Preparing to work in Estonia is an exciting time for everyone involved in your company. Soon you can harness the talent of a tech-savvy workforce, form essential relationships with other companies, and offer new products and services. But until you can enjoy these benefits, you have to focus on how to set up your Estonia subsidiary.
Establishing a subsidiary is often time-consuming and challenging. It can take up to a few months to officially incorporate, and your company also has to learn Estonia’s subsidiary laws on top of running a new location. Fortunately, Globalization Partners makes it easy to work in foreign countries such as Estonia through subsidiary outsourcing and our global expansion solution.
How to Set up an Estonia Subsidiary
Before you jump into setting up your Estonia subsidiary, you need to consider several important factors. First, look at what location within Estonia is best for your company’s subsidiary. Different cities or regions can sometimes have varied subsidiary laws that impact fees, availability, and more. We recommend working with an expert if you’re not familiar with which places are best for incorporation.
Next, you need to look at what type of entity matches your business goals. Estonia’s Commercial Code allows several different types of subsidiaries, including a private limited company, public limited company, general partnership, limited partnership, or commercial association. A private limited company, also known as a limited liability company (LLC), will give you the most freedom to operate in the country and also protect both your subsidiary and parent company.
Setting up your Estonia subsidiary as a private limited company includes the following steps:
- Filing the parent company’s Articles of Association and Certificate of Registration
- Drafting the subsidiary’s Articles of Association
- Submitting proof of the subsidiary’s registered address
- Submitting proof of deposited share capital
- Drafting details of the manager you appoint
- Filing any other documents requested by the Trade Register
- Registering in the Register of Economic Agency depending on your industry
- Registering in the Commercial Register
- Opening an in-country bank account
- Registering for VAT and Central Sick Fund of Estonia
Estonia Subsidiary Laws
As a private limited company, you can operate in Estonia just like a resident company. After completing the Estonia subsidiary setup process, you’ll need to follow all the laws required for your entity. For example, your LLC must pay corporate tax on your worldwide income at a rate of 20%. You also need to follow the same accounting and filing requirements as domestic companies, but you may be eligible for some tax deductions and exemptions.
Estonia subsidiary laws also require you to have a business name that’s different from the parent company. LLCs need a registered address in an Estonian subsidiary, as specific laws can change based on where you are. Your parent company is responsible for selecting all of the business activities your subsidiary will perform in Estonia.
Benefits of Incorporating in Estonia
Although incorporating in Estonia is often a time-consuming process, it will give you the benefit of operating in Estonia just like a resident company. Since the structure creates limited liability between the parent company and subsidiary, both of your locations can operate somewhat independently.
That said, you won’t benefit until you spend months trying to set up your Estonia subsidiary. Globalization Partners, on the other hand, can help you start working in the country in as little as a day. You can use our Estonia PEO to hire your employees, pay them, and give out compensation and benefits. As the Employer of Record, we’ll even be responsible for Estonia’s subsidiary laws instead of you.
Everything You Need to Set up a Subsidiary
If you don’t choose Estonia subsidiary outsourcing, you’ll need time and money to incorporate. The incorporation process includes many fees, and you’ll also have to pay for frequent travel back and forth to Estonia. You should work to clear your schedule as well so that you’re available for anything that comes up during incorporation.
We recommend working with an expert in Estonia subsidiary laws if you choose this route. A consultant, accountant, or lawyer can make sure your company is staying compliant, and you won’t have to worry about incurring any fines or delays.
Choose Globalization Partners
Globalization Partners will make it easier for your company to expand. Contact us today to learn more about Estonia subsidiary outsourcing.