When you establish a private limited company in Estonia, you are also required to register its minimum share capital when registering the company. The minimum share capital amount of a private limited company can be as little as €0.01 per shareholder.
Please note that your share capital contribution is not a state fee. The amount of share capital contributed belongs to your company and can be used to pay for business activities. For companies whose share capital is under €2500, any amount up to €2500 not covered by your company’s share capital is considered to be the liability of its shareholders. This means that should your company go through bankruptcy proceedings, and the company’s assets are not enough to cover its outstanding expenses, the remaining amount is considered to be the liability of its shareholders.
For example, if your company’s share capital is €0.01, but the assets required of your company are €2500, the company’s shareholders’ liabilities are €2500 - 0.01 = €2499.9
Consider your share capital contribution to be an investment into your business that helps build greater confidence in both your company and the Estonian business ecosystem.
- According to the Estonian Commercial Code, the minimum required share capital for a private limited company is €0.01 per shareholder. As this is the minimum share capital amount, you can of course choose to pay in and register even more as share capital.
- The minimum nominal value of a share is €0.01. In case the nominal value of a share is greater than one cent, then it shall be an exact multiple of one cent, thereby also increasing the amount of share capital associated with your company.
- You will have to confirm the payment of your share capital contribution when registering your company. Once the share capital has been transferred to your company’s bank account with a credit or payment institution within the European Economic Area (EEA) and registered in the Estonian Business Register, you may use these funds for business-related expenses.
- It is important to declare your share capital at the Estonian Tax and Customs Board. If you would decide to close your company at some point, this would allow you to pay out the share capital tax-free.
- You cannot pay dividends from your share capital contribution. You can only pay dividends from the company's revenue once you have paid and registered the share capital.
How to register share capital
Your company’s share capital can be registered with a credit or payment institution anywhere within the European Economic Area (EEA), which includes all EU countries plus Iceland, Liechtenstein and Norway. As of 01.02.2023, the share capital contribution associated with a company must be made when founding the company. Making this payment is confirmed by the shareholders founding the company when completing the registration of the company.
Something to keep in mind when opting for a deferred share capital contribution: until the minimum share capital contribution exceeds €2500, the company’s founders remain personally liable for the company’s obligations in the amount of the unpaid part. The company is not allowed to pay out dividends and increase or decrease the share capital but is allowed to make salary payments.
You will need to provide the e-Business Register with proof of the payment of share capital to the company’s bank account if your company's share capital exceeds €50 000. A digitally signed statement (confirming the payment) can be requested from your financial services provider. In addition to having a digital signature, the statement should be in Estonian and meet the requirements of the Business Register.
If your financial services provider is not an Estonian bank or a fintech company with the necessary capabilities (i.e. able to provide you with a digitally signed statement in Estonian), this payment verification process may become a little more complex. If you are unsure about registering your share capital, business service providers can advise and guide you through the process.
If you wish to make changes to your company's share capital, you need to log in to the Company Registration Portal and submit an application to change the data of your company. The whole procedure is quite straightforward and takes just a few guided steps to complete. However, altering your company’s information requires you to pay an additional state fee in the amount of EUR 25.
Generally, it takes up to 5 working days for the registration department to review the application and register the share capital contribution. Make sure to also declare the share capital contribution on Annex 7 of form TSD, so you can make tax-exempt distributions to the extent of paid-in capital in the future.
Learn more about share capital contribution on our blog.
This article is part of a Business Guide
This article is a part of larger set of guidelines that e-Residency project team has requested for you and that has been compiled in cooperation with AS PwC. Download the full version of the Business Guide.
Articles in the Knowledge Base and the Business Guide are intended solely to provide general guidance on matters of interest for the personal use of the reader, who accepts full responsibility for its use. This information should not be used as a substitute for consultation with professional accounting, tax, legal or other competent advisers.