Learn about everything you need to register a sole proprietorship in Estonia.
Thanks to its rapid economic growth at the turn of the century, the country of Estonia has earned itself the title of one of Europe’s “Baltic Tigers.” The country has led the globe in digitizing residency and elections and continues to surpass economic expectations.
If you’re ready to start your own freelance business in Estonia, we’ll walk you through everything you need to do to get started! Just keep in mind that nothing you read here should take the place of legal counsel.
What is a sole proprietorship in Estonia?
A sole proprietor, also referred to by the Estonian acronym FIE, is a form of small business ownership where the individual operating the business is indistinguishable from the business itself. In other words, you are the business, and you are personally liable for any debts the business accrues. However, the ease it takes to establish an FIE, along with the lack of any capital required to open it, makes it an excellent approach for individuals looking to start a small business.
How do I become a sole proprietor in Estonia?
Both Estonians and foreigners can become sole proprietors, but non-Estonians must first register for a residence permit. If that permit is acquired remotely, then you’ll be required to physically relocate to Estonia before you can start your sole proprietorship. Additionally, you’ll need a bank account that can be used for your business.
Next, you’ll need to use the e-Business Register to choose a business name that includes both your given name and surname and has not yet been registered by anyone else. Once that name is decided, you’ll need to register your company in the Company registration portal. You can also register your company by using a notary. You will be required to identify the code that describes the type of activity your business will perform and, if required, apply for a license for your type of business. Finally, you’ll also need to pay a €13 fee.
If you expect your business to exceed €40,000 worth of turnover annually, you’ll also need to register for VAT at the Tax and Customs Board.
What kind of taxes will I pay as a sole proprietor in Estonia?
Estonian taxes are extremely straightforward and easy to calculate. As a self-employed sole proprietor, you’ll be required to pay a 20% tax on your business income as part of your annual personal income tax filings. You’ll also be required to remit any collected VAT to the Tax and Customs Board.
Receiving payments in Estonia via Liquid.
With its low tax rate and open trading policies, Estonia has proven to be an excellent place to operate a business. When you’re ready to invoice your clients in America, you can use Liquid to send invoices in EUR and other select foreign currencies. Work Orders / Project Proposals can also be agreed to in EUR in Liquid.
In fact, Liquid supports payments to Estonia and 175+ countries worldwide in USD and select foreign currencies, including EUR. Payments arrive in 2-5 business days via wire transfer, whether the invoice was sent to an existing client using Liquid or a client who is new to Liquid.
Liquid charges clients who initiate payments $3 per US invoice paid and $8 per international invoice paid.
Liquid never charges Vendors to receive payments, even when Vendors are requesting payments from Clients who are not current users of Liquid.
Now you’re ready to start making money in Estonia!
Estonia is lauded as one of the globe’s most economically free countries. As a new member of their entrepreneurial workforce, you’re primed to take advantage of everything it has to offer! And when your clients are in the US, Liquid is your seamless way to accept work orders, manage invoices, and get paid.
Ready to boost your cash flow by saving time and money? Try Liquid today.