Why UK investors choose an Estonian entity
Over 5,000 British are e-Residents, with 1,500 operating an Estonian entity for business purposes.
Many overlook the opportunity to use an Estonian entity as an investment vehicle, as Nordic HNWIs have done for decades.
Here are 5 reasons why UK investors choose an Estonian entity:
1. UK investors choose Estonia for affordable corporate structures
Investing through an entity is tax efficient compared to personal, but usually has prohibitive costs.
An Estonian entity is affordable; private limited companies (Osaühing(OÜ)) can be formed with a minimum share capital of just €0.01 per shareholder.
Incorporating an Estonian company is easy and cost effective, from EUR 415 in state fees for e-Residency and state formation fees.
Ongoing costs are also low, from EUR 1,000 annually for accountancy and representation. Additional taxation and annual reporting costs may apply.
2. UK investors choose Estonia for a growing investable universe
Estonia offers interesting investment opportunities, in particular venture capital and private equity with a tech focus, and real estate with high yield.
An Estonian company is EU compliant, meaning many banks and brokers provide EU investment services for an Estonian entity.
Specialist FinTechs such as Wise and Lightyear increasingly offer access to global markets for an Estonian entity.
3. UK investors choose Estonia for easy entity management
Estonian company management is digital using electronic identity and digital contracts, enabling secure, remote management.
Investment management is also online, giving enhanced visibility on positions and streamlined administration.
Language proficiency is high, with state, commercial and financial services readily available in English.
4. UK investors choose Estonia for an attractive tax system
Estonia is one of the most competitive tax systems in the world, with a flat structure which reduces complexity.
Corporate income tax is calculated at 22/78 (about 28%) when profits, dividends or capital gains are distributed and is 0% at all other times.
The ability to reinvest at 0% tax allows investors to compound capital then make distributions based on realised gains, rather than pre-paying based on forecasts.
5. UK investors choose Estonia for rule of law
Estonia has a record of creating profitable investments thanks to its growing economy and innovative companies, including 10 unicorns.
Laws are translated into English language, and foreign investors receive equal treatment with local investors. Most investment providers are regulated.
Nonetheless, Estonia is a small market with a different legal system; UK investors must consider liquidity and corporate governance matters in advance.
TrustBooks Services for your Estonian Company
TrustBooks provides accountancy, taxation and consulting services to clients with an Estonian company. Our British and Estonian staff have extensive experience and language capability, contact us for a free consultation.
