Most common business entity in Estonia
The Osaühing (OÜ) is the standard choice for most small- to mid-size businesses in Estonia. Like a US LLC, it provides limited liability protection separated from the owners' personal assets. e-Residency card €100-€120 + state fee €265. Dividend tax rises to 22% in 2025.
The full menu of Estonia business structures
| Structure | Liability | Tax | Best for |
|---|---|---|---|
| Osaühing (OÜ) | Limited | 22% corporate | Most operating businesses |
| Sole proprietor / self-employed | Unlimited personal | Personal income tax rates | Freelancers, one-person services |
| Partnership | Joint and several | Pass-through to partners | Professional services (law, accounting) |
| Branch of foreign company | Parent company liability | 22% on Estonia-source profits | Foreign companies entering Estonia market |
| Public limited company | Limited | Same as Osaühing (OÜ) but stricter | Companies preparing for listing |
Which one should you pick?
- Freelance or one-person service in Estonia? Self-employed structure if simple, Osaühing (OÜ) if you want liability protection.
- Software / e-commerce / agency? Osaühing (OÜ) — standard, scalable.
- Operating an existing foreign company in Estonia? Branch (simpler) or subsidiary Osaühing (OÜ) (more substance).
- Planning to raise venture capital? Confirm investors accept Estonia entities. Many require a US Delaware C-Corp flip — see US company formation.
- Holding company for IP or other companies? Osaühing (OÜ) with minimal substance requirements.
The Osaühing (OÜ) in one paragraph
Osaühing (OÜ) is Estonia's primary limited liability vehicle. Minimum paid-up capital: nominal. Headline corporate tax: 22%. 0% on retained earnings. 22% only when distributed as dividends (rising from 20% in 2025).. Banking accessibility: 6/10. Privacy: 5/10 (UBO public). Remote formation: yes. Processing time: 1 business day.
For US comparison, see Estonia vs USA. For non-resident formation specifics, see forming a Estonia company as a non-resident.