Estonia foreign Investments incentivesEstonia attempts to encourage investments from foreign residents.
The following are among the reasons that foreign investors are attracted to Estonia:
- Political and economic stability.
- Membership of important bodies such as - IMF and membership of the EU from May 2004.
- Significantly lower labor costs than the European norm. The average gross monthly salary in 2003 was Euro 428.
- An excellent location on the Baltic Sea in the heart of one of the fastest developing areas in Europe that has a potential target population of 600 million purchasers. In 2003, 55% of Estonian exports were to the neighboring Baltic States while approximately 40% of total exports were to Sweden and Finland.
- The transport infrastructure is well developed both on land and on sea.
- Particularly accommodating tax regulation - companies in Estonia are exempt from tax on undistributed profits as distinct from accepted practice in most countries. Tax is payable only on profits actually distributed. Tax is payable at the rate of 26% on a dividend, gross.
Individuals also pay tax at a fixed rate of 26%.
- Communications - Estonia, with the influence of the neighboring Scandinavian countries known for the level of their technology, has an excellent communications infrastructure. According to the figures for 2002, the rate of Internet connections for the population in general is similar to that of Britain, above that of Germany. For example, the tax authorities have developed the E-Revenue application that enables tax reports to be submitted on the Internet. Some 62% of the Estonian populations use banking services on the Internet, a particularly high rate even for the Western world.
- Foreign investments - according to the Estonian Bank figures, as at December 31, 2003, most investments were from Scandinavia, principally Sweden - 42% and Finland - 26%. Investments from the USA amounted to 6% of the total investments. The aggregate sum of foreign residents' investments up until the end of 2002 amounted to 4.37 billion dollars.
Estonia Restrictions on Foreign Ownership
- As a general rule, there are few restrictions on foreign investments, mainly in thosesectors that require a license even from local investors - sectors such as banking and communications.
- Foreign investors may purchase real estate in Estonia.
Estonia Benefits for Foreign Investors
- There are no special tax benefits for foreign investors in Estonia.