Estonian company for e-commerce: cost, tax and VAT

This page is about an Estonian OÜ used to sell goods online. The cost question, the tax question and the VAT question are connected, and answering one without the other two is how people end up with a company that works on paper and not in the warehouse.

What an Estonian company for e-commerce costs to set up

The state fee is EUR 265 for expedited electronic registration, and approval usually comes within one business day. That is the fee, not the cost. The realistic all-in first-year figure depends on how you incorporate and whether you live here.

• Electronic registration, state fee EUR 265, if you already have an Estonian ID card or an e-Residency card and an Estonian address
• Through e-Residency, with a legal address and contact person service, the first year runs about EUR 585. The e-Residency application itself carries a separate state fee of EUR 150, which is not refunded if the application is refused
• Through a notary, from about EUR 1,320, which is the route when electronic registration is not available to you

Add accounting from month one, because the obligation starts with the first transaction and not with the first profit. Add VAT registration if you cross the threshold or are not established here, and an EORI number if you import. None of those carry a large fee, but they all carry work.

What it costs to run

Monthly bookkeeping for an Estonian company runs from about EUR 20 a month for a dormant company to around EUR 300 for a multi-country operation with staff. Most working small companies sit between EUR 45 and EUR 120. E-commerce sits in the upper half of that band, for a specific reason: sales channels, payment processors, marketplace settlement reports, returns and OSS reporting generate far more lines per euro of revenue than a consultancy does.

The annual report is the most common hidden cost. It is frequently quoted separately at EUR 150 to EUR 400, which turns a cheap monthly fee into something quite different. Ask whether the monthly price includes it before comparing two quotes.

How an Estonian company for e-commerce is taxed

Retained and reinvested profit is taxed at 0%. Tax arises on distribution, at 22%, levied as 22/78 of the net amount distributed. Distributing EUR 78 costs EUR 22 in corporate income tax. That is the whole of the headline proposition, and it is intact.

The rate moved twice in recent years, which is why so much published guidance is wrong. The reduced 14/86 rate on regular distributions was abolished from 1 January 2025, along with the 7% dividend withholding tax that went with it. A 2% corporate security tax on annual accrued profits was legislated to start on 1 January 2026 and repealed by the Riigikogu on 19 June 2025 before it ever entered force — which matters, because it would have taxed profit whether or not it was distributed. The planned rise from 22% to 24% was dropped in the September 2025 budget process. The rate is 22% in 2026. If a page tells you 24%, it was written before that decision.

Two further points. There is no Estonian withholding tax on dividends or interest paid to non-residents, and royalties are 10% domestically, reduced by treaty. And Estonian tax residence is by incorporation only — there is no domestic place-of-management test.

That last sentence is where people over-read the structure. Estonia not applying a management test says nothing about whether your own country applies one. e-Residency's own guidance warns that your activities abroad may create a taxable presence for your Estonian company and that e-Residency is not the same as tax residency. We are Estonian accountants; where you live and work is a question for a specialist there, and it is worth asking before incorporation rather than after.

VAT: 24%, and the threshold that may not apply to you

The Estonian standard VAT rate has been 24% since 1 July 2025 and is now permanent. Reduced rates are 13% for accommodation and 9% for books and press, with 0% on exports and intra-Community supplies.

The registration threshold is EUR 40,000 of taxable turnover per calendar year under VAT Act section 19. The critical exception for cross-border sellers is that the threshold is nil for persons not established in Estonia: registration is required from the first taxable transaction. There is also a separate EUR 10,000 threshold for intra-Community acquisitions. If you are importing, you need an EORI number, obtained from the Tax and Customs Board and valid across the EU.

OSS and IOSS: what they do and what they do not

OSS lets distance sales from Estonian stock to consumers across the EU be reported in a single return, instead of registering for VAT in every destination country. That is a real saving and the main reason an Estonian company works well for EU-wide consumer sales. What OSS does not do is remove the need for an Estonian VAT number. You still need one for the intra-Community acquisition of your own goods, for import VAT recovery and as a prerequisite for deferment.

IOSS is for a different movement: distance sales of imported goods in consignments of EUR 150 or less intrinsic value. VAT is charged at checkout at the destination rate and declared monthly in one Member State, and the import itself is then VAT-exempt. Above EUR 150 there is no IOSS: normal import VAT applies together with full ad valorem duty on a standard declaration.

Where IOSS is not used, the fallback is the special arrangements, under which the postal or express operator collects the VAT from the recipient. That fallback is being closed. Council Directive (EU) 2025/1539 repeals it and, from 1 July 2028, makes the supplier or deemed supplier liable for import VAT where IOSS is not used, with a tax representative required for a non-EU supplier unless it is EU-established or in a country with an EU mutual-assistance agreement. Be precise: IOSS becomes close to unavoidable, but it is not made strictly mandatory. And the EUR 150 IOSS ceiling is not removed by that directive — removal was deferred to the customs reform and is not yet confirmed in adopted VAT law.

Import VAT, and the deferment you cannot have in year one

Estonia has a clean import VAT deferment under VAT Act section 38(2-1). Import VAT is not paid at the customs office; it is declared in box 4-1 of the VAT return and simultaneously deducted as input VAT in the same return, so the net cash effect is zero. For an importer of goods this is the difference between financing 24% of every shipment for a month and financing nothing.

• Registered for VAT for at least the preceding 12 consecutive months
• No late VAT returns in the preceding 12 months
• No tax arrears in the preceding 12 months
• Applied for electronically through the LUBA system in e-MTA, with a decision within 30 days; for goods the authorisation is issued for an indefinite period

When an Estonian company is the wrong answer

If your stock sits in Germany, an Estonian company does not solve your German VAT. Moving your own goods into another Member State is a deemed intra-Community acquisition there, which triggers registration in that country, and domestic sales from that stock are domestic supplies there. It is the same rule that catches a foreign company moving stock into Estonia, read in the other direction, and OSS does not cover it.

If you need a local marketplace storefront, Estonia does not give you one. The clearest example is Allegro in Poland, where only a Polish entity can open a local store and receive the platform traffic that goes with it. If the local storefront is central to the plan, incorporate where the storefront is and take the accounting question from there.

And if you are choosing a fulfilment location rather than a company jurisdiction, Estonia is a poor base for serving Germany, France and Spain. Tallinn to Berlin is about 1,545 km by road, roughly 18 hours of driving, with no direct deep-sea gateway. From Poland or the Netherlands the same delivery is one to two days at lower cost. Estonia is genuinely strong for the Nordics and the Baltics — Helsinki is 85 km and a two-hour ferry — and can be an excellent legal and fiscal home with fulfilment somewhere else.

What this adds up to

An Estonian company for e-commerce is cheap to form, moderately cheap to run, taxed at 0% while profit stays in the business and 22% when it comes out, and well suited to selling across the EU through OSS. The three things that most often bite in year one are the nil VAT threshold for non-established persons, the twelve-month wait for import VAT deferment, and foreign VAT obligations wherever the stock physically sits. None of them are reasons not to do it. All of them are reasons to plan the first year properly.

Frequently asked questions

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