Exporting guide to Estonia
Business environment
Estonia has been one of the fastest growing economies in the region due to liberalisation of the economy, innovation and openness to foreign capital. This makes it a good starting platform for small and medium enterprises. Estonia ranks highly for ease of doing business and English is widely spoken, making it easy for UK companies to work with local partners.
Growing export market
In the year to March 2019, total UK exports to Estonia amounted to £242 million (ONS, 2019). This was an increase of 17.5% from the previous year and highlights the growing market for UK exports.
Trade gateway
Estonia can serve as a gateway to the wider region due to:
- business links with Commonwealth of Independent States (CIS) markets
- a high level of Russian language proficiency in the local workforce
- a strategic location making it a good springboard into markets in Scandinavia, the Baltics, Central Europe and Asia.
Ease of doing business
18th
out of 190 countries (World Bank, 2019)
Currency
Euro
Business language
Estonian
English is widely spoken
GDP per capita
$23,330
UK is $41,030 (IMF, 2019)
Economic growth
4.8%
(IMF, 2019)
Time zone
UTC +2
Opportunities for exporters
There are opportunities for UK companies across a broad range of industries. Our trade advisers in Estonia have identified particular opportunities for UK businesses in the following sectors:
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Technology
The information communication technology sector is well-developed. Many e-services have been developed in the public and private sector, for example i-voting, e-banking, e-prescriptions, e-parking, e-school, e-health and e-residency. There are opportunities for UK businesses to cooperate with cutting-edge technology companies. Products and services which are unavailable from local providers will also be of interest.
IT research and development
Significant corporate research and development (R&D) takes place in Estonia in areas such as AI and big data. Estonia’s IT R&D ecosystem is helped by modern digital infrastructure and a pro-business environment which is free from red tape and promotes innovation. Estonia aims to develop 5G connectivity in a way that enables the free movement of data, development of innovative services and the introduction of AI.
Cyber security
Estonia has unique expertise in the research, development and management of cyber security solutions and systems. It is home to the NATO Cooperative Cyber Defence Centre of Excellence (NATO CCDCOE) and the European Agency for the operational management of large-scale IT systems (EU LISA). World-leading cyber security and blockchain companies use Estonia as a base to research, develop and manage consumer, enterprise and government solutions. There are opportunities for UK companies to bid for tenders.
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Energy
Estonia has a fast-growing sustainable energy sector which includes wind, biomass and waste-to-energy. There are also opportunities in several offshore wind projects which are in the early planning phase.
Natural gas
Plans for the construction of a liquefied natural gas terminal are under way. There are opportunities for UK companies to provide consultancy, development and project delivery services, operations and maintenance.
Offshore wind energy
The wind farm near Hiiumaa is expected to enter construction after 2020, when the economic case for the project improves. Opportunities for UK companies include consultancy, development, project delivery, operations and maintenance.
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Infrastructure
Estonia has extensive opportunities in construction, engineering and rail transport. There are also opportunities in road transport, ports, hospital and airport infrastructure. Potential development projects include industrial parks, smart city developments and creative city developments.
Rail Baltica
Rail Baltica is an EU priority project which plans to link Finland, the Baltic States and Poland. The project will run until the network is operative in 2026. Opportunities include consultancy, construction, development of railway infrastructure, supply of rolling stock and railway infrastructure equipment.
Major developments in healthcare
Major developments in healthcare infrastructure are expected over the coming years, including in Tallinn and Viljandi.
Developments around the Tallinn Old City Harbour
Development is continuing in the harbour area, with construction of new developments and the planned renovation of existing buildings like Tallinn Linnahall. This creates opportunities ranging from consultancy to construction services.
Doing business in Estonia
Prepare to export
VAT
If you’re registered for VAT in the UK, it may be possible to zero-rate the goods you export to Estonia, provided certain conditions are met.
VAT is charged at 20%. Rates of 0% and 9% apply to certain goods and services.
You can find more information on tax rates in Estonia through the Estonian Tax and Customs Board.
Corporate tax
There is no corporate income tax on retained and reinvested profits.
This means that Estonian resident companies and the permanent establishments of foreign entities (including branches) are subject to 0% income tax for all reinvested and retained profits, and a 20% income tax for all distributed profits (both actual and deemed).
You can find further information on corporate tax from the Estonian Investment Agency.
Customs
You are encouraged to use a customs clearance agent familiar with Estonian customs clearance formalities.
The Estonian Tax and Customs Board gives details of all relevant regulations concerning legislation, formalities, duties and tariffs in Estonia.
Regulations
Products and services must meet relevant EU safety standards. These include clear instructions on proper use and warnings against misuse. The Estonian Centre for Standardisation (website in Estonian) is responsible for standardisation, metrology and accreditation.
All consumer goods should have a translation in Estonian attached to the packaging. This is most commonly done in the form of a post-production sticky label. Failure to do so can lead to prosecution.
Ingredients of foodstuffs and consumption instructions must be clearly stated along with the importer’s and producer’s details.
Pharmaceuticals must be approved for use by the Estonian State Agency of Medicines. They should include an Estonian, and for some medicines Russian language, insert in the packaging.
You must obtain a license to carry out certain activities. Sectors affected include:
- mining
- public, long distance telecommunications
- retail sales of pharmaceuticals
- production of alcohol and tobacco
- gambling
- banking
- insurance
Trade barriers
Check for any reported barriers to trading with Estonia.
Report any trade barriers that are affecting your business so we can help fix them.
Operating in Estonia
Intellectual property
As a first step, we advise you to speak to an intellectual property lawyer if you think you need patent protection when exporting.
EU IP law has a major impact on local law. However law covering intellectual property is not totally harmonised within the EU. In particular patent protection is only harmonised to a certain degree.
The Estonian Patent Office (website in Estonian) gives an overview of legal protection of patents, trademarks, utility models, industrial designs, geographical indications and integrated circuits in Estonia.
Next steps
DIT can advise you on doing business abroad, and help put you in touch with other people who can help such as lawyers and distributors.
