How to start a company



Useful information and advises you can find from:

Investment guide:


General Overview
The legal system in Estonia is based on the Continental European civil law model and has been influenced by the German legal system. Unlike to common law countries Estonia has detailed codifications and issues are solved according to the codifications.

Estonian law is basically divided into private and public law. Generally private law consists of civil law and commercial law.

Public law consists of international law, constitutional law, administrative law, criminal law, financial law and procedural law.


Foreign investors have equal rights and obligations with local entrepreneurs. All foreign investors may establish a company in Estonia in the same way as local investors, no special restrictions are made.
Foreign investments are protected by internal law and international agreements. Estonia has concluded treaties for the protection of investments with several countries including U.S.; Germany; France; Finland, Sweden; Norway; Switzerland. Also agreements on avoiding double taxation are made with more than 30 countries including EU countries.


Suggested links 
Estonian legislative text in English:
Chamber of Notaries:
The Estonian Law Centre:
The Estonian Ministry of Justice:

Forms of Business Entities
The new Commercial Code was adopted on 15 February 1995 and has been effective since 1 September 1995. The law expresses the basic principles of Estonian entrepreneurship according to the best European traditions and standards and outlines the role of the Commercial Register. According to the Commercial Code there are five forms of business entities, which are created by entry into the Commercial Register.

More information about Forms of Business Entities you can find on


The Estoian tax system, incl. individual taxation is one of the most liberal tax regimes in the world. Moreover, the new Law on Income Tax provides that undistributed profits of the companies are not subject to income taxation, regardless whether invested or merely retained.


Principal Taxes
The system of taxation is described in the Law on Taxation. The existing state taxes are:

  • income tax: 21%
  • Reinvested profit is not subjected to Corporate Income Tax (dividends paid to resident legal persons are exempt from tax).
  • Companies are subjected to Corporate Income Tax 21/79 (2008) if the profit will be distributed.
  • Value added tax is a compulsory 20% supplement to nearly all goods and services sold in Estonia with a few exemptions 9% and 0% enumerated in Value Added Tax Act.
  • Social tax is 33% and contains the social security tax 20% and medical insurance 13%.
  • Excise tax is implied on production and import of tobacco, alcohol, motor vehicles, motor fuel etc.
  • Land tax is based on the market value of land and ranges between 0.1 to 2.5 percent of market value of land annually (0.1 to 2.0 for arable land and natural grassland).
  • Gambling tax is implied on companies that offer gambling services.

Estonia does not impose any gift, inheritance or estate taxes. Various transactions may be subject to payment of state fees (stamp duties).

Local governments have the authority to impose local taxes, but effectively only few municipalities have introduced local taxes.


Accounting Principles
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). With a few exceptions, the use of IAS was acceptable prior to 1 January 1995.

Compared with International Accounting Standards the major differences are: 1) no consolidation is required (equity method is used to account for subsidiaries); 2) notes to financial statements are usually fewer.

In addition to the Law on Accounting there are a number of regulations issued by the Estonian Accounting Committee which interpret and amend the law. Each business entity may also establish additional rules regulating some aspects of its own accounting and reporting.

A fiscal year is twelve months long. A business entity can choose a fiscal year ending on 31 March, 30 June, 30 September or 31 December. If a company wishes to use any other fiscal year, permission from the Ministry of Finance is required. The law also prescribes that a parent company and its subsidiary should have the same financial year, which may also be a fiscal year.

All accounting records should be maintained for seven years. Contracts, business plans and other documents, necessary for reconstructing business transactions should be maintained for ten years.


More Information on Taxes
Estonian Tax and Customs Board:
Estonian Translation and Legislative Support Centre:
AS PricewaterhouseCoopers:
AS KPMG Eesti: