Eternity Law International — News — Registration and maintenance of an Estonian company

Registration and maintenance of an Estonian company

Published:
September 25, 2019

Registration and maintenance of an Estonian company. To register an open joint stock company in Estonia, you only need a minimum authorized capital – 2,500 euros. Its entry is not considered a prerequisite. The total cost of starting a new company must be up to five thousand euros.

It is also important that the firm has at least one founder and director. At the same time, these positions may be one and the same person. If the director of the company is not a resident of Europe, it will be necessary to have a contact person residing in the Estonian territory.

Taxation in Estonia

Income tax. In Estonia income is taxed at 0%. The financial rate will be in direct proportion to how often the firm will redistribute income. Social tax is 33%. Based on the clauses of the Estonian legislative act, digital currencies are – as property (that is, as property).

Income that comes from transactions that have a direct relationship with digital currencies will be counted as income from entrepreneurship. And from such income, both income tax and social tax can already be taken.

Estonia is an exception to the rule. It is not an offshore jurisdiction where the taxation of the firm’s income is zero percent. Today in the country there are only systems of taxation for non-distributable profitability or profitability that is distributed outside the boundaries of the Estonian state.

Thus, the company is completely exempted from rallying under the taxation system until it deems it necessary to withdraw its profits outside the Estonian state.

Subject to the distribution of profits, the company pays a tax rate of 14/20%. When reinvesting in a firm, the profitability of the firm is not subject to mandatory taxation.

However, when purchasing goods / services / property that are not related to the activities of the company, the profit received will be taxed at a rate of 14/20%.

Reasons to choose Estonia as a jurisdiction

The Estonian legal framework is extremely friendly towards projects that use cryptocurrency.

In addition, there is a very clearly expressed position regarding ICOs and cases when tokens can be approved by stocks or go through regulation and definition of exchange rules and acceptance of digital currencies as a way to pay for products and services.

This allows for some exposure for those who are in the cryptocurrency industry, and it is also a good way for them to get active within the country. In addition, Estonia has a very well-thought-out e-residency system – the conditions for doing business here are not difficult.

To register a company and start managing it, you do not need to come to the state or be physically present in the country. But more recently, the country extremely rudely demanded certain actions regarding the operation of exchanges for digital currencies. These exchanges largely limited freedom of activity.

Today, digital currency transactions are not subject to VAT. With clear taxation, the percentage on profitability will still reach zero. It is for this reason that the Estonian state will be considered one of the most interesting countries, from the standpoint of the legal framework, for jurisdictions.

A trend can be observed when more and more cryptocurrency firms are going through the registration procedure in the Estonian region.

This can explain the fact that blockchain firms and business projects in Estonia go to increase.

The specialists of Eternity Law International will provide you with expert advice on the acquisition of an offshore company, opening a bank account in any jurisdiction.
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