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Estonian Company and e-Residency

Estonian Company and e-Residency in practice

An Estonian private limited company (OÜ) appeals to Slovak founders of SaaS and e-commerce businesses for two reasons: fully digital administration and the fact that Estonia taxes profit only when it is distributed. For a company reinvesting its profit for years, that can make sense. For one that pays dividends every year, often not. And if the Estonian company is in fact run from Slovakia, it becomes Slovak tax resident and the whole idea falls apart.

We first check whether the Estonian model suits your business and compare it with a Slovak limited company over five and ten years. If it does, we help with the e-residency application, coordinate setting up the OÜ and prepare a plan for real presence in Estonia so the company withstands the Slovak CFC rules. On the Slovak side we assess DAC6, transfer pricing and related-party notifications.

What we help with

  • Assessing whether the Estonian model fits your business
  • Comparison with a Slovak limited company over five and ten years
  • Help with the e-residency application
  • Coordinating the OÜ set-up and beneficial owner registration
  • Plan for real presence and management in Estonia
  • Slovak side: DAC6, transfer pricing, related parties

Worth knowing

E-residency is not residence

E-residency is a digital identity that lets a foreigner use Estonian e-services, set up an OÜ and sign documents remotely. It is neither residence nor tax residence; an e-resident remains tax resident in Slovakia.

Management from Slovakia

If an Estonian company is effectively managed from Slovakia, it may become Slovak tax resident under Section 2(d)(2) of the Slovak Income Tax Act (place of effective management).

CFC risk

Because Estonia does not tax undistributed profit, the Slovak CFC rules in Section 17h may catch the OÜ's passive income. The key is showing genuine economic activity: clients, local decision-making and active income.

Dividends to a Slovak company

Where the shareholder of the OÜ is a Slovak company, dividends it receives are outside the scope of Slovak tax (Section 12(7)(c) of the Income Tax Act).

Common questions

  • No. A company managed from Slovakia becomes Slovak tax resident under Section 2(d)(2) of the Income Tax Act. E-residency allows remote administration, but key decisions must be taken in Estonia.

  • It can, especially with passive income. If the OÜ has real clients, local decision-making and active income, the genuine economic activity exception applies. The assessment is always case by case.

  • Mainly SaaS, e-commerce and IT companies that reinvest profit over the long term and sell across borders. For companies paying out profit regularly, a Slovak limited company tends to be simpler.

Related articles

Articles are in Slovak.

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This page is for general information, reflects Slovak law at the time of writing and is not a substitute for advice on your particular matter.