ESTONIA

i. Name of country

ESTONIA

ii. Region

Eastern Europe, bordering the Baltic Sea and Gulf of Finland, between Latvia and Russia

iii. Population

1,220,042 (July 2021 est.)

iv. General Introduction

Estonia is a developed, advanced country in northern Europe. Estonia is an EU member state as well as a member of the Schengen zone. Estonia ranks very high in terms of freedom, liberties, and press freedom. The capital is Talinn, and the primary currency is the Euro. Engineering, electronics, and wood products are the primary industries. Estonian has introduced e-Residency, which is a digital identity that allows anyone in the world to easily conduct business online. Estonia has a taxation system that encourages investment, as well as transparent and functional legislation. Estonia has four free trade zones that welcome direct foreign investment.

There are usually no special economic or financial incentives for foreign direct investments inbound. However, corporate earning taxation occurs when profits are distributed (rather than when they are earned), which can be seen as beneficial. Otherwise, Estonia’s policy is to not give special incentives for particular territories, economic fields, long term investments, and so on. Foreign and domestic investments are treated equally.

v. Wifi Speed

Estonia is ranked 47th in the world with its average fixed broadband download speed of 65.79 megabits per second.

vi. Electrical outlet

In Estonia the power plugs and sockets are of type F. The standard voltage is 230 V and the standard frequency is 50 Hz.

vii. Per Capita GDP

Real GDP per capita
$35,600 note: data are in 2017 dollars (2020 est.)
$36,800 note: data are in 2017 dollars (2019 est.)
$35,200 note: data are in 2017 dollars (2018 est.)

note: data are in 2010 dollars

viii. Climate

maritime; wet, moderate winters, cool summers

ix. Residence-by-Investment

Estonia is one of Europe’s most technologically advanced countries, with advanced infrastructure and a stable political climate with Europe. Estonia is the EU’s most developed and fastest growing country.

Estonia has a golden visa program for major investors in the country’s IT and other sectors. Estonia has no citizenship by investment program; the only way for foreigners to become Estonian citizens is to naturalize after eight years of legally living in the country.

Investment

Business

– Foreigners who participate in a company, operate as sole proprietors, or invest in a business activity in Estonia with at least €65,000 (€16,000 if self-employed) are granted residency. Investment can be defined as the capital stock, the subordinated liability, and the amount of registered fixed assets.

-Temporary residence permits are typically valid for 5 years. Following that, you can either renew your permit or apply for permanent residency. You have health insurance, a permanent legal income (€260 per month), and an Estonian language B1 level if your address is registered in the Estonian population registry.

– You may be eligible for naturalization after living in Estonia for 8 years, 5 of which must be spent with a permanent residency permit. Estonian language proficiency, passing an exam on the Constitution and the Citizenship Law, a permanent legal income (€ 260 per month), and loyalty to the Estonian state are all required to become a citizen.

– Naturalized citizens do not have the right to dual citizenship in Estonia. Anyone who obtains Estonian citizenship through naturalization is required to renounce their previous nationality.

Processing Time

Processing time is with in 3 months

Key Benefits

Citizenship Benefits

• Visa-free or Visa on arrival to 164 countries, including United States, Schengen Area, United Kingdom
• Passport with optimal reputation
• Become an EU citizen, with the right to live, work, do business, invest, own property and access to healthcare and education benefits throughout the European Union
• Visa-free access to the United States
• Access to educational and healthcare benefits
• The right to live and work in Estonia at all times
• Buy real properties without restrictions

Permanent Residency Benefits

• Access to healthcare and education system
• The right to live and work in Estonia, without any time limit
• Be eventually eligible for citizenship

Temporary Residency Benefits

• Set up a profitable business
• Peaceful, democratic and politically stable country Low tax jurisdiction
• Enormous potential for start-ups and Internet entrepreneurs
• Business-friendly policies
• Extremely safe, modern and livable country
• Access to funding
• English speaking country
• Be eventually eligible for permanent residency
• Travel visa-free across the European Union
• Low crime rate country
• High quality of life
• Potentially profitable investment

Requirements

• An actual place of residence is Estonia registered with the Population Register.
• Have health insurance.
• Business plan in Estonian or English.
• The description of business plan must express the following data:
• Name and registry code of the company or the sole proprietor;
• Business idea – planned activities, potential clients and suppliers, plans of development, fixed assets available for the company, circulating capital, labour force being used; financial forecasts for the next two financial years – projected income statement, balance sheet, cash flow forecast
• Curriculum Vitaes of the persons who perform managerial and supervisory functions
• Motivation – why the settling of the applicant in Estonia is important for the enterprise

When applying for a residence permit extension after one year, the investment requirement set for applications for a residence permit may be replaced by sales income (if at least €200,000 per year) or the social security tax paid in Estonia (in each month at least equal to the monthly social security tax paid in Estonia from the fivefold remuneration of Estonian annual average gross wages).

Procedures and Time Frame

All you need to do is complete the online application form. After that, the Estonian Police and Border Guard will conduct a background check on you. Once your application has been approved, you will be able to select where you want to pick up your digital ID card. You can go to any of the 38 Estonian embassies and consulates around the world, or you can go to an Estonian Police and Border Guard Station.

You must personally collect your digital ID card once it arrives at your designated pickup location. To do so, you must present valid travel documents for your country of nationality as well as submit your fingerprints for verification.

xi. Natural Resources

oil shale, peat, rare earth elements, phosphorite, clay, limestone, sand, dolomite, arable land, sea mud

xii. Ethnic Groups

Estonian 68.7%, Russian 24.8%, Ukrainian 1.7%, Belarusian 1%, Finn 0.6%, other 1.6%, unspecified 1.6% (2011 est.)

xiii. Languages

Estonian (official) 68.5%, Russian 29.6%, Ukrainian 0.6%, other 1.2%, unspecified 0.1% (2011 est.)

xiv. Religion

Orthodox 16.2%, Lutheran 9.9%, other Christian (including Methodist, Seventh Day Adventist, Roman Catholic, Pentecostal) 2.2%, other 0.9%, none 54.1%, unspecified 16.7% (2011 est.)

xv. Median Age

total: 43.7 years
male: 40.4 years
female: 47 years (2020 est.)

xvi. Urbanization

urban population: 69.4% of total population (2021)
rate of urbanization: -0.03% annual rate of change (2020-25 est.)

xvii. Physician density

4.48 physicians/1,000 population (2018)

xviii. Government type

parliamentary republic

xix. Unemployment Rate

4.94% (2019 est.)
4.73% (2018 est.)

x. Taxes

Headline Personal Income Tax Rate (highest marginal tax rate) – 20%
(+ 33% social tax)
(0% on dividends)
(7% on regular dividends)

Headline Corporate Income Tax Rate (excluding dividend taxes)- 20%
(14% on regular dividends)

To be a considered a tax resident in Estonia you must have a permanent residence and/or stay in the country more than 182 days in a 12-month period.

Tax residents are subject to income tax on their worldwide income at a flat rate of 20%. Non-residents pay taxes on their income accrued in Estonia.

Capital gains are considered ordinary income and taxed at the standard income tax rate. Investment income is usually taxed at normal rates. However, a tax deferment may be available under an investment account scheme where individuals can reinvest investment income and capital gains tax-free.

Domestic dividends are exempt from taxation; dividends obtained abroad are exempt provided they were taxed on source. Interest from financial institutions of the EEA are tax-exempt. Rental income and royalties are taxed as ordinary income.

On January 3rd 2019, Estonia implemented the EU-wide Anti-Tax Avoidance Directive Measures, which include new rules on controlled foreign companies (CFCs).

The V.A.T. standard rate is 20%. Reduced rates of 9% and 0% apply to certain goods and services.

Land is subject to a property tax that ranges from 0.1% to 2.5%, except for residential land. There are no transfer, inheritance and net worth taxes in Estonia.

Regarding corporate taxation, resident entities are subject to tax on their distributed profits at a 20% tax rate. Non-resident entities are subject to tax on their income accrued within Estonia.

Undistributed profits may be retained in an Estonian entity tax-free.