Opening a Branch vs a Subsidiary in Estonia - The 2024 Guide

Opening a Branch vs a Subsidiary in Estonia

Updated on Tuesday 27th February 2024

Rate this article

based on 1 reviews.

Opening a Branch vs a Subsidiary in Estonia.jpg
Foreign companies are encouraged to open branch offices or  subsidiaries in Estonia due to the Estonian government  pro-  investment legislation and constant economic growth.  Foreign  companies will be treated like any Estonian company and  benefit from the same tax facilities in 2024.

 Branch offices (filials) in Estonia

 A foreign company may establish a branch office in Estonia. In case of the Estonian branch  office the liability will fall onto the parent company, as the branch office cannot be considered  an independent legal entity. An Estonian branch office must submit the parent company’s  financial statements with the Companies Registry in Estonia. The branch office has the  same obligations as the parent company.
The Branch office must register with the Commercial Register even if it acts as an extension of the parent company. The registration process of a branch takes about one month and must be done in front of a notary public.
When registering a company with the Commercial Register the parent company must submit an application form, the memorandum and articles of association, and a bank payment as evidence of the full payment of the share capital.

Subsidiaries in Estonia

Companies may set up subsidiaries in Estonia. Estonian subsidiaries will be treated as independent legal entities that have their own accounting system thus being subject to the Estonian taxation system. The most common types of Estonian subsidiaries are the public limited liability company and private limited liability company. The liability of the company will be limited to the capital contribution of each shareholder.
Subsidiaries must be registered with the Commercial Registry in Estonia and the registration process will take no longer than one week.

Comparison between a branch office and a subsidiary in Estonia for 2024

The main difference between a branch office and a subsidiary in Estonia lies in the independency of conducting business operations. While the subsidiary is regarded as an independent entity, the branch office totally depends on the parent company and must undertake the same type of operations. In terms of registration, the process for registering a subsidiary in 2024 will take about one week compared to the registration process of a branch office that can take up to a month. However, both types of companies must register with the Commercial Register.
In case of taxation, both types of companies are subject to the same taxes, but the subsidiary may benefit from better taxation plans when it comes to earnings repatriated with the parent company. In case of the branch office, it will not be subject to the audit requirement; it will only submit an annual report of the parent company.
Estonia is a hub for international businesses, with many companies having opened branches or subsidiaries here. If you are a foreign national who wishes to remain in the country, our team can also give you information about residency in Estonia: the main types of temporary residence permits, the visas, extending your stay in the country, having your family join you in Estonia, and more.
For details on how to register a company in Estonia in 2024 you can contact our law firm. Our lawyers can also assist you in case you need trademark registration services in Estonia or other business related services.
According to Statistics Estonia, the number of companies is growing:
  • In 2022 there were 144,449 registered companies, a 13.4% growth compared to the previous year;
  • The total enterprise turnover in 2022 was 98.51 billion euros, a 23.3% increase compared to a year prior;
  • The total investments in fixed assets made by these enterprises in 2022 amounted to  5.92 billion euros;
  • The Estonian enterprises on register employed 545,036 individuals, which is also an increase (5.5%) compared to the previous year;
  • According to preliminary data concerning the year 2023, startups in Estonia continued to grow during the tear and it was estimated that the startups alone employed 9,600 people at the end of Q3, 2023.
Clients who have questions about our services for individuals can reach out to us for information on how we can assist them, according to their particular situation. We also assist foreign clients who have been lawfully residing in the country and wish to apply for permanent residency or Estonian citizenship, if they meet the conditions for income, minimum language proficiency, and others. 
Opening a branch or a subsidiary is not a direct route to residency, therefore, those interested in Estonian immigration can reach out to our team for detailed information on how they can first acquire temporary residence, followed by how they can apply for the right of permanent residence after a number of years. if your goal is to relocate to the country for business purposes, we can assist you.