Estonia: Tax-Efficient Regimes and Sectors

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- ESTONIA TAX-EFFICIENT BUSINESS FORMS
- ESTONIA TAX-PRIVILEGED BUSINESS SECTORS

Estonia Tax-Efficient Business Forms

Estonia provides a cost-efficient base for production and export and is handily placed for access to the affluent markets of the Baltic states and north-west Europe. Estonia is very advanced in terms of its telecommunications and Internet take-up and is one of the most technologically advanced in Europe. Corporate income tax is effectively zero if profits are not distributed, thereby encouraging businesses to reinvest profits.

Start-up costs and employment rates are low in Estonia, by comparison with many other European countries. Though there are no specific tax concessions for businesses setting up in Estonia, state aid is available subject to the EU rules governing the granting of such aid.

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Estonia Tax-Privileged Business Sectors

The fact that there is no corporate tax on undistributed profits is an incentive for new businesses to reinvest. Start-up and development grants are available through Enterprise Estonia in conjunction with funding available through the EU. The process for applying for and receiving grants has been streamlined and is now much faster. Grants of up to EEK100,000 (EUR15,600) are now available and the business must contribute 20% of the total investment. For larger businesses (e.g. with more potential in the export market), grants of up to EEK500,000 (EUR32,050) are available with the business contribution set at 35% (down from 50% previously).

A decision will generally be made within 10 to 20 days, depending on whether the grant applied for is a start-up or development funding. For the former, the grant is available for businesses less than 12 months old: for the latter, the grant is available for businesses that have been active for up to 36 months.

Training vouchers are available for small businesses, up to EEK15,000 (EUR960) per head.

The Estonian government, under the auspices of the Estonian Tax & Customs Board, has established Free Zones that are regarded as being outside the remit of the Customs area for purposes of import and export duties. VAT and excise duties do not have to be paid on goods brought in for later re-export.

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