The process of establishing a private limited company

ITS_logo_35x35   Choosing and checking the business name from the Commercial Register

ITS_logo_35x35   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.

ITS_logo_35x35  Acquiring licenses if the area of activity is subject to special requirements. Information and electronic registration at the Register of Economic Activities

ITS_logo_35x35   Registration of the company as a VAT payer at the Estonian Tax and Customs Board

ITS_logo_35x35   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. The following documents should be enclosed with the application:

  • the Memorandum of Association;
  • the Articles of Association;
  • a bank notice concerning the payment of share capital if the share capital must be paid before the entry in Commercial Register;
  • the names, personal identification codes and addresses of the founders and the amount of their contributions;
  • upon payment by a non-monetary contribution, the agreement concerning the transfer of the contribution to the private (public) limited company, documents certifying the value of the contribution and an opinion on the valuation of the non-monetary contribution signed by the auditor;
  • a notarized expression of consent of every member of the board to act as a member of the board and the confirmation of the absence of circumstances that would rule that out;
  • the names, personal identification codes and residences of the members of the management board, the supervisory board, and the auditors;
  • information on the planned principal activity;
  • telecommunication numbers (telephone, fax, etc.);
  • other documents provided by law.

 The following information shall be entered in the Commercial Register:

  • the business name of the private limited company;
  • the seat and address of the private limited company;
  • the amount of share capital;
  • the foundation of the company without making the contributions;
  • the date of conclusion of the Memorandum of Association;
  • the names and personal identification codes of the members of the management board;
  • the members of the management board entitled to represent the private limited company differently than provided for in subsection 181 (1) of the Commercial Code;
  • the beginning and end of the financial year of the private limited company;
  • other information provided by law.

 

ITS_logo_35x35   If registered electronically, a company can be established in just a few hours. Registering through a notary will take up to 3 days.

ITS_logo_35x35   The state fee for registering a private limited company is EUR 140.60. If one uses the services of the notary then the notary fee must be paid as well. The amount of the fee depends on the number of founders and the amount of share capital.

ITS_logo_35x35   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.

 

The process of registration of the branch

The basis for opening the branch is the notarized application of the branch director.
ITS_logo_35x35  The following documents must be appended to the application:

  • official certificate regarding the existence of the company in its country of location (extract from the Commercial Register or copy of the registration certificate);
  • consent or licence for establishing the branch if required by legislation;
  • letter of authorization certifying the authority of the branch director or copy of the resolution appointing the director;
  • copy of the company’s articles or memorandum of association certified according to the laws of the country of location;
  • numbers of communication devices (telephone, fax);
  • notarized samples of the directors’ signatures.

ITS_logo_35x35   The documents must be in the required format, certified by apostil, legalized and translated into Estonian. The translation must be notarized or certified by a sworn translator. Legalization is a confirmation regarding the fact that the document you submit is suitable for use in Estonia.

ITS_logo_35x35   The time expenditure for the entire process depends on the time necessary for preparing, translating and certifying documents both in the country of location and Estonia.
The branch will be entered into the Commercial Register within 5 business days of submission of the registration application.

ITS_logo_35x35   The notary fee for notarizing one signature is 12.75 euros. It will cost 18.21 euros to have a notary prepare the draft registration application. VAT will be added to the notary fees. Registration of the branch with the Commercial Register costs 140.60 euros. Certification of documents by apostil costs 14.69 euros per document.

ITS_logo_35x35   What must be done after registering a branch?

  • If the branch will be operating in an area of activity subject to special requirements, you will have to apply for an activity licence.
  • If your annual turnover exceeds 16 000 euros, you will have to register as a VAT payer with the Tax and Customs Board.
  • If you recruit employees, they must be registered with the Health Insurance Fund.

 

General accounting requirements in Estonia

The Law on Accounting (valid from 1 January 2003) 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 (IAS).

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 financial institutions 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 consists 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 report if auditing is not compulsory.

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

ITS_logo_35x35   Auditing

The financial statements should be audited for all public limited companies and foundations.

In addition to that an accounting entity 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 entities EUR 2 Million;
  • total assets EUR 1 Million;
  • number of employees 30.

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 6 Million;
  • total assets EUR 3 Million;
  • number of employees 90.

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 0.5 Million;
  • number of employees 15.

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 3 Million;
  • total assets EUR 1.5 Million;
  • number of employees 45.

A compulsory review may be replaced by an audit.