How easy is it to set up a business in Estonia?
Setting up a business in Estonia is very easy process and can be performed online in just a few steps and in a short period of time (not more than seven working days). There are just a few documents necessary in order to register a new business (the constitutive documents and the receipt from the bank confirming that the minimum share capital was deposited).
How easy is it to hire personnel in Estonia?
55% of the Estonian workforce is fluent in one or more foreign languages. Most of the employees have University degree (especially in Engineering) which is attesting their high degree of professionalism. The Estonian workforce was situated on the 16th place Global Competitiveness Report for the Labor Market Efficiency.
The companies are advised to contact a recruitment agency in order to find the suitable candidates for their profile.
What are the main points of interest for foreign investors?
Estonia is a desired place for doing business as there are no restrictions to the free movement of capital; the tax system is simple and advantageous and has access a market of over Estonia 300 million customers.
The infrastructure is very developed here, facilitating the commerce. In Estonia are located the largest port of Baltic Sea and the deepest harbors. Estonia it’s considered the most efficient rail operator in Europe and has a very good road capacity with modern infrastructure.
The most developed sectors of the economy are the machinery, metalworking, electronics, food, wood processing and electronics.
What are the advantages of a holding company in Estonia?
One of the major advantages of the holding companies in Estonia is the lack of corporate tax on undistributed profits and a small tax of 21% on the distributed profits.
The corporate tax can be exempt anyway or refunded if there is a double tax treaty signed with the country of origin, stipulating this. The dividends are not subject to a withholding tax, while the interests are taxed with 21% but only if the interests are exceeding the market interest rate (the tax it’s applicable on the difference between the interest rate and the market interest rate). The interest withholding tax on interests and the 10% withholding tax on royalties can be exempt if there are double tax treaties with provisions for this.
Estonia is also part of the EU Parent-Subsidiary directive which grants a 0% withholding tax on interests and royalties if the recipient is an EU company holding at least 25% of the company for a minimum period of 2 years.
Usually the capital gains from the sale of shares of Estonian companies by non-residents are not taxed in Estonia. However, there is a 10% tax is the shares are from a company where at least 75% of the goods are represented by real estate or buildings.
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