Larssen

Individuals with an Estonian ID card may establish a company within 48 hours through the Internet. Foreign citizens must come to Estonia and submit an application to the Commercial Register in person through a notary. Operating licences must be obtained for certain types of activities. The company registration process usually takes 10-15 days. The registration process in Latvia is similar to that of Estonia. Reserve up to one month for the registration process. Founding a company in Russia and Ukraine will take more time - up to 3 months.

Yes, Estonian companies have not had to pay corporate tax on reinvested profits since 1999. This exemption will continue up at least 2009, when a new tax law will be introdused.  According to new law, the overall tax expenses should remain unchanged, but advance tax payments will be paid to the state budget  based on average annual payments of dividends in previuos 3 years.

In Estonia, 5% of profit should be allocated to a capital reserve until the reserve reaches 10% of share capital. Companies may not pay dividends if doing so may cause company insolvency. There are similar requirements in Latvia, Russia and Ukraine.

The following dividend taxes must be withheld from payments

Estonia : 0%*

Latvia : 0%

Russia :15%

Ukraine :15%

* Income tax amounted to 22/77 of paid out dividends should be be paid by company

The international tax treaty exemptions may be used by a number of owners to reduce tax rates to 5-10%

In Estonia, companies that meet at least two of the following criteria must have their annual reports audited by a CPA

Turnover EEK 10 million

Balance sheet total EEK 5 million

Number of employees 10

The average salary for middle level managers and accountants in Estonia is about EUR 1,200-1,500. In Latvia salaries are about 10-15% higher than in Estonia. In Russia, managers and accountants who are proficient in English may ask for a monthly salary from USD 2,000, whereas a Russian-speaking accountant may be employed for USD 500 per month. The Ukrainian job market may offer considerably cheaper human resources; however, be wary of their qualification and ethics.

In Estonia foreigners can purchase houses or apartments without restrictions (there are some formalities involved in the case of large pieces of real estate). Similarly in Latvia, there is no significant restriction on buying of real estate. In Russia and Ukraine you can experience many bureaucratic snags and will definitely need assistance in obtaining the necessary permits from local authorities. In many cases, because of this, businesses do not buy land, but rather lease it under a long-term agreement with a municipality.

The discounted cash flow method is widely used for valuation of business. This is also accepted by financial institutions and investors for making decisions on project financing, buy-outs, mergers and acquisitions. We can provide you with valuation services in all countries covered by our branches or partner firms.

Whether you are just establishing a firm or suspect that the local managers are stealing from you, we recommend that a special audit be performed and necessary procedures for fraud prevention be set up. We may also conduct an internal investigation for fraud cases that are either revealed or suspected, since we have a Certified Fraud Examiner in our office.