Estonia Market Entry

Estonia Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

According to cheeroutdoor.com, Estonia consistently ranks high in human capital, digital capabilities and ease of doing business. This creates a competitive environment to research, develop and deliver solutions and services globally. The society is highly digitized, the knowledge of English is very high, especially among the younger generation. The relatively small market is significantly covered by strong players mainly from the Nordic or neighboring Baltic countries. There is no direct rail or air connection with the Czech Republic. The north-eastern, mostly Russian-speaking part of the country is economically dependent on the extraction of oil shale and its non-ecological burning, which will be significantly reduced in the coming years. Population aging corresponds to trends in Western or Central Europe. Due to the dwindling free labor force, Estonia has been recruiting workers from Russian-speaking Eastern European countries every year. Thanks to its location on the Baltic Sea, Estonia has three maritime free trade zones (Muuga, Sillamäe and Paldiski, ports in the north of the country) and the inland town of Valga in the south on the border with Latvia. The zones are open to foreign direct investment and goods here are considered goods outside the customs territory; re-exported goods are not subject to VAT, excise duty or customs duties. In 2014, the Estonian government launched the e-Residency program, which makes it easier for people from outside Estonia to enter the Estonian economy. E-Residency allows people to set up their own Estonian company, open an Estonian bank account and pay taxes completely remotely. The zones are open to foreign direct investment and goods here are considered goods outside the customs territory; re-exported goods are not subject to VAT, excise duty or customs duties. In 2014, the Estonian government launched the e-Residency program, which makes it easier for people from outside Estonia to enter the Estonian economy. E-Residency allows people to set up their own Estonian company, open an Estonian bank account and pay taxes completely remotely. The zones are open to foreign direct investment and goods here are considered goods outside the customs territory; re-exported goods are not subject to VAT, excise duty or customs duties. In 2014, the Estonian government launched the e-Residency program, which makes it easier for applicants from outside Estonia to enter the Estonian economy. E-Residency allows people to set up their own Estonian company, open an Estonian bank account and pay taxes completely remotely.

Overall, the business climate in Estonia is characterized as free enterprise and trade in line with EU practices. Many companies are subsidiaries of European, especially Scandinavian companies. Estonia has one of the highest credit ratings in the region (Fitch IBCA, Standard & Poor’s, Moody’s). Estonia has been a member of the eurozone since 2011, but the country’s cost level is still significantly lower than its neighboring Scandinavian countries.

Estonian businessmen prefer the most direct business relations possible. Organizing your own presentation events, to which local businessmen are invited, is best prepared and promoted with the participation of the Czech embassy or relevant Estonian institutions (e.g. the Estonian Chamber of Commerce and Industry), or industry associations. Participation in local fairs can also be successful, especially if organized by an umbrella organization.

References from the Nordic countries, especially Finland, are appreciated.

Forms and conditions of operation on the market

The main channel for sales are wholesale companies, retail chains and department stores, which have been increasing rapidly in recent years, especially in Tallinn and other larger cities. The use of local representatives is one of the most effective ways to success, which is also confirmed by the experience of Czech companies operating on the Estonian market. A frequently used option is the so-called digital residence, where every citizen of the Czech Republic can apply for the assignment of a digital identity, which includes an electronic signature, at the Estonian embassy in Prague. Subsequently, directly from the Czech Republic, he can establish a company in Estonia online using an electronic signature and manage it remotely. Tax returns can also be filed electronically.

Options for entering the Estonian market include establishing a Sole Proprietorship (FIE), Limited Liability Company (OÜ) or Joint Stock Company (AS). All of these options subsequently bring different requirements for minimum share capital, annual reports, board members, etc. The company is registered in the e-Business register upon incorporation. The most common form of business in Estonia is a limited liability company (in Estonian: osaühig or OÜ). Information about its establishment is available here. The conditions for the entry of foreign capital create the same competitive environment for all interested parties, domestic and foreign. Investments are supported by a transparent tax system, relatively high education and good language skills. Also important for the interest of investors is the fact that the reinvested profit is exempt from taxes. Since 1 January 2011, Estonia has been a member of the Eurozone, which has significantly affected the country’s investment environment. Estonia has not introduced any restrictive measures to prevent the inflow of foreign investment. Only in some areas (mining of minerals, management of public funds, repair of railways, airports, ports, dams and telecommunications, sale of medicines, production of alcohol, lotteries and banking) it is necessary to meet the requirements of the relevant licensing laws.Enterprise Estonia, which covers individual Estonian investment and export agencies.

According to available information, Czech-Estonian joint ventures do not operate in Estonia.

Marketing and communication

In Estonia, a basic prerequisite for success is a website in several languages ​​(absolutely mandatory English, Estonian is very suitable, possibly also Russian as a supplement). Thanks to the high “digital literacy” of the company and FB and other social networks. Online communication should not be underestimated: Estonia is one of the leading countries in the world in creating and implementing e-government and cyber security solutions. 99% of people use internet banking services and more than 95% fill out their tax returns online. Estonia hosts both NATO’s Cyber ​​Security Center and the European Union’s IT Agency. In the parliamentary elections in 2019, 38% of all participants voted via the Internet.

In marketing, it is convenient to refer to Estonians as “Northern Europeans” and not to mention “Eastern Europe”, which in their view begins beyond the borders of Estonia. Advertisements on television and radio, advertisements in the daily and professional press, on the Internet, as well as the use of billboards and advertising spaces are a proven form of promotion. Participation in local fairs and exhibitions is an appropriate form of promotion.

Several advertising and PR and HR agencies in Estonia:

  • PR Partner OÜ
  • KPMS
  • Alpha-Omega Communications
  • PR Strategies OÜ
  • OÜ Agenda Public Relations
  • Callisto

Issues of intellectual property protection

Intellectual property is protected in Estonia at the standard level as in all European Union countries, i.e. it covers copyright enforcement as well as real jurisdiction. The most important document for intellectual property rights (IPR) in Estonia is the Copyright Act. The legal protection of patentable inventions is governed by the Patent Act n. All universities have their own detailed IPR principles. A list of international treaties for the protection of intellectual property to which Estonia has acceded can be found here.

In order to obtain legal protection in Estonia, you must file a trademark application in Estonian with the Estonian Patent Office. You can apply through the e-filing portal or by filling out the application form, which can be printed and either brought or sent to the reception of the Estonian Patent Office. It is also possible to bring the application to the mailbox, which is open 24/7 and the relevant submission date will be determined. Each application may contain only one trademark. If you need legal protection for different versions of your trademark, you should file separate applications. Proceedings related to the registration of a trademark can be carried out by the applicant or a patent representative authorized by him. A person without residence, seat or business or industrial enterprise operating in Estonia must authorize the patent attorney as a representative. The notice regarding the decision to register a trademark is published in the Estonian Trademark Gazette. The interested party may challenge the decision on the registration of the trademark at the Industrial Property Appeal Board within two months from the date of publication.

The European Union Trademark System (EUTM) offers trademark owners uniform protection throughout the European Union (EU) by filing a single application. Legal protection will also apply on the territory of Estonia. In case of EU enlargement, the legal protection of the trademark is automatically extended to the new member states. The European Union Intellectual Property Office (EUIPO) provides services across the Union for the protection of industrial designs.

In cases provided by law, the Board of Appeal of the Estonian Patent Office decides disputes between a third party and the applicant or owner of rights.

Public procurement market

Estonia is at the forefront of e-procurement. The share of electronic procedures in all procurement procedures is 96%. The full transition to e-public procurement took place on October 22, 2018.

Information about the purchase intention and the progress of these purchases is available only in one place – in the Public Procurement Register. Information about concluded contracts and disputes is also available here. Detailed documentation requirements are set by the contracting authority in the procurement documentation of a specific public contract. Digital signatures are not mandatory, unless otherwise stated in the public contract – the entrepreneur must submit an offer in the form required by the contracting authority. In some cases, tenders may be announced through EU institutions ( ted.europa.eu ). The organization of public procurement is governed by the Public Procurement Act and its implementing regulations, more detailed information on public procurement (including threshold values, public procurement planning, procedural rules) can be found on the websitewebsite of the Ministry of Finance of Estonia.

To arrange a public contract, the contracting authority chooses one of the following types of procedure based on its needs and in accordance with the law: open procedure, narrow procedure, competitive procedure with negotiations, innovative partnership, competitive dialogue, negotiated procedure without prior publication of the contract notice, simple procedure, special procedure for social and specific services, procedure for awarding a concession, competition for a proposal. Depending on the scope of the contract, the tender documentation is published either only in Estonian, but often an English version is also available.

A company that is interested in participating in a public contract can challenge the procedure of the contracting authority by submitting a request for review to the review committee if it discovers a violation of the law on public procurement by the contracting authority.

Payment terms, payment ethics and resolution of commercial disputes

Common terms of payment for foreign trade are payment order, documentary direct debit and documentary letter of credit. The most common invoice maturity period is 14 days, among entrepreneurs the invoice maturity period can be longer. The payment morale of the Estonian clientele is very high. Estonian companies generally prefer amicable resolution of business disputes. Possible legal actions against Estonian companies are best conducted through Estonian law firms or companies specializing in debt collection.

In case of problems with the due date of the claim at the Estonian company, you can:

  • Contact the insurance company AS KredExKrediidikindlustus to see if the borrowers are insured with it. It is an insurance company established jointly by the KredEx Foundation and the Ministry of Economy and Communications in 2009, which aims to help Estonian companies insure credit risks related to both exports and domestic sales. If the debtors were insured, KredEx will compensate the damage arising from unpaid invoices according to the contract. KredEx services are intended for small and large businesses.
  • If the credit insurance company does not have and does not pay its bills, go to court. In such a case, consider using the cross-border debt collection mechanism. The proposal can be submitted online, you must select the locally competent court (it depends on the business contract with the partners, whether the competent court is in the Czech Republic or Estonia).
  • Thirdly, it is possible to turn to a “collection” company (Estonian “inkasso”), which will help you collect the debt (you can hand over your debt to the company for a commission, or sell it entirely). A debt collection company can carry out out-of-court or judicial debt collection.

Visas, fees, specific conditions for traveling to the territory

Estonia is part of the EU and the Schengen area and you can travel here from the Czech Republic with a valid passport or identity card. The length of stay is not limited, but EU citizens must register in the register of residents of Estonia for a stay longer than 3 months. When applying for the right of residence, the fingerprints of a family member of an EU citizen starting from the age of 6 are taken, the fingerprints are recorded in the residence card of the family member of the EU citizen. Applicants from among EU citizens first obtain the right of temporary residence valid for 5 years, then they can obtain the right of permanent residence.

Contact: Politsei-ja piirivalveamet (Police and Border Guard Board), Pärnu mnt. 139, 15060 Tallinn, phone: +372) 612 3000, http://www.politsei.ee.

Estonia is a very safe country where you can move everywhere and in all ways and means of transport. The cities have a high-quality public transport network and there is reliable train and bus transport between the individual cities. Card payment is very widespread in Estonia and there are only a very few places where you cannot pay by card.

Employment of citizens from the Czech Republic

A citizen of the European Union, a member state of the European Economic Area and the Swiss Confederation (hereinafter referred to as an EU citizen) has the right to reside in Estonia on the basis of a valid travel document or identity card for a maximum of three months without registering the right of residence. Family members of EU citizens (who are not EU citizens themselves) can only work in Estonia if they have the right of residence (either temporary or long-term). In other words, Estonia, like the Czech Republic, is a member of the European Union, so a work permit or residence permit is not required. It is only necessary to register in the resident register ( Rahvastiku Register ) within three months of arrival in Estonia.

If you are already coming to Estonia with an agreed job, it is recommended to follow the following steps:

  1. Apply for an Estonian identification code . You must apply for an Estonian personal identification code within 5 days of starting work so that your employer can register you in the employee register. The local office in Tallinn is located at Vabaduse väljak 7, 15199 Tallinn, phone +372 6404 457. You can read more on the website of the Estonian Ministry of the Interior. It is also possible to request an identification code from the Estonian representative office abroad and at the International House of Estonia located in Ülemiste City.
  2. Register your address in Estonia at your local government office or at the International House of Estonia. After registering the address, you can start using public and social services provided by the state.
  3. Get an ID card . Apply for an Estonian identity card at the Police and Border Guard as soon as you register your place of residence. The citizenship card will be proof of your right of residence.
  4. Change your tax status . When your stay in Estonia exceeds 183 days or when you register your address in Estonia, you become a tax resident here. The change will not take place automatically, you must inform the tax authorities via the form.

The minimum hourly wage in 2022 is €3.86 (gross) and the minimum monthly wage is €654 (gross). Details on the wage issue can be found on the website https://www.tooelu.ee/en/175/wages.

If you have been educated or worked in another member state of the European Union or the European Economic Area and wish to work in Estonia, check whether your qualification (education and/or work experience) is also recognized in Estonia. Work traditions and education systems may differ between Member States. Therefore, the professional qualification you obtained abroad may differ from the requirements set for similar jobs in Estonia.

Fairs and events

The most important fairs in Estonia include:

  • Estbuild, international construction fair, https://estbuild.ee/en/ (Tallinn)
  • Tourest, International Tourism Fair, https://tourest.ee/eng/ (Tallinn)
  • Intellektika, youth education and career fair, https://intellektika.ee/ (Tartu)
  • Tallinn Boat Show, https://www.meremess.ee/eng/ (Tallinn)
  • Beauty and Motoexotica, lifestyle fair, https://www.ilumessid.ee/ (Tartu)
  • Tallinn Motor Show, International Exhibition of Motorcycles and ATVs, https://motomess.ee/en/ (Tallinn)
  • Maamess, fair for agricultural technology and products, https://maamess.ee/en/ (Tartu)
  • Tallinn Coffee Festival, https://tallinncoffeefestival.ee/?lang=en (Tallinn)
  • Robotex International, robotics fair and festival, https://robotex.international/ (Tallinn)

Important international conferences for ICT start-ups are held in Estonia every year in Tallinn ( Latitude59 ) and Tartu ( sTARTUp Day ).

In 2022, Estonia will host an international exhibition of renewable energy for the first time – GREENEXPO 2022. The exhibition takes place from 12 to 14 October 2022 at the EESTI Näituste exhibition center in Tallinn.

Estonia Market Entry