Invest in Estonia
June 4, 2020 at 3:25 pm,
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Even if it is a small country, Estonia attracts foreign investors through its pro-business legislation. The Estonian economy is based on the taxes levied on companies which is why the government offers incentives that are meant to draw businessmen from other countries. Businessmen who want to invest in Estonia should know that the most appealing investment fields in this country are the IT sector, the bio technology sector and regenerative industry.The business environment in Estonia
The Estonian business environment draws investors mainly because foreign companies benefit from the same treatment in matters of incorporation as Estonian Companies. Other advantages of investing in Estonia are:
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its
geographical position at the crossroads between Europe and Russia;
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foreign companies are not subject to
any tax on reinvested profits;
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a skilled and well-educated workforce;
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setting up a company in Estonia takes about 15 minutes through the online application platform;
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the Estonian Banking system allows
for almost all operations to be conducted online;
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Estonia is a member of the World Trade
Organization, of the European Union, of the Organization for Economic
Co-Operation and Development (OECD) and NATO.
If you want to invest in Estonia, our lawyers can assist you, no matter if you want to open a new company in this country or to purchase a ready-made one.
Why invest in Estonia?
Estonia’s location in a dynamic and rapidly growing region is beneficial for the developement of domestic businesses. Estonian economic environment is characterized by competitiveness and economic freedom indicators, which have shown that this country offers a favorable business climate, which allows for investment in high productivity.
Another aspect that makes Estonia an attractive country for foreign investors consists in the success of building up a conservative fiscal policy since 2009. The Estonian state budget deficit has stayed within the limits allowed by the Maastricht criteria, thereby allowing Estonia to join the euro zone. Thus, the government has declared Estonia ready to adopt the euro as national currency in January 2011.
An entrepreneur willing to invest in Estonia must also know that the Estonian state debt is less than 5% of gross domestic product and the public sector costs are relatively low, with a simple tax system. The Estonian state also encourages investment and the income tax is 21%.
Accession to the euro zone has amplified the business success, especially in the current global economic situation, where the introduction of the euro as national currency provides a clear and concise perspective on the security of the local business environment and increases reliability.
Estonia is an attractive country for foreign investors also due to economy’s flexibility, which plays an important role in the labor market, allowing responding to market signals. The economical restructuration has also accelerated the new Labor Law, applied since July 2009.
The Estonian government provides the basis for the necessary stimulus for the development of human capital and offers good opportunities for the regulation of the labor market, with unemployment insurance and retraining opportunities. In recent years, the Estonia's salary was lower than the EU average and, after the completion of the necessary correction, the average wage is expected to rise in accordance with the development of the overall economy. However, the main purpose is to assure that the Estonian economy remains cost advantage. If you need more details on how to invest in Estonia, our lawyers are at your disposal.
Estonia is an attractive country for foreign investors also due to a correct communication between the state and the citizen or business. A foreign investor can create a company online in less than 5 minutes and declare taxes on e-tax office in 10 minutes.
Foreign investments in Estonia
The Estonian government encourages foreign investment through liberal regulations for exports. The government is seeking to attract foreign investments in Estonia by allowing 100% foreign ownership, but maintaining some regulation for certain industries. Estonia has switched to Euro in 2011 which led to market liberalization thus making investment more accessible for foreigners. According to the country’s conversion and transfer policies there is no restriction for transferring or converting currencies. Dividends can also be repatriated without any restrictions and so can be all the assets of a company that stops its activity in Estonia.
Foreign investors who want to invest in Estonia should know that they have the right to own properties in Estonia and expropriation is possible only in cases of buildings important for public interests with the appropriate compensation.
Dispute settlements are also available as the Estonia judical system does not depend on the government and allows arbitration tribunals that facilitate dispute resolutions.
Taxation of companies in Estonia
One of the key points of the Estonian taxation system is that there is no corporate tax therefore foreign companies are only subject to the income tax of 21% when it comes to distributed profits. Starting January 2009 dividends sent to foreign shareholders are not subject to any withholding tax. If you want to invest in Estonia, you should know that gifts, inheritances and real estate are not subject to taxes with few exceptions. Estonia has also signed double taxation agreements that enable the country to attract foreign investors.