Learn how Estonia is a preferred location for global entrepreneurs to set up an online or an offline business.
If you have a small business idea or would like some information before you start a company, it is always wise to consult an experienced advisor.
Embrace Estonia’s digital innovation with My1Office. Within one working day, you can begin operating with guidance tailored to Estonia’s e-solutions, all facilitated 100% online using a digital ID card, while official steps are managed through government channels.
Estonia is one of the world’s most digitally advanced countries and digital innovation has transformed the way business is conducted. With minimal bureaucracy, you can sign your documents online and manage your company from anywhere in the world.
Company names must be distinctive, written in the Latin alphabet without special characters, and not misleading or conflicting with existing trademarks or entities.
“Working with clients is an absolute pleasure for me as it allows us to build meaningful relationships based on trust, collaboration, and mutual growth. I take great joy in understanding every clients needs and providing tailored solutions. Witnessing their success and satisfaction is truly gratifying and fuels my passion for delivering exceptional service.”
Tel: +372 5071921
E-mail: estonia@1office.co
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FREQUENTLY ASKED QUESTIONS
Not always. If all your services are supplied to EU business clients (B2B) and reverse charge applies, you may not need Estonian VAT registration immediately. However, you must register if your Estonia-taxable turnover exceeds €40,000/year, or if you sell digital services to EU consumers (B2C), in that case OSS registration is required.
Corporate Income Tax (CIT):
Estonia has a unique system: companies do not pay corporate income tax on retained earnings.
Current standard rate: 22%, applied as 22/78 on net distributions.
This is ideal for IT consultants reinvesting profits into business growth.
Value Added Tax (VAT):
Mandatory VAT registration if your annual turnover exceeds €40,000.
Standard VAT rate: 24%
Digital services sold within the EU may require VAT OSS (One Stop Shop)registration.
Personal Income Tax (if drawing salary):
Flat rate of 22%.
Social tax contributions (33%) are required on salaries, covering health insurance and pensions.
Payroll & Employment Taxes:
Mandatory if you hire employees or pay yourself a regular salary.
Includes unemployment insurance contributions and funded pension payments.
Cross-Border Considerations:
IT consultants working with clients abroad may face double taxation risks if not structured properly.
Estonia has tax treaties with many countries to avoid double taxation.
It’s possible to take profit out as dividends, which are taxed at 22/78. But if you are actively working for your company, the Tax Board may expect you to pay yourself a reasonable salary subject to personal income tax (22%), social tax (33%), and unemployment contributions. The right balance of salary vs. dividends helps optimize tax and stay compliant.
VAT returns: monthly, by the 20th of the following month.
Payroll/social tax returns (TSD): monthly, also by the 10th of the following month.
Annual report: once a year, within 6 months of financial year-end.
Yes, Estonia has double taxation treaties with many countries. These treaties determine which country has taxing rights over different types of income. With proper structuring, most IT consultants can avoid paying tax twice on the same income.
Not necessarily. You can operate as a sole trader in some cases, but most international IT consultants prefer to form a private limited company (OÜ) through Estonia’s e-Residency program. An OÜ provides limited liability, better client trust, and easier access to EU business services.
Yes. Every Estonian company must have a registered legal address in Estonia. 1Office provides virtual office services so you can meet this requirement without a physical office.
You must register for VAT immediately once you cross the threshold, starting from the date you exceeded it. From that point, you must add VAT to eligible invoices and submit monthly VAT returns.
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