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How did I register a company in Estonia?

Ennur Bilgin, Estonian e-resident

Unicount has a landing page saying “registering a company should be as easy as registering a domain”. When I first read this, I remember getting really confused. Neither registering a company nor a domain sounded simple to me at that time. But it has been a few months ever since I register a company in Estonia. Now, I am here to explain why and how registering a company in Estonia is easy as it sounds.

I am from Türkiye and the company registration process here equals bureaucracy, paperwork, and hidden expenses. Also, I needed a company that I could manage online and invoice my customers in European countries. In 2021, I came across the Estonian e-Residency program. Despite being skeptical about the easiness of the company formation process, I decided to give it a try. Entering the e-Residency system starts with having an e-resident card for non-Estonian residents. You may read my previous blog post on how to obtain an Estonian e-resident card as well.

There are a couple of ways to register a company in Estonia for e-residents. Simply, all registrations may be done via the e-Business Register. There is also Unicount company formation API service, which is an easier solution than registering a company via e-Business Register. It works perfectly for single founder/shareholder companies with a sole board member. My company has another board member besides me, therefore, I established it via the e-Business Register.

The first thing to do for a non-Estonian resident founder is to make sure you have an Estonian address and contact person for your company. All Estonian companies managed from abroad need to have an address in Estonia and a contact person per the Estonian Commercial Code. Non-residents may get a virtual office address and contact person with a multitude of service providers.

My service provider was Unicount as I stated during my e-resident card application as well. Unicount has an annual virtual office address and contact person subscription at very competitive prices. Also, they have a very comprehensive support articles collection that answered many of my questions before starting my application. After subscribing to the virtual office and contact person subscription of Unicount, I started company formation on the e-Business Register.

I also have registered a Smart-ID as I find it more effective than using an ID card. Using Smart-ID is a very practical method compared to the e-resident ID card you will use for logging in and signing documents. With Smart-ID, you do not need to connect your card to your device and you just need to enter the PIN1 and PIN2 codes you will create with Smart-ID registration. In this way, you will not deal with possible problems related to both hardware and browser plugins. It works perfectly with Unicount as well. You may log in to the e-Business Register with Smart-ID but signing applications is not possible for now.

Limited liability company registration basically has 13 steps to complete. Also, I have found a step-by-step guide by Unicount to help me fill out these steps on my application. I highly recommend referring to their guide as it explains each of these steps.

In the first step, there is the company name selection. If there are other names similar to the company name you selected, these similar names will appear in red. In this case, there is always a possibility that the name you choose will be rejected. However, this decision is made by the registration department of the Tartu County Court in Estonia. If your name is rejected, you can change your name in your application and resubmit it without paying any extras.

In the second step, you need to enter your company’s office address and email address. As I received service from Unicount, I used the virtual office address and company email address provided to me upon my Unicount subscription. I do not recommend using your personal email address because you would be receiving lots of spam emails. Unicount email with the eesti.ee extension is spam-proofed and mails are forwarded to Client Dashboard. If you want to learn how to activate your eesti.ee email address for your own company, you can take a look at this official guide.

In the 3rd step, there is activity code (EMTAK) selection in accordance with your company’s main field of activity. This issue can be a bit confusing because there are companies with more than one activity and they want to make multiple selections, but it is not possible to select more than one activity code in the Estonian Business Register. The selected code cannot be changed later either. However, there is no need to panic about it! When you submit the annual accounts of your company, the EMTAK code is automatically updated according to your main source of income. If you are not engaged in an activity that requires a license, such as a cryptocurrency trading, you can choose the activity code that you think is most appropriate. The financial year duration and dates are set in default and should not be amended without a good reason.

In step 4, you are expected to add the details of the company’s board members, founders, and contact members. An important detail to note here is that your “personal identification code” must be your ID number on your e-resident card. For example, you cannot register a board member with a Turkish ID number! For this reason, your country selection should be Estonia as it is the country that issued you the e-resident card with a national ID number. The system auto-fills your details as a board member because you are the founder. If you have more than one board member as I have, you must know their full legal names and their Estonian ID number or e-resident ID card number. Please note that your board members and company founders must have a valid Estonian ID card and be able to sign the application with their card! Under “Term of office”, you can define the term of board member rights to represent the company but this was not recommended to me. In the selection of the company founder, you must add your information as founder and, if any, other partners who will make a share capital contribution to the company. You need to provide your actual full address at this step if you are not a real resident of Estonia. Under the “Other roles” option, do not forget to add your “Contact person” information, which is currently mandatory as per the Estonian Commercial Code. If you have a board member or founder residing in Estonia, you do not need to add a contact person.

The 5th step is about the payment of the share capital. The minimum share capital payment is 2500 Euros and it was the amount I was going with. However, I did not have a business bank account for my non-existing company at that time to make this transaction during my company formation. I have contacted Unicount Support on this matter, and they advised me to register my company by postponing the share capital registration. I followed their advice on this and postponed this payment. When I opened my Wise business bank account, I followed Unicount share capital registry article and registered my share capital of 2500 Euros. I will talk about this in detail in my “How did I open a business bank account with Wise?” blog post.

In the 6th step, we constitute the company’s articles of association. I made my choices by following Unicount guide. The option I decided to change was the “legal reserve” option number 2.5. Since I don’t want to have accounting-related problems due to the dividend ratio specified in this article in the future, I set my company’s legal reserve ratio as 0%. As another detail, I have stated the Business Register fee, which is 265 Euros, under the title of “foundation expenses” in the 4th article for it to be a company expense.

In step 7, you can select the documents you need to add such as a document proving you have the right to use a specific trademark as your company name.

In the 8th step, there is a voluntary VAT registration of your company. Estonian companies automatically have to register for VAT when their annual taxable turnover exceeds 40,000 Euros. You can do it immediately if you already have a company that will be having Estonia as the place of tax residency. My company was not yet operational and therefore VAT registration was not required.

In the 9th step, the beneficial owners of the company are added. As I was the sole owner of the company, I have added my own information as a natural person. For companies with natural person founders, the correct choice is direct ownership for each shareholder holding more than 25% of the shares.

The 10th step is about pre-registering your company’s future employees residing in Estonia as employees of the company. If you will have employees from other countries, you should leave this registration to your accounting and tax specialist.

In the 11th, 12th, and 13th stages, you must approve the application and sign the application after paying the state fee and send it for evaluation. I had an issue at this point as I didn’t have a Euro account that I could wire transfer the 265 Euro state fee payment. But I was lucky that Unicount Support offered me a solution. They charged the state fee amount from my saved payment method on Unicount system. Then, they wire-transferred the state fee to the Business Register on my behalf so that I did not have to transfer money internationally and wait a couple of days for the money to arrive. It was a time and budger-saver for me. As a result, my company got registered on the same day.

My company has another board member, and it should be noted that all board members’ digital signatures are necessary for company formation applications. Therefore, you should not add board members who cannot sign digitally with their Estonian ID card via DigiDoc4 software.

My experience with registering a company in Estonia was made easy overall by the help of the great Unicount team. The Estonian government also processes applications in one or two business days. Considering that I have not used Unicount’s fast company formation API, registering a company in less than 4 hours with the e-Business Register was a great experience. Later, I also learned Unicount has a record of registering a company in less than 5 minutes. At this point, it does not surprise me anymore.

After registering my company successfully, the next step was opening a business bank account. In my next blog post, I will be explaining how did I open a business bank account with Wise.

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