The Non-profit Associations Act is the main law that covers the creation of foundations in Estonia. Also known as non-profit organizations (NPOs), they are established with the purpose of completing various activities for social welfare.
Below, our Estonian company formation agents explain the requirements to open a foundation. Foreign and local investors can rely on us for support in setting up NPOs.
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The main characteristics of Estonian foundations
Non-profit organizations in Estonia are created to fulfil social purposes without earning profits from the activities they undertake. However, under certain circumstances, they can operate as any other type of company, including:
- having Estonian bank accounts;
- entering into contracts;
- hiring employees.
Foundations can generate income that will be used for achieving the goals they were created. Also, any remaining profit will be distributed to the same causes, as they cannot pay dividends to their members.
Should you decide to open a foundation in Estonia, our local specialists can help you.
Requirements to open an NPO in Estonia
The conditions to set up a foundation in Estonia are not many, as you can read below:
- it must have at least 2 members;
- it must also appoint a minimum of one board member who must be a natural person;
- it must secure an Estonian registered address.
Its registration is based on Articles of Association, just like in the case of Estonian companies. Our company registration agents in Estonia can offer more information on the conditions to be met when setting up such an entity.
Documents to prepare to open a foundation in Estonia
The following documents must be prepared when setting up an NPO in Estonia:
- passport copies and details of all members, including the director’s;
- the Memorandum of Association which must state the purpose of the foundation;
- a name reservation form;
- a valid email address opened on the name of the foundation.
It is also possible for a foundation to have a corporate member (with the exception presented above). In this case, the name, registered number, and address of the company must be supplied instead of the passport copy.
You can rely on our local specialists for support in preparing and filing all the documents with the Companies Register. The entire process takes about a week to complete.
Remote registration
An advantage of opening a foundation in Estonia is the possibility of registering it remotely. This option is often used by foreign members who can apply for e-residency in Estonia and benefit from this status to run their activities.
Should you decide on this type of registration, our company formation specialists in Estonia can help you file for e-residency.
Accounting requirements for foundations in Estonia
Estonian foundations are subject to similar accounting requirements as private limited liability companies. They must file annual reports with the tax authorities no later than the end of May of the following year after the closing of a calendar year.
From a taxation point of view, the foundation does not pay the corporate tax, it is subject to:
- a social tax of 33%;
- a 20% income tax;
- it may also pay the VAT at the standard rate of 24% for certain activities.
You can rely on our accountants in Estonia for support in dealing with the financial requirements imposed on foundations.
You can also rely on us for support in filing a crypto license in Estonia.
If you want to open a foundation in Estonia and need assistance, do not hesitate to contact our local advisors.