Estonia's economy has boomed in recent years as it has pursued a liberal business agenda in preparation for EU membership which was finally achieved in 2004. Foreign investment has flooded into this small Baltic state enabling it to create a relatively relaxed environment for the international business community.
What is the most common type of company in Estonia?
There are two main kinds of business entity in Estonia:
- public limited company - Aktsiaselts (AS)
- private limited company – Osaühing (OÜ)
Main requirements an OÜ
- The minimum share capital for an OÜ is €2,500.
- if Member of the Management Board is not resident of Estonia or EU, official representative is needed. This representative must be resident of Estonia, it can be legal or natural person
- an auditor’s report must be appended to the annual report of an organisation subject to accounting requirements who meets at least two of the following conditions (i)annual net sales of €4 000 000 and more;(ii) balance sheet volume of €2 000 000 and more;(iii) average number of employees is at least 60.
The recruitment industry in Estonia has been slow to develop. Many Estonian companies remain content to rely on the official state employment agency to find staff. However, a number of private-sector employment agencies have emerged and Estonian job-seekers are avid readers of local press advertisements. Estonia has a well-educated and skilled labour force and wage costs are very low by EU standards.
Estonia operates one of the most liberal foreign trade regimes, with virtually no tariff or non-tariff barriers. This approach has been carried through into the wider regulatory arena. Capital and earnings can be freely repatriated. Estonia has no exchange controls or restrictions on foreign investment. The amount of foreign capital that can be invested in an Estonian business enterprise is unlimited and companies can be in full foreign ownership. However, tax regulations must be strictly adhered to and there are severe penalties for infringement.
There are no start-up incentives in the formal sense of the word, but other advantages associated with Estonia, such as liberal business regulations and low labour costs, compensate for this. The local banking infrastructure is well developed, if a little slower than elsewhere in the EU.
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