sales. The grant is limited to 1000 EUR for each applicant in a calendar year. The maximum grant limit is 50% of the actual eligible expenditures.

Foreign trade fair grant – Aimed at small enterprises in Tallinn who want to enter new foreign markets and expand their contact networks by participating as exhibitors at international trade fairs. The rate of the grant is 8 000 EUR per applicant per calendar year. The maximum rate of the grant is 80% of the actual eligible expenditures.

Grant for internship instructors - The objective is to promote the organisation of knowledge-intensive high-quality internships in cooperation with educational institutions and companies, and to motivate companies to involve experienced workers in the instruction of students.

The maximum grant is 3000 EUR per year, the maximum grant limit is 100% of the actual eligible expenditures.

More information available at tallinn.ee/en/business

4. BEING A GOOD EMPLOYER

4.1. HOW TO FIND SUITABLE STAFF?

Potential sources of nding suitable sta :

The Unemployment O ice o ers free of charge services to employers by looking for workers who meet the criteria they submit.

Private recruitment companies can help in nding the necessary specialists.

One can advertise in national and local papers as well as on job-seeking portals.

Careers services of main universities are also a good possibility to nd young talent

CV Keskus (cvkeskus.ee) - one of the leading job portals and recruitment partners in the Baltics.

CV-Online (cv.ee) - one of the leading job portals and recruitment partners in the Baltics.

GoWorkaBit (goworkabit.com) - portal for providing small goworkabit.com“work bites” for odd jobs.

4.2. HOW TO REGISTER EMPLOYEES?

It is easier to employ workers from the European Union than from third countries as there is free movement of labour within the European Economic Area and there are therefore fewer legal barriers and necessary steps.

In case you want to employ people from third countries, you should keep in mind the immigration quota for residence permits. There are also several exemptions from the quota. For example, the citizens of the United States and Japan have been excluded from the quota, as are under certain conditions ICT specialists or start-up workers. Find out more about the immigration quota in the handbook on residence and citizenship.

4.2.1. How to register an employee for short-term employment?

Short-term labour force can be employed without the need of a residence permit. The migration quota also does not apply to short-term employment without a residence permit. To employ people on a short-term basis, then you as the employer need to register employees at the Police and Border Guard. Short-term work can be done for up to 12 months during any 15-month period, i.e. 365 days during a 455-day period. Short-time employment for participation in seasonal work can be registered for up to 270 days during a year.

You need to pay a salary at least equal to the annual average gross monthly salary in Estonia to your short-term employees. Furthermore, the employees need to meet required quali cations, education, state of health, work experience and the necessary professional skills and knowledge to assume such positions.

Other special conditions apply depending on the nature of the job. These can be found at: politsei.ee/en/teenused/working-in-estonia/ registration-of-short-term-employment/

According to of the Aliens Act § 1762 since 2023 a temporary residence permit for short-term employment may be granted to an alien for up to two years in case:

the alien with a temporary basis of stay has been employed in Estonia for at least nine months on the basis of the registration of short-term employment immediately before applying for a residence permit;

employment continues with the employer who has registered short-term employment, and who has registered the short-term employment of the alien with a temporary basis of stay before applying for a temporary residence permit; the employer is reliable; the employer has paid the alien remuneration in compliance with the requirements.

Please read more about this opportunity in the Aliens Act that you can nd at riigiteataja.ee

The process of registering a foreigner’s short-term employment at PPA takes 15 working days. A quicker process (one working day) applies for some special categories of companies and workers (e.g. certi ed start-up companies or if the employer is a large and well-established company and the future worker’s salary is at least twice the Estonian average, etc).

After the short-term employment has been registered, the foreigner can start working in Estonia. Please remember that the foreigner may still need a visa to travel to Estonia. The fact that short-term working has been registered does not give the right to travel to Estonia. At the same time, the registration is a valid ground for applying for a long-term visa (D-visa).

4.2.2. How can I employ people with the Startup Visa?

The Startup Visa can be used by established Estonian startups to hire talent from outside the EU. This right is managed by a list of Estonian startups that can hire non-EU employees on preferential terms. If your company is not on the list, then you will need to apply consent from the Startup Committee.

The Startup Committee, consisting of members of the Estonian startup community, will review the application about your startup and decide within 10 working days whether your company quali es for the Startup Visa or not. In case of a positive decision, your startup will generally be quali ed for up to 5 years for bringing non-EU employees to Estonia on preferential terms.

After receiving the quali cation, if the employee's employment is short term, you will need to apply for their registration for the short-term employment and your employee will need to apply for a visa. If the employment is for a longer-term, the employee will need to apply for a temporary residence permit.

4.2.3. How to formalize my employee’s health insurance?

If a person starts working normally and under an employment contract and social tax will be paid for him or her in Estonia, then you will have to register the employee in the Register of Employees. For that, the potential employee should have an Estonian personal ID code and he or she must not have health insurance in some other EU country.

If a foreign citizen working in Estonia has no Estonian ID code and also cannot apply for one before starting work then you can register the employee for up to ve days using the date of birth stated in his or her personal identity document. Registration by date of birth does not grant the employee with social guarantees, including health insurance.

After the person receives an ID code, the validity term of the person’s registration of work can be extended. No new record needs to be initiated and instead, the record with the date of birth is amended to state the personal ID code. After entering the employee’s ID code into the employment register, the employee becomes entitled to health insurance pursuant to the Health Insurance Act. The necessary data are automatically and electronically sent to the Health Insurance Fund.

Keep in mind that you must send data about the person’s end of employment to the employment register within 10 days from the date of the employment’s end.

4.3. HOW ARE WORK RELATIONS REGULATED?

Work relations need to be xed in written contract. The handbook on work and labour market has a detailed overview of contract types as well as workers’ rights. Some of the most important elements are brie y covered in this subsection as well.

4.3.1. How are payments regulated?

Estonian average gross salary in 2022 was 1685 EUR. It was highest in the information and communication and nancial and insurance activities sectors. Lowest salaries were paid in real estate activities and accommodation and food service activities. Minimum gross salary in 2023 for full-time work is 725 EUR/month (4,30 EUR/hour) and in 2024 it will raise to 820 EUR/month (4,86 EUR/hour).

Employers are obliged to compensate for overtime, night time work and working on national holidays.

Type of work

Over-time work

Remuneration

Time o equal to the overtime (or x 1.5 monetary compensation if agreed with your employee)

Night-time work x 1.25 (may be compensated as rest time if agreed with your employee)

National holiday x 2 (may be compensated as rest time if agreed with your employee)

4.3.2. What other obligations do I have as an employer regarding the salary?

You must pay the employee:

Their average salary while the employee is in work-related training;

Their average salary while you cannot provide him or her with work;

Remuneration for the time that the employee performs a trustee’s duties; Their average salary while the employee is unable to work due to personal reasons (being at a physician, in state authority, at a funeral, etc.).

4.3.3. Can I lower the salary of my employees?

You have the right to subject the employees to the national minimum salary for up to 3 months in a year if unforeseen temporary economic hardship independent from you occurs. The rights and obligations of the parties in that case are:

you must inform the employees about the salary reduction 14 days in advance and initiate consultations to discuss the subsequent work arrangement.

before reducing the salary, you must o er another job if possible.

the employee has the right to refuse to perform work duties proportionally to the reduction in their salary.

the employee has the right to cancel the employment contract with 5-day advance notice and to receive redundancy compensation (1 month’s average salary from you, the rest from The Estonian Unemployment Insurance Fund).

See also the handbook on work and labour market for a more detailed view of your worker's rights.

LIST OF REFERENCES

O icial guides and gateways:

Destination Estonia – Relocation Guide: Compilation of practical info for new arrivals in Estonia

workinestonia.com/coming-to-estonia/relocation-guide/ e-Estonia Portal: eesti.ee – gateway to all government information and public e-services.

Settle in Estonia: settleinestonia.ee – Your guide to settling in Estonia

Roadmap for coming to Estonia: euraxess.ee/estonia/information-assistance/entryconditions-and-residence-permits-estonia/roadmap-visas-entry

Visit Estonia: visitestonia.com - gateway to travel and sights in Estonia

Study in Estonia: studyinestonia.ee gateway to higher education in Estonia

Research in Estonia: researchinestonia.eu — information and news about research activities in Estonia.

Found in Estonia: foundinestonia.ee — bi-weekly podcast sharing stories of people who have moved to Estonia.

Ministries and other institutions:

Ministry of Education and Research: hm.ee/en – education, research and Estonian language.

Ministry of Social A airs: sm.ee/en – health care, labour, social services.

Ministry of Culture: kul.ee/en — information about the state’s culture, sports, arts and heritage conservation activities.

Ministry of Justice: just.ee/en – legal and criminal policy of the state.

Ministry of the Interior: siseministeerium.ee/en – citizenship, migration, identi cation documents and internal security.

Ministry of Foreign A airs: vm.ee/en – security, business diplomacy and human rights.

Estonian Ministry of Economic A airs and Communications: mkm.ee — economy, entrepreneurship, business-academic cooperation.

The Integration Foundation: integratsioon.ee/en – information about adaptation in Estonia, adaptation programme Settle in Estonia, Estonian language courses, citizenship and Estonian Language houses etc.

Estonian Institute: estinst.ee/en/ – information about Estonian society and culture.

EURES: eures.ee/en – pan-European network for job-seekers.

Unemployment Fund: tootukassa.ee/eng – o icial website of Eesti Töötukassa, which administers the social insurance provisions related to unemployment, and organises labour market services.

Pension Centre: pensionikeskus.ee- information about the Estonian pension system.

Police and Border Guard Board: politsei.ee/en – legal basis for staying in Estonia, identity documents, citizenship.

Police and Border Guard Board Migration Advisors: politsei.ee/en/migration-consultants – free legal advice by PBGB personal advisors about di erent legal grounds to live in Estonia and the necessary documentation

Emergency contacts: 112 - 24/7 emergency telephone number for ambulance, police and rescue workers.

1247 – State helpline for trustworthy governmental information, state measures on coronavirus, psychological rst aid to all in need.

116 006 – Victim support helpline assistance to people who have fallen victim to an o ence, negligence, or mistreatment or experienced physical, psychological, economic, or sexual violence.

1220 – The Medical Counselling Advice Line o ers medical advice (calling from abroad, dial +372 630 4107). 24/7 in Estonian and Russian, between 15.00-17.00 in English

KEYWORDS

FURTHER READING

Networking, Volunteering and Leisure Time

Education in Estonia

Volunteering in Estonia

Leisure activities and free time

Family vacation and kids

Making friends and networking

Youth work and hobby education

Lifelong learning

Kindergartens and childcare

Schools in Estonia

Learning languages

Studying for adults

Vocational education

Private and Public Services

Family and Children

Relocation and belongings

Counselling and mentoring

Residence and housing

Identity documents

Transportation

Local media and information

Estonia: State, Society and Language

Estonian state and its structure

Political and legal system

Culture, perceptions and habits

Geography

Estonian language

Opportunities for learning Estonian

Estonian working environment

Securing a job in Estonia

Salaries, taxes and returns

Working rights and contracts

Skills and language in Estonia

Pension and health insurance

Higher Education and Research

Working and Labour Market

Overview of higher education

Academic life and available resources

Networking and support for students

Research in Estonia and its essence

The state of research

Funding framework

Residence and Citizenship

Education in Estonia

Moving to Estonia

Residence and registration

Naturalisation and citizenship

Estonian migration policy

Estonian migration compared

Kindergartens and childcare

Schools in Estonia

Learning languages

Studying for adults

Vocational education

My Rights and Responsibilities

Kindergarten and Schools

Rights and opportunities

Offences and misdemeanours

Protection from violence and abuse

Relevant support

Child protection

Contracting companies: Expat Relocation Estonia OÜ

Design and layout: Richard Kaarna, richardkaarna.com

Printing: Printed at Librix Print powered by wabrix.ee

Responsible publisher: Integration Foundation

Settle in Estonia website: www.settleinestonia.ee

The project is co-funded by the European Union via the European Social Fund and by the Republic of Estonia.

Handbook version: April 2024

© 2024 Integration Foundation All rights reserved.

Provided the use of the work is not carried out for commercial purposes, it is allowed to use it without the author’s permission as established in Chapter IV of the Copyright Act. The Ministry of Culture points to the fact that pursuant to the Copyright Act, in the case of unlawful use of the work, compensation for the patrimonial or non-patrimonial damage caused and delivery of that which was received may among other things be claimed for.