Low tax jurisdiction
Ease of doing business
Political and economic stability
Low cost of doing business
Ease of communications and travel
Equal treatment and protection of investors
Estonia is a country located at the heart of the Baltic Sea Region – Europe's fastest-growing market of more than 90 million people. It is a country described by political and economic stability, accessibility, investor equality and ease and low cost of doing business. Estonia is the geographical midpoint of Northern Europe and therefore the best place to set up logistics and distribution centres. Estonia is the link between Western and Eastern Europe.
Estonia features one of the most liberal tax regimes in the world. The Income Tax Act provides that undistributed profits of companies are not subject to income tax, regardless of whether they are invested or merely retained in the Estonian company. Estonian tax system is among the simplest in the European Union. In addition, the tax administration can be proceeded fully electronically.
Since joining the European Union and NATO in 2004, Estonia has experienced phenomenal economic growth. Estonia is financially stable. Estonia´s government debt is among the lowest in Europe and the economy has shown considerable endurance to the global economic crisis.
Estonia is a low cost location for doing business. Labour costs and rent levels are considerably lower than in the Western Europe and Nordic countries. The Estonian cost level is gradually converging with the surrounding European Union, but there are still meaningful differences.
Estonia is accessible, both from a logistical and social point of view – Tallinn is within 3 hours flight from major European capitals and the power distance is very low. Also, as a front-runner is applying modern IT solutions, communications technology makes distances in Estonia irrelevant.
Estonia’s business infrastructure is among the most supportive for business activities in Europe, evidenced by Estonia’s high ranking in most international business indices:
The Wall Street Journal and Heritage Foundation’s Index of Economic Freedom 2016 ranks Estonia as one of the freest economies in the world – 9th out of 178 countries.
Estonia ranks 22nd on Fraser Institute's "Economic Freedom of the World: 2015 Annual Report". Economic freedom scoreboard, trailing right behind fellow EU members Denmark and Malta.
The World Economic Forum’s Global Competitiveness Index 2015-2016 ranks Estonia 30th among 140 countries. The survey among business leaders measures economic competitiveness based on a combination of technology, the quality of public institutions, and the macroeconomic environment.
According to the World Competitiveness Yearbook 2015, published by the International Institute for Management Development, Estonia ranks 31st among 60 countries and regional economies covered by the WCY.
Transparency International ranked Estonia 23th out of 167 countries in 2016. Among members of the European Union, Estonia places 14th.
The World Bank ranks Estonia 16th in its Doing Business in 2016 report, which covers 189 countries.
The Bertelsmann Transformation Index in 2015 ranks Estonia one of the most successful of 128 transformation countries in the world. In the status index, Estonia is third after Taiwan and Czech Republic and in the management index, Estonia is fourth after Taiwan, Uruguay and Brasilia.
International Credit Ratings:
Moody's: A1, outlook stable
Standard & Poor's: AA-, outlook stable
Fitch: A+, outlook stable
In every index Estonia is the highest-ranked CEE country and almost on the same level with the Nordic countries – Finland, Sweden, Norway and Denmark.
See also: Estonian company formation