How to Choose the Right Business Entity in Estonia

Mar 3, 2023 | Business, Estonia

When you start a business in Estonia, one of the most important decisions you need to make is choosing the right type of company. There are several types of companies in Estonia, each with its own legal and tax implications. The following guide will help you choose the right type of company for your needs.

Sole proprietorship (FIE)

A sole proprietorship is the simplest and most straightforward form of company formation in Estonia. It’s suitable for small businesses that don’t require a lot of capital or have low liability risks. As a sole proprietor, you’re personally responsible for all debts and obligations of the business.

Limited Liability Company (OÜ)

A limited liability company (OÜ) is the most common form of business in Estonia. It’s a legal entity separate from its owners, which means that the liability of the owners is limited to the amount of their invested capital. A limited liability company requires a minimum share capital of €2,500 and must have at least one board member and one shareholder.

Joint stock company (AS)

A joint stock company (AS) is a larger and more complex business entity than a limited liability company. It’s suitable for companies that require a lot of capital or have a large number of shareholders. A joint stock company is subject to stricter regulations and requires a minimum share capital of €25,000.

General partnership (TÜe)

A general partnership (TÜ) is a business entity in which two or more individuals or companies share profits and losses. Each partner is personally responsible for the debts and obligations of the partnership.

Limited partnership (UÜe)

A limited partnership (UÜ) is similar to a general partnership, but has two types of partners: general partners, who are personally liable for the debts and obligations of the partnership, and limited partners, who have limited liability and are liable only for the capital they invest.

When choosing the right type of company in Estonia, it’s important to consider the goals, size and potential risks of your business. Working with an experienced business consultant or lawyer can help you navigate the legal and tax requirements and make an informed decision.

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