Estonia is the smallest and most northerly of the Baltic states and is a great place to do business and has moved up to be ranked at 17th place in the World Bank’s imaginatively titled Ease of Business index.
And there are many benefits for UK businesses looking to set up links with Estonia such as the low cost direct flights between the UK and Tallinn and the fact that the country is an open economy with a very westernised business culture – including the fact that English is widely spoken.
So, if you’re looking to take your business to the Baltic states, here’s everything you need to know about exporting to Estonia…
What are the pros and cons of exporting to Estonia?
The UK is the 10th largest exporter to Estonia, with exports totaling around EUR 444.3 million – the top exports from the UK are:
- machinery and mechanical appliances
- food and beverages
- vehicles, aircraft, vessels
- chemicals and allied industries
- mineral products
- textiles and textile products
The strengths of the Estonian market include:
- stable political environment
- substantial funding from European Union (EU) Structural Funds
- small market, so good starting point for new to export companies and Small and Medium Enterprises (SMEs)
- well developed infrastructure
- second highest number of start-ups per capita in the world
And if you’re thinking of exporting to Estonia, the advantages for UK business, are:
- low cost direct flights from UK to Tallinn
- western business culture with English widely spoken
- early adopter of new technologies
- open economy
- business links and knowledge of Russian and Commonwealth of Independent States (CIS) markets
And, being a member of the EU means there are no significant problems for UK businesses wanting to do trade in Estonia.
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How does tax work in Estonia?
VAT is charged at 20% in Estonia, but certain goods and services benefit from a rate of between of 0% and 9%.
A rate of 21% is charged on corporation tax for resident companies and permanent establishments of foreign entities, including branches. This is taken as an income tax on all distributed profits.
The Estonian Investment Agency has further information on corporation tax.
Income tax is set at 21%.
For more information on tax rates in Estonia, visit the Estonian Tax Board.
How will customs affect me when exporting to Estonia?
The internal EU single market allows for the free movement of goods and services without any import duties being applied.
As far as export documentation goes, any temporary export items and commercial samples must be listed as such on any manifests.
For more information on regulations related to legislation, formalities, duties and tariffs in Estonia, visit the Estonian Customs Department.