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Obtain Estonia ICO Company Formation

ICO company in Estonia

ICO Company Formation
Recently, a lot of project developers and businesses have drawn their attention to cryptocurrencies and initial coin offerings (ICO) in order to raise capital for various types of projects. Starting your ICO company in Estonia is a great choice due to the local remote maintenance administrative tools, which mean minimal bureaucracy level, and due to the absence of any specific regulation on ICOs by the Estonian Financial Supervisory Authority (EFSA). However, it is highly recommended that ICO Companies completed an analysis of their planned activity in order to clarify whether the particular ICO project complies with Estonian legislation.
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Timeframe: 2-4 weeks + delivery time for the courier

Minimum share capital: EUR 2,500.00


Overview

Estonia is being regarded as a convenient jurisdiction for ICO start-ups as one of the most advanced digital nations and also the first country, which has implemented e-residency for global citizens, empowering them to easily set up and run a location-independent business in a trusted EU environment.

However, the legal framework to the offerings remains unclear for most potential investors. Although, there is no specific regulation on ICOs, the Estonian Financial Supervisory Authority (EFSA) is of opinion that tokens may be considered as securities in the context of the current Securities Market Act (SMA) as well as in the Law of Obligations Act (LOA). The EFSA explains that tokens, which grant certain rights in the issuer’s company or give investors profit expectation, are most likely to be considered securities according to the SMA.

In General, the position of EFSA tends to be very similar to Singapore’s regulators, making Estonia an attractive country for starting the ICO start-ups at least for now while there is a lack of clear statements from EFSA and Estonian regulator has not implemented any amendments to the current legislation.

To summarize the aforementioned, the EFSA explains that despite a new technology is involved, and what is being sold is referred to as a token instead of share or equity, a token may still be qualified as a security in accordance with the Estonian legislation. Every ICO is unique and should be assessed on its own characteristics, so it is highly recommended that ICO Companies completed an analysis of their planned activity in order to clarify whether “security” or ”utility” definition might be applied. Professional conclusion is required, i.e. drafting a proper white paper specifying the technical aspects of the project and receiving a valid legal opinion from a certified legal advisor on the compatibility of the particular ICO project with Estonian legislation.

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Licensing Criteria and Procedures for Applying for Estonia ICO Company Incorporation

Notable features
Procedure
Documents Required

ICO company's structure

  • At least 1 Shareholder (natural person or legal entity, no restrictions with regards to citizenship or residence)
  • At least 1 Director (foreign residents are allowed)

Confidentiality

  • Director’s details – part of the public record
  • Shareholder’s details –  part of the public record
  • Beneficial owner’s details – disclosed to the Authorities

Registered Agent - Local Representative is required if there are no EU residents within the Board

Registered office - Local Registered office is required

Company secretary - Not Required

Company name

  • Language: Any
  • Letters: Roman alphabet
  • Must be distinguishable from other already registered business names and trademarks 
  • Cannot contain such words as Assurance, Insurance, Bank, University, etc. without obtaining a respective license  
  • Name denoting any connection to local, state or national government are generally prohibited, e.g. Eesti   

Timeframe

  • 2-4 weeks + delivery time for the courier

Taxation

  • Estonian companies and branches of foreign entities are subject to 20% income tax only in respect to all distributed profits (both actual and deemed)
  • Starting from January 1, 2018 – the CIT rate on regular profit distributions will be decreased to 14%, but only if dividends are paid to legal entities

Reporting

  • Filing annual report is obligatory
  • Accounting records shall be kept in Estonian
  • VAT and salary declarations are filed monthly

Benefits

  • Possibility to obtain e-residency and get access to all local e-services
  • 0% tax on retained and reinvested profits
  • 14% tax on distributed profit
  • No obligatory employees are required, Director can perform his duties without receiving actual salary

Initial steps

  • Requesting preferable ICO company names from the side of client;
  • Checking the availability of selected ICO company names using Estonian and EU databases;
  • Gathering required due diligence from the client; 
  • Issuing the invoice for our services after the preferred Company name is approved to be available.  

Incorporation of company

  • Sending the client important information and documents and gathering the relevant information;
  • Preparation of the full package of incorporation documents, ICO company White Paper and legal opinion on its compatibility with Estonian legislation, and sending the package of the documents to the client for approval and signing;
  • Filing the documents to the Commercial Register on client’s behalf; 
  • Covering state fees.  

Opening the bank account

  • Estonian legislation allows to open account in any foreign jurisdiction. We can assist you with the opening of bank account in any chosen jurisdiction among those we offer. Please note that bank requirements and time frame vary from bank to bank.

Transmission of documents

  • Hard copies of company incorporation documents will be sent to the address provided by the client via courier.

In order to obtain license, Offshorelicense will fill all necessary application forms and also acquire apostilled corporate documents. 

For each Director and Shareholder:

  • Certified passport copy
  • Certified proof of residential address

If Shareholder is legal entity:

  • Valid certificates of Good Standing
  • Valid certificate of Incumbency

In order to open a bank account for Estonian ICO company, you will be required to provide the following documents:

  • Certified copy of a valid passport (of each Shareholder and Director
  • Proof of address (e.g. recent utility bill of each Shareholder and Director)
  • CV (of each Director and Shareholder)
  • Optional: Bank reference (of each Director)
  • Optional: Legal reference (of each Director and Shareholder)   

*If original documents are not in English or Estonian, the documents must be accompanied by a notarized translation (in English or Estonian).

*Additional documents may be requested by the Commercial register or local bank at any point to verify specific information.

*When Shareholders are legal entities, it is required to provide apostilled set of corporate documents and certificate of Good Standing.