Estonia is a North-Eastern European country located between 4 neighbours – Sweden, Finland, Russia and Latvia. The total area of Estonia is ca 45,000 sq. kms and the population is ca 1.5 million. The capital city of Tallinn has a population of ca 400,000 and is very well connected with the rest of Europe via daily flights to major European cities.

Business Environment

Estonia offers many advantages as a financial centre, including:
• No corporate income tax
• No exchange controls
• Excellent worldwide communications
• Modern banking system
• Low cost of company administration
• Availability of shelf companies
• The official language is Estonian but English and Russian are widely spoken

These and other features make Estonia an attractive jurisdiction for international tax planning in trading and holding structures.

Government & Legal System

Estonia is an independent country, which declared independence in 1918. The country was a part of the Soviet Union between 1940 and 1991. Estonia is a member of the United Nations and joined the European Union on May 01, 2004. Stable, democratic, parliamentary government is headed by the Prime Minister. The President has a formal role in Estonia’s political system.

The legal system is based on Roman civil law. The final court of appeal from decisions of Estonia’s courts is the Supreme Court. Tax disputes are solved in Administrative Courts. Tax evasion is considered a crime. Estonia’s laws are fast being brought into line, where necessary, with the laws of the European Union.

The Economy

According to the index of Economic Freedom of The Wall Street Journal and the Heritage Foundation published in November 2001, Estonia is placed fourth-equal alongside Ireland, Luxembourg, the Netherlands and the United States. The only countries to place ahead of Estonia in this authoritative list are Hong Kong, Singapore and New Zealand. It was noted that Estonia has made its way to the top of the pile of the world’ s most liberal economies thanks to a highly developed banking and finance sector and complete freedom of movement of investments with no governmental interference in the sphere of the market economy.

With modern anti-money laundering legislation in place Estonia is and has never been black listed by any international supervising bodies.

The main pillars of Estonia’s economy are light industries, oil transit, timber processing, food processing, IT-services and financial services.

Financial Services

Characteristics of the Estonian banking system:

• No exchange controls
• The service fees of Estonian banks are on the low side
• Real time internet banking for monitoring accounts and processing payments
• Very user friendly internet interface
• Three languages spoken: English, Russian and Estonian
• Internet banking available at once upon account opening
• No disclosure of beneficial owners is required upon bank account opening
• Excellent credit ratings

International Credit Ratings as of July 1, 2002:

- Moody’s: Baa1
- Fitch IBCA: A-
- Standard & Poor’s: Affirmed A-
• Extensive correspondent account network
• One account number for all currencies, automatic conversion only at client’s request
• Possibility to operate in soft currencies (RUB, UAH, BYR, etc.)
• Opening of an account for an Estonian company is a matter of only 30 minutes
• Most banks are happy to serve non-resident clients also from Eastern Europe
• Accounts for offshore companies are opened with a higher level of scrutiny if compared with local companies
• Thanks to modern anti-money laundering legislation (as amended on January 1, 2004) Estonia is not and has never been black listed by any international supervisory institutions (OECD, FATF, FSF, etc.); suspicious activities reports must be filed with a special unit under the Central Bank of Estonia.