Part V: Entrepreneurship in Estonia

What makes Estonian business environment attractive?

Part V of the material provides an overview of the Estonian economy and business environment. It introduces the opportunities to found a company, as well as various possible legal forms of companies. A short overview is provided about the requirements for accounting and auditing as well as opportunities to find suitable employees, office premises and funding sources for a company.

The material also introduces the Company Registration Portal and the organisations supporting entrepreneurship, enterprise networks and Estonian start-up community.

5.1. Economic and business environment

Estonia has an investment-friendly taxation system and transparent and functioning legislation. High degree of economic freedom, low national debt, belonging to the euro zone, low corruption index, e-variety of e-services, mobile communications and internet applications – all these factors show that Estonia has a stable and innovative business environment.

GDP by areas of activity and consumption components, 2018

Current prices, million euros Share of total added value, % Agriculture, forestry and fishery 572,2 2,6

Mining industry 239,8 1,1

Processing industry 3427,2 15,4

Electricity and natural gas supply 778,6 3,5

Water supply; waste handling 190,9 0,9

Construction 1722,8 7,7

Wholesale and retail trade 2619,2 11,7

Transportation and warehousing 1636,9 7,3

Accommodation and catering 447,0 2,0

Information and communication 1347,6 6,0

Financial and insurance activities 877,3 3,9

Real estate activities 2246,3 10,1

Professional, research and technology activities 1336,3 6,0

Administrative and helper activities 841,3 3,8

Public administration and national defence 1520,5 6,8

Education 1054,4 4,7

Healthcare and social welfare 903,5 4,1

Arts, recreation and free time 340,7 1,5

As we have modest market volumes, there is no artificial protection of our own market participants. Therefore there is a large number of foreign investors doing business in Estonia – in 2017 exports represented as much as 79% of Estonian GDP.

To mention but a few, Ericsson, ABB, Kuehne + Nagel, Stora Enso, Microsoft, Symantec, Stoneridge, Vopak EOS, Deutsche Post DHL, Transferwise. 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.

What does Estonian economy consist of? In Estonia, the 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.

5.2. Estonian export

The most important export markets in 2018 were Finland with 16%, Sweden with 11%, Latvia with 10%, USA with 6% and Germany with 6%. So, all our most important export destination countries are situated near us. also includes the export of 246 million euros of electricity.

The third place among goods groups being exported is held by timber products. In 2017, Estonia was Europe’s

Figure 11. Estonia’s main trade partners (2018)

30% 16%

11%

3%

3%

4%

5%

6% 10%

6% 6%

Latvia Sweden Latvia USA Germany Russia Lithuania Norway Denmark Netherlands other

Among goods groups, the most important export sector of 2018 was that of electrical appliances and equipment with 2,28 billion euros of turnover and a 22% share in total export.

The export of mining industry in 2018 was 2,16 billion euros i.e. 15% of total export. The row of mineral products largest exporter of modular timber houses.

There is also significant export of machines, mechanical appliances and their parts from Estonia.

In addition to good, Estonia is also an active exporter of services in the fields of tourism, construction, transport and others.

5.3. Setting up a company

It is easy to start your own company in Estonia. You can do this in person or online, and paperwork takes only a few days. For online registration, an ID card is required for authentication and digital signing. The Commercial Code regulates establishing a company.

Legal form

According to the Commercial Code there are five forms of business entities, which are created by entry into the Commercial Register: private limited company, public limited company, general partnership, limited partnership, or commercial association.

The most popular type of legal entity being set up by foreigners in Estonia is the so-called “Osaühing, OÜ”, or private limited company.

Private Limited Company (Osaühing or OÜ) A private limited company is a company that has its share capital (in Estonian: osakapital) divided into private limited company shares (in Estonian: osad). A shareholder is not personally liable for the obligations of the company. A private limited company is liable for the performance of its obligations with all of its assets.

The share capital must be a minimum of EUR 2,500. The minimum nominal value of a share is EUR 1. If the founders are private persons and the share capital is less than EUR 25,000 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 private limited 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 has a contact in Estonia where necessary documents can be sent. The foreign owner must give the Commercial Register his/her address and e-mail address.

A private limited company can have a supervisor board if prescribed by the Articles of Association. But it is not mandatory by the law. A private limited company must have an auditor if prescribed by law or the Articles of Association. An auditor is also mandatory when the company surpasses certain threshold values in terms of turnover, number of employees and asset value.

The process of establishing a private limited company • Choosing and checking the business name from the Commercial Register • Registration of the company: • Electronic filing request to the Commercial Register (possible for the holders of Estonian, Portuguese, Finnish and Belgian ID-card or Lithuanian Mobile-ID);

OR • Verification of foundation documents by the notary who will present those to the Commercial Register. • Acquiring licenses if the area of activity is subject to special requirements. Information and electronic registration (in Estonian) at the Register of Economic Activities https://mtr.mkm.ee/ • Registration of the company as a VAT payer at the Estonian Tax and Customs Board (if necessary) • Registration of the employees in the employee registry at the Estonian Tax and Customs Board

Entry in Commercial Register In order to enter a private limited company in the Commercial Register, 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 online is EUR 190.

Entries in the Commercial Register are public. Everyone has the right to examine the registry cards and the business files, and to obtain copies of registry cards and of documents in the business files.

Other forms of legal persons are also possible. The most common ones include:

Public Limited Company (Aktsiaselts or AS) A public limited company is a company that has a share capital (in Estonian: aktsiakapital) divided into public limited company shares (in Estonian: aktsiad). A shareholder is not personally liable for the obligations of the public limited company. A public limited You can get more information about the Commercial Code on the website of Riigi Teataja at www.riigiteataja.ee

How big must a private limited company’s share capital be?

How is a private limited company founded?

You can file an electronic request (in Estonian and English): http://ettevotjaportaal.rik.ee

List of notaries is available at www.notar.ee/19765

Find out more details about founding a company and the various types of companies that are available in Estonia (in English):

company is liable for the performance of its obligations with all of its assets. One or more natural or legal persons with or without share subscription may found a public limited company.

Share capital must be a minimum of EUR 25,000 and the minimum nomi- nal value of a share should be EUR 0.1. Shares must be registered and en- tered in the Estonian Central Register of Securities. The rights attached to registered shares belong to the per- son who is entered as the shareholder in the share register.

A public limited company must have a management board and a supervi- sory board.

The management board is a direct- ing body of the public limited com- pany that represents and directs the public limited company. A member of the management board need not be a shareholder. The management board may have one member (direc- tor) or several members. A member of the management board must be a natural person with active legal ca- pacity. 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 foreign owner must give the Commercial Register his/her address and e-mail address.

The supervisory board must plan the activities of the public limited com- pany, organise the management of the public limited company and su- pervise the activities of the manage- ment board. The supervisory board must notify the general meeting of the results of a review. The supervi- sory board must give orders to the management board for organisation of the management of the public lim- ited company. The supervisory board must have three members unless the Articles of Association prescribe a greater number of members. A mem- ber of the supervisory board must be a natural person with active legal capacity.

A public limited company must ap- point an auditor.

Sole Proprietorship (Füüsilisest Isikust Ettevõtja or FIE) A sole proprietor must be entered in the Commercial Register on his or her petition, or on another basis provided by law. 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 Pro- prietor can be used as collateral re- gardless of whether that property was used for business or private purposes.

Branch of Foreign Company If a foreign commercial undertaking wants to permanently offer goods or services in its own name in Estonia, it should enter its branch in the Com- mercial Register. A branch is not a le- gal person. The company is liable for the obligations arising from the activi- ties of the branch. In the cases provid- ed by law, a company must obtain a licence in order to found 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 res- idence 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 specified that the directors or some of them may represent the branch jointly.

A foreign company must maintain sep- arate accounts concerning the branch. Accounts concerning the branch must be maintained pursuant to the require- ments of the Accounting Act.

E-residency

e-Residency offers to every world citizen a government-issued digital identity and the opportunity to run a trusted company online, unleashing the world’s entrepreneurial potential.“

The Republic of Estonia is the first country to offer e-Residency — a transnational digital identity available to anyone in the world interested in administering a location-independ- ent business online. e-Residency additionally enables secure and con- venient digital services that facilitate credibility and trust online.

e-Residents can: • Digitally sign documents and contracts • Verify the authenticity of signed documents Encrypt and trans- mit documents securely • Establish an Estonian compa- ny online within a day. At the moment a physical address in

Estonia is required, which may be obtained using an external service provider. • Administer the company from anywhere in the world. • Conduct e-banking and remote money transfers. Establishing an Estonian bank account currently requires one in-person meeting at the bank, and is at the sole discretion of our banking partners. • Access online payment service providers • Declare Estonian taxes online. e-Residency does not automatically establish tax residency. To learn about taxation and to avoid double taxation please consult a tax professional.

All of these services have been available to Estonians for over a decade. By offering e-Residents the same services, Estonia is proudly pioneering the idea of a country without borders.

e-Residents receive a smart ID card which provides: • digital identification and authentication to secure services • digital signing of documents • digital verification of document authenticity • document encryption

Activity licenses

When founding a company, keep in mind that there are fields of activities with special requirements where you will need to apply for an activity license (there is a license obligation) or file a notice of economic activity (there is a notification obligation).

In cases set out in the law, an entrepreneur is obligated to file a notice of starting an economic activity with the registrar before starting that activity. Also, in other cases set out in the law, an entrepreneur must have an activity license before starting economic activities in certain fields.

Activity licenses are required for example for the following activities: • construction; • financial and insurance activities; • information and communication; • selling alcohol and tobacco; • media; • agriculture; • transport and industry; • energy. Registering a field of activity with special requirements

Verify whether your field of activity is listed among those with special requirements. The list of activities with special requirements (in Estonian) is here: • Pay the state fee for filing an application for an activity license. The state fees for different activity licenses are different.

File a notice or application for being active in a field with special requirements, logging into the Register of Economic Activities or into another relevant register. The application forms to register for fields of activities with special requirements are available here (in Estonian):

https://mtr.mkm.ee/

File a notice or application for being active in a field with special requirements, sending it to a registrar, a state authority (for example, a ministry or department), or local government, depending on the field. See here about whom to send the application (in Estonian): •• Time taken by registration After you file a notice of economic activity in the state portal or through that directly in the register, the data are automatically entered into the Register of Economic Activities or a similar register.

Notices of economic activity sent in any other way are entered into the register by the registrar on the workday following the receipt of the notice. The economic administration authority normally reviews an application for an activity license within 30 days and if the license is granted, it will enter its data into the Register of Economic Activities or a similar register.

Notification obligation If you are active in a field with special requirement, your activity must comply at all times 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 or may suspend the license or revoke it.

If the data of the notice of economic activity change, the registrar must be informed about it within 5 workdays.

What is an activity license?

What are the stages of registering for a field of activity with special requirements?

If the data of an activity license change, the economic administration authority must normally be informed about it 30 days before the planned change.

Most important legislation related to entrepreneurship

• Commercial Code

• General Part of the Civil Code Act

• Law of Obligations Act

• Law of Property Act

• Employment Contracts Act

• Occupational Health and Safety Act

• Accounting Act

Accounting requirements The Law on Accounting regulates basic accounting functions in all busi- ness entities registered in Estonia. It does not regulate accounting for tax- es, which are regulated by other laws and acts. The essence of the law is framed in compliance with Interna- tional Accounting Standards (IAS).

Almost all Estonian companies can choose whether to prepare their con- solidated and annual accounts in ac- cordance with International Financial Reporting Standards (IFRS) or in ac- cordance with the Estonian account- ing standards (“Estonian GAAP”). Listed companies and financial insti- tutions are required to prepare their accounts in accordance with IFRS. The Estonian GAAP is written by the Estonian Accounting Standards Board.

The length of a financial year is 12 months. At the end of each financial year, an accounting entity is required to prepare an annual report that con- sists of the annual accounts and the management report. The auditor’s report and, in the case of a company, the profit distribution proposal for the financial year should be annexed to the annual report. The auditor’s report need not be annexed to the annual re- port if auditing is not compulsory.

Annual report should be filed at the Commercial Register during six months after the end of the financial year.

Auditing The financial statements should be audited for all public limited compa- nies and foundations.

In addition to that an accounting enti- ty should be audited if, at the balance sheet date of the accounting year, the accounting entity exceeds the limits of at least two of the three following criteria: • sales revenue (net turnover), in the case of a company, or income, in the case of other accounting enti- ties EUR 4 Million; • total assets EUR 2 Million; • number of employees 60.

Or if the accounting identity exceeds the limit of one of the three following criteria: • sales revenue (net turnover), in the case of a company, or income, in the case of other accounting entities EUR 12 Million; • total assets EUR 6 Million; • number of employees 180.

The financial statements of an accounting entity should be reviewed by an auditor if, at the balance sheet date of the accounting year, the accounting entity exceeds the limits of at least two of the three following criteria: • sales revenue (net turnover), in the case of a company, or income, in the case of other accounting entities EUR 1 Million; • total assets EUR 0.8 Million; • number of employees 24.

Or if the accounting identity exceeds the limit of one of the three following criteria: • sales revenue (net turnover), in the case of a company, or income, in the case of other accounting entities EUR 4.8 Million; • total assets EUR 2.4 Million; number of employees 72.

A compulsory review may be replaced by an audit.

Finding suitable staff Potential sources of finding suitable staff: • Töötukassa offers free of charge services to employers by looking for workers who meet the criteria they submit; • private recruitment companies can help in finding necessary specialists; • one can advertise in national and local papers. Estonian Newspaper Association unites all the biggest newspapers in Estonia; • careers services of main universities are one possibility to find employees.

Remuneration The average wage in Estonia in 2019 1st quarter was 1,341 €. The monthly minimum wage for full-time work in 2019 is 540 €.

Payment for overtime - additional remuneration per hour of overtime paid to an employee shall not be less than 50% of the rate of the hourly wage. Work during holidays may be compensated either by offering time off or by extra remuneration of at least 50% of the wage rate. Work on public holidays is required to be compensated at a double rate.

Debt financing Debt financing is basically an acquisition of funds by borrowing. In Estonia, debt financing is mainly provided by commercial banks. Major banks of Estonia offer a large range of services, whereas smaller banks concentrate on a specific range of services.

The Estonian commercial banking market is divided by four Scandinavian owned banks and one locally owned bank: • Swedbank (Swedbank Group) with the biggest market share; • SEB Bank (SEB Group); • Luminor; • LHV

In total there are seven licensed banks and 9 branches of foreign credit institutions in Estonia.

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

Short Term debt financing is essentially to provide capital deficit businesses funds for a short-term period of no more than a year. • An Overdraft 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 flow. • Working Capital Loan (current capital loan) is a special purpose loan for short-term financing of additional needs in working capital. • Loan for agricultural enterprises is provided for companies in cooperation with the Rural Development Foundation (RDF). Credit institutions are granting financing for primary producers in the agricultural sector and issuing loans on favourable conditions. The purpose of this loan is to support agricultural producers and other undertakings operating in rural areas to assure better access to financial resources that are needed for development of the economic activity. How long does registration take?

What is notification obligation?

Read more about all these legal acts on the website of the Official Journal (Riigi Teataja): www.riigiteataja.ee

Long Term debt financing is a form of financing that is provided for a period of more than a year. Longterm financing services are provided to those business entities that face a shortage of capital.

Investment loan is a long-term loan, the purpose of which is financing new projects such as acquisition of fixed assets or building office, warehouse or production facilities. The financed period for investment loans varies de- pending on the credit institution, but usually does not exceed 15 years.

Start-up loan is meant for companies just starting in business 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 have to take smaller risks with their own property.

Most of these loan types require col- lateral in order to secure the credit institution’s financing; 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.

In the case of a rural life and agricul- ture loan, the company can apply to the Rural Development Foundation. These guarantees are meant for small and medium-sized enterprises that are just beginning their business or cannot secure a bank loan. In addi- tion to the above-mentioned servic- es, credit institutions also provide car and equipment leases and factoring services.

Equity financing ment banks, funds etc) and private investors. There is a wide array of pri- vate equity types and styles and the term ‘private equity’ has varying con- notations in different countries.

Premises There are no particular restrictions for foreigners acquiring immovables in Estonia. General restrictions fall into two main types according to the Re- strictions on Acquisition of Immova- bles Act: • restrictions arising from the acqui- sition of 10 hectares or more of ag- ricultural or forested land; • restrictions arising from national defence reasons.

The Government may grant authori- sation to foreigners for acquisition of an immovable in one of the two cat- egories above for reasons significant to the State.

Renting The following table shows the indic- ative range for rents (excluding VAT and operating expenses) in major towns of Estonia for class A and B1 office premises, medium-size re- tail units in major shopping centres, and new and renovated warehouses (EUR/m2 per month):

Class A -property under management by a professional management com- pany, located in Downtown (Süda- linn), completely new construction, fully controllable technical systems, reasonable column spacing, raised floors and suspended ceilings, a good underground parking ratio, corre- sponding infrastructure/amenities in the building (including cafeteria).

Equity financing is an alternative to debt financing and is basically an ac- quisition of funds by selling common or preferred stock to individual or in- stitutional investors. In return for the money paid, shareholders receive ownership interests in the corporation.

A company can finance equity through:

Private equity companies financed by institutional investors (such as invest- Class B1 -reconstructed or newly constructed buildings with fully or partially replaced technical systems, located in City Centre (Kesklinn) or on the edge of the City Centre; possi- bility exists to install raised floors and suspended ceilings, western-standard interior fit-out, and surface parking.

Broadband network Estonia has a highly developed tele- communications and IT infrastructure. A fibre optic backbone network con-

Type of space Tallinn Tartu Pärnu Narva

Office 8 - 16 5-13 4,5-10 3,5-6,5

Retail 20 - 50 8-35 7-20 6-15

Industrial 3,8 - 8 3-5 2-5 2-5

Almost all Estonian households, enterprises and institutions have access to broadband with a data connection speed of up to 100 Mbit/s. The Estonian Broadband Development Foundation’s objective is to build a network of fibre optic cables across Estonia to make that possible.

Estonia is completely covered by digital networks providing wireless internet. A network of Public Access Points covers most cities and towns.

5.4. Company Registration Portal

The Company Registration Portal is an Internet environment that allows entrepreneurs to submit electronic applications, documents and annual reports to the Commercial Register. Applications can only be signed using your ID-card or Mobile-ID.

The services available on the Company Registration Portal • The Company Registration Portal can be used to establish new businesses and non-profit organizations, and to submit applications to amend, liquidate or delete registry data. • The company registration portal includes e-annual reporting environment which can be used for compiling, signing and submitting annual reports. • Political party members can see their party affiliation in the Company Registration Portal and submit applications to resign from the party. After providing a digital signature to the application, the applicant is automatically removed from the political party’s membership list. • The company registration portal also includes a simple web-based accounting software e-billing, which helps the start-ups and small business to organize their accounting comfortably.

Getting information about other companies

The Commercial Register’s information system allows free queries about companies, non-profit associations and foundations. Read more here:

https://ariregister.rik.ee/index- ?lang=eng (click ENG for English)

On the Tax and Customs Board’s website you can see the list of legal entity debtors:

5.5. Organisations 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 offer entrepreneurs counselling, help in finding contacts and under certain conditions also various kinds of material support (e.g. guarantees, funding support, loans, etc.).

5.5.1. Enterprise Estonia (EAS)

EAS is offering different support possibilities and solutions to help a starting entrepreneur kick-start their business. The emphasis in activities geared towards starting entrepreneurs is placed on increasing awareness and encouraging the potential entrepreneurs. Information and awareness are also at the forefront with already functioning entrepreneurs, which often possess extensive skills and knowledge in their field of activity, but lack knowledge regarding entrepreneurship.

Enterprise Estonia offers comprehensive information to starting businesses, starting with information on the web and ending with personal counselling under the mentoring programme. In addition, starting companies can apply for direct aid.

Information on the web: • Enterprise Estonia’s web for starting entrepreneurs (in Estonian) provides information, services and training possibilities to a starting entrepreneur. • The information centre provides general information on all support possibilities by fields. • Entrepreneurship awareness project grants support the projects that are aimed at increasing initiative and business activity in the society. The Company Registration Portal is there (in Estonian and English): https://ettevotjaportaal.rik.ee/

What actions are possible in the Company Registration Portal?

The website of EAS is there: www.eas.ee

On what conditions is startup support paid? Do these conditions seem realistically possible to meet?

How big is the start-up support?

Read more about applying for start-up support on the website of EAS at www.eas.ee

• Participation in the regional entrepreneurship days and entrepreneurship week provides you with useful ideas, knowledge and confidence in starting your business.

• the company is capable of growing 20% per financial year, reaching at least 80,000 euros of sales revenue by the end of the third financial year.

Trainings and counselling: • Enterprise Estonia’s offices in Tallinn, East and South Estonia to make contacting easier. • County development centres give you free support on the questions related to starting a business and preparing a business plan. • Business mentoring programme helps you find a personal mentor for your developing business. • Regional mentoring clubs have experienced entrepreneurs from across Estonia sharing their knowledge. • The Business Incubator is the best place to start if you are an innovative, growth-oriented entrepreneur. • Base training for a start-up entrepreneur – base knowledge for starting one’s own business. A business plan is compiled in the course of the training.

EAS start-up support Enterprise Estonia is offering different support possibilities and solutions to help a starting entrepreneur kick-start their business. In supporting starting businesses, EAS considers the following objectives: more starting entrepreneurs, a better survival rate for businesses and a larger number of fast-growing companies.

The purpose of granting the start-up support is to help starting entrepreneurs with little business experience but high growth potential. The goal is to launch the companies and achieve the results as described in the business plan.

A starting entrepreneur is invited to apply for the start-up support if: • not more than 24 months have passed from the company’s founding; • at least two jobs with the median gross salary (688 euros) are created; • the business mode is well thought through and the business plan includes not only the business description but also the launch plan (action plan); • the product or service is ready for starting the economic activity; Up to 15,000 euros of start-up support can be applied for. The support’s proportion in the project’s total cost is maximum 80% and the self-funded part is at least 20%.

The start-up support can be used for the acquisition of fixed assets, the implementation of marketing activities, the purchasing and development of software and the funding of labour costs in the project period.

5.5.2. County development centres (Maakondlikud Arenduskeskused) County development centres (CDCs) are organisations located in all counties, offering free information and counselling services to companies. The clients of CDCs are enterprising people, potential and active entrepreneurs. CDCs work as networks; the role of network coordinator is played by Enterprise Estonia. • CDCs support and guide the development of entrepreneurship through: • Development of an entrepreneurial attitude; • Supporting the establishment and development of new businesses; • Spreading the knowledge and skills related to getting started in entrepreneurship.

In the field of entrepreneurship, CDCs provide the following services: • Sharing information: • On support possibilities; • On entrepreneurship in the county; • On services of private market consultants. • Counselling starting entrepreneurs in the following matters: • How do you know if entrepreneurship is suitable for you? • What are the risks, liabilities and responsibilities accompanying entrepreneurship? • Is your business idea sufficiently thought through? • How to start your own business? • How to assemble a team?

• How to prepare a business plan? • How to prepare financial prognoses? • Where to find sources to finance your business idea? • Counselling of active entrepreneurs in the following matters: • Where to find project funding for your idea? • What are the main conditions for support applications?

KredEx KredEx helps enterprises develop faster and expand safely to foreign markets, by offering loans, venture capital, credit insurance and state-guaranteed collaterals. KredEx offers 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: https://www.kredex.ee/en

5.5.3. Business start-up subsidy by Töötukassa

If you have a good idea, or a special skill you think you can turn into a business, you might want to consider starting your own enterprise. Töötukassa provides financial backing to registered unemployed persons who form new enterprises, through a business startup subsidy. The maximum amount of the subsidy depends on the available budget and on the needs of your new business. This does not mean that everyone who is granted the subsidy.

The maximum amount of the subsidy depends on the available budget and on the needs of your new business. In 2019, the maximum is set to 4474 EUR. This does not mean that everyone who is granted the subsidy will receive that amount – what is granted depends on the eligible needs, as they are expressed in the business plan.

In order to receive a business startup 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 specific business training.

As the subsidy is meant to create employment, one must be unemployed in order to qualify. Also, the subsidy is only given for the purpose of starting a new business, not for expanding or enhancing an existing economic activity or to invest in an existing company.

The business start-up subsidy must be used for the intended purpose, as is expressed in the business plan. To make sure this is the case, the economic activity of the person who has received the subsidy is inspected at least twice a year, a first time within six months after the subsidy has been transferred.

If you are unemployed and would like to start your own business, but lack qualifications or experience, you can enrol in a specific training programme. 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.

If you have already started your business with a business start-up subsidy, you can also benefit from trainings that can help you acquire the skills to increase the sustainability of your business and from guidance and mentoring by other successful entrepreneurs. If you are interested in participating in such opportunities, you can ask more information from your consultant.

5.6. Enterprise networks

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 specific sector of the economy, discuss common problems, find solutions to those and exchange experiences. Enterprise networks can be generalised (e.g. the Chamber of Commerce and Industry) or specific to an industry (e.g. the Estonian Association of Fishery or the Estonian Association of Information Technology and Telecommunications), but can also represent specific groups of people active in entrepreneurship (e.g. the Estonian Employers’ Confederation). You can find more info about CDCs at their web page (in Estonian) www.arenduskeskused.ee

What kinds of services do CDCs provide?

Co-ordinator of county development centres: Kaido Sipelgas Tel: 627 9502 kaido.sipelgas@eas.ee

How big is the business startup subsidy?

On what conditions can one get business start-up subsidy from Töötukassa? How are those conditions different from the conditions of paying the EAS start-up support?

You can find all the contacts of Töötukassa and more info about business start-up subsidy on their website: www.tootukassa.ee

Why is it useful to join enterprise networks? 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 e.g. 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 different in different organisations. For more information it is recommended to contact them directly.

Some of the more important enterprise organisations: • Estonian Chamber of Commerce and Industry – www.koda.ee • Estonian Employers’ Confederation – https://www.employers.ee/en/ • Estonian Service Industry Association – http://www.teenusmajandus.ee/ (in Estonian and English)

5.7. Start-ups

• Estonian Association of SMEs – www.evea.ee • Finance Estonia – www.financeestonia.eu (in English)

Examples of sector-specific enterprise organisations: • Estonian Association of Information Technology and Telecommunications – www.itl.ee (in Estonian and English) • Estonian Forestry and Timber Association – www.empl.ee (in Estonian and English) • Estonian Association of Construction Entrepreneurs – www.eeel.ee • Estonian Traders Association – www.kaupmeesteliit.ee (in Estonian) • Estonian Banking Association – www.pangaliit.ee (in Estonian and English)

The community 2 Estonia is known as a good source of start-ups. Estonian entrepreneurs are innovators who are not afraid of new things. Estonia’s Tech Alumni wall of fame include Skype, Transferwise, Pipedrive, Cloutex, Click & Grow, Grabcad, Erply, Fortumo, Lingvist and more.

Good economic environment Estonia is the most transparent and the least corrupt country in the CEE region (Transparency International Corruption Perception Index 2018, 18th out of 177 countries). Estonia’s economic freedom is regarded as one of the highest in the World and the best in the CEE region (Economic Freedom World Ranking, 11th out of 178 countries).

There is a reason why the country has a nickname “E-stonia” Voting can be done from the living room couch, you can sign documents digitally, fill tax returns and follow your startup finance activities via web. The backbone of the system in Estonia is called The X-road. It is also worth mentioning that it was designed with growth in mind. One of the recent developments started this May, when Estonian government decided to approve the electronic declaration of officials’ financial interests to reduce the risk of corruption and increase transparency. Not to mention NATO Cooperative Cyber Defence Centre of Excellence and IT-agency of the European Union is located in Tallinn.

Organisations and communities you can access

Tehnopol The Startup Incubator Tehnopol helps implement the ideas of technology enterprises. Tehnopol focuses on the fields of ICT, environmental technology, mechatronics and natural sciences.

Tehnopol offers: • one-on-one coaching • advice from international specialists • the Startup Academy with trainers from among the tops of Estonia and abroad • access to a contact network (business angels, investors) • help in funding customers and partners from abroad

• prototyping opportunities • furnished offices and collaboration rooms in Estonia and abroad • help with applying for funds from Prototron • events, seminars, training courses and business missions.

Estonian Business Angels Network EstBan Estonian Business Angels Network, established in late 2012, is an umbrella organization for business angels and business angel groups seeking investment opportunities in Estonia and its neighbouring regions with an aim to grow the quantity and quality of local seed stage investments. htttp://www.estban.ee/en

Startup Wiseguys Startup Wise Guys BusinessTech is the leading B2B, SaaS accelerator in Europe & located in Tallinn, Estonia. They connect innovative and ambitious startups from around the world to experts from Europe and the US. www.startupwiseguys.com/

Incubator Tallinn

The incubator programme awaits enterprises wishing to develop and reach new markets. Incubation is of the greatest help to growth enterprises. The prerequisites for joining the incubation package are: • a team of 2-3 members (ideally with marketing and economy skills being represented), • the leading creative person having high professional competences and being recognised in the field; • the planned product/service being based on a creative approach, technology, material concept or business model enabling to develop a competitive edge; • the team’s ambition to apply their professional skills profitably in entrepreneurship.

Read more:

https://inkubaator.tallinn.ee/en/

Other information sources and organisations related to the start-up community:

• Estonian Startup Leaders Club www.startupleadersclub.com • Startup Estonia www.arengufond.ee/en/startup-estonia/overview (in Estonian and English) • Garage48 https://garage48.org/ What are the most wellknown Estonian start-ups?

Why is Estonia a good place for start-ups?

Töötukassa: www.tootukassa.ee – an overview of labour market services

Ministry of Social Affairs: www.sm.ee – the official website of the Ministry of Social Affairs

EURES Platform: www.eures.ee – pan-European labour mediation network for jobseekers and employers

Jurist aitab: www.juristaitab.ee – legal advice in everyday matters

Estonian Trade Union Confederation: www.eakl.ee

Labour Inspectorate: www.ti.ee – state supervision over work environment

CrossCulture: www.crossculture.com – cross cultural advisory portal

International Organization for Migration: www.iom.ee/estco/failid/File/ COHandbook2015/IOM_Handbo ok_ENG.pdf

Enterprise Estonia: www.eas.ee - promotes business and regional policy in Estonia

Pension Centre: www.pensionikeskus.ee – information about the pension system

Social Insurance Board: www.sotsiaalkindlustusamet.ee

Ministry of Education and Research: www.hm.ee/et/eesmargid-tegevused/ taiskasvanuharidus/äienduskoolitus

ttka.hm.ee – information about in-service training

Innove Foundation: www.innove.ee – education competence centre

Innove Rajaleidja: www.rajaleidja.ee – career counselling portal

Work in Estonia: www.workinestonia.com - guide to living and working in Estonia

e-services gateway: www.eesti.ee – portal to various e-services

Tax and Customs Board: www.emta.ee