Estonia Allows its Businesses to use European Bank Accounts when Registering Share Capital

The Estonian parliament on 5 December passed an amendment to the country’s Commercial Code to allow businesses registered in Estonia to use bank accounts in any European Economic Area country when registering share capital.


The amendment removes the requirement that limited companies must use an Estonian bank account when registering share capital. From January 2019, they can instead use a “credit or payment institution in the European Economic Area” for this, the Estonian e-residency team said in a blog post.

“This change means that all limited Estonian companies can conduct all their business activity using any business account for their company from across the Europe Economic Area for the first time,” the e-residency team added.

According to Kaspar Korjus, the managing director at e-residency, there is never one banking solution that suits every company or is available to every company, whether it is run by a citizen, a resident or an e-resident.

The change takes effect in January 2019

“That’s why the most important way to improve business banking for Estonian companies is to provide greater freedom of choice. This amendment to the Commercial Code will help more people around the world benefit from e-residency and unlock greater investment into Estonia, while preserving the trusted nature of our business environment,” Korjus said.

The Estonian Commercial Code includes a requirement for limited companies to register a minimum share capital of €2,500, which can be deferred for up to ten years from the company’s founding. During this time, the company can use business banking either inside or outside of Estonia. However, when they are ready to register share capital though, the previous Commercial Code stated that only an Estonian credit institution could be used. This effectively compels Estonian companies to open an Estonian bank account at some point, regardless of whether they want it or ever use it for anything else.

The revised Commercial Code, which takes effect from January 2019, will instead state that share capital must be registered using “a credit or payment institution in the European Economic Area (EEA)”, which includes all EU countries plus Iceland, Liechtenstein and Norway.

This not only expands the countries where the banking providers can be based, but also the types of banking providers offering these business accounts. A “credit institution” is a bank, but a “payment institution” covers many financial technology companies too, the e-residency team explained.

Non-residents benefit the most

“The change to the Commercial Code will benefit all Estonian limited companies that want to take advantage of this greater freedom in business banking, whether they are run by citizens, residents or e-residents. However, non-residents (which includes e-residents) have the most difficulty obtaining an Estonian bank account for a combination of reasons. For a start, Estonian banks still choose to verify their clients in person so a visit to Estonia is required, which can mean quite a large investment of time and money depending on where they are in the world.

“In addition, banks have more complex risk considerations due to the nature of their business models and so, for understandable reasons, are not able to serve the broad spectrum of non-residents whose companies would make a positive contribution to our country.”

“This change will have a significant effect on improving the e-residency programme and helping more people around the world benefit from it, while unlocking foreign investment into Estonia,” the e-residency team added.



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