Company in Estonia

Starting cryptocurrency company in Estonia

I. About licenses   |   II. Requirements   |   III. Timeframe  |   IV. Opening bank account   |   V. Taxation   |   VI. ICO   |   VII. Legal opinion



Cryptocurrency exchange and wallet service provider licenses

Companies that deal with virtual currencies can apply for 2 different activity licences:

1. Providers of a service of exchanging a virtual currency against a fiat currency

2. Providers of a virtual currency wallet service

General about the licenses above

The operating licences are issued by Estonian Financial Intelligence Unit (FIU) which is an independent structural unit of the Estonian Police and Border Guard Board. Link

When applied together, two applications must be submitted and two different licenses are issued.

The main acts that regulate the activity: Link

The company is qualified as a Financial Institution but has no special reporting requirements to tax authority. Accounting must be done like any other company.

No special reporting to the regulator but FIU can always make precepts and inquiries about the company's activities.




Documents presented to officials

  • Certificate of the register of convictions (a.k.a. criminal record) for all related persons (shareholders, board members, ultimate beneficiary owners and responsible person)
  • Passport copies of all above mentioned persons

As a rule all documents must be in english (or russian) and certified with an apostille. These documents may not be older than 3 month. It is also required to present rules of procedure for AML purposes. Usually this is prepared by KRM Advisor. Officials have right to ask additional information and they ofter ask:

  • CV-s of related persons
  • Description of planned activities.

License obtaining process

To apply for above mentioned license(s) it must be done via company registered in Estonia or registered branch office of a foreign company in Estonia. As a rule we suggest to use local company not branch office as branch registration is clearly more complicated task.

When local company is registered and all required documents collected we will pay state fee 345 EUR and apply for the license.

During  the licence application process we also assist in current matters as authorities often have additional questions or they need clarifications.


Additional transparency requirement

In case of corporate shareholder (of an Estonian cryptocurrency company), officials will ask criminal records for the shareholder company and ALL related persons to that company (shareholders and board members). This means that using corporate shareholder in your structure might complicate things a lot. Therefore our suggestion is to avoid using corporate shareholders.





Company registration

Once we have all initial information from you it takes usually 1-2 days to create the company.

In case you choose a ready made company - it is already created and ready to be transferred to you.

To transfer company to your name you need to visit Estonia for 1 day. During that day we transfer the company shares and board membership to you. Changes will be visible in register in few days (max 1 week).

In case you want to start the company remotely (without visiting Estonia) - it takes usually 2-3 weeks additional time and involves some additional costs.

Registration for virtual currency services license

After the company is registered and we have received from you info and documents mentioned above we can do the rest of the job and apply for the license.

The process of an application

An application for activity licence shall be processed by the Financial Intelligence Unit (FIU) by granting or refusing to grant the activity licence within 30 working days as of the date of submission of the application.

During the process FIU has the right to request additional information and explanations about the planned activity. License will be issued after all required info is concidered sufficient and conditions fulfilled.

Real results of license registrations

Currently we have succeeded to get above mentioned licenses
registered in ca 2-3 weeks with 100% success rate.



Opening bank account for cryptocurrency company

New reality with bank accounts

Due to rising importance of AML rules all banks must know their clients, which means that they have right to refuse to open account in case they do not understand client's business or consider it too risky for the bank.

As a rule in case beneficiary owners of an Estonian company are foreigners and the company has no reasonable connection in Estonia (clients or vendors or employees), then local bank in most cases refuse to open bank account. In other words it means in most cases trying to open bank account for cryptocurrency company in Estonia is waste of time and due to that today we do not suggest local banks.

Options to open (bank) account

As the situation with bank account opening changes daily basis - we suggest to deal with bank account opening after you have created the company and obtained the licenses.

In the world there are many banks and PSP-s (Payment Service Provider) who accept (often just imaginary) higher risk related to cryptocurrency companies. For clients it means usually higher fees. However - full KYC process must be done and there is still no guarantee that account will be opened as this is solely bank's to decide.

We and some of our our partners have several options for account opening and when you are ready with the company and license then it is time to decide where is most reasonable to start account opening process.



Taxation of cryptocurrency transactions in Estonia

Taxation of virtual currency transactions depend on the nature of the transaction. 

There is no direct taxation if the token is sold or bought similar to security or investment or other currency. 

Regular sales

Sales are counted as normal/regular, even when payments for goods and services are received in virtual currencies. For accounting purposes the transaction must have the value in EUR and VAT rules apply as per usual/normal transaction.

Payments for goods or services in the form of virtual currency does not free you from following VAT rules. If VAT is applied in FIAT currency payments then it should be applied in virtual currency payments as well. VAT returns must be submitted in EUR and VAT will be paid/returned in EUR.

Read also Link
About corporate profit taxation in Estonia you can read here: Link



Initial coin offering (ICO) in Estonia

The Estonian Financial Supervisory Authority (EFSA) is of opinion that tokens in terms of the offerings mentioned above, depending on their structure, might be considered as securities according to the definition set forth in the current Securities Market Act (SMA) as well as in the Law of Obligations Act (LOA). In assessing whether or not securities laws apply, the EFSA states that substance should be considered over form.

Every ICO is unique and should be assessed on its own characteristics. The EFSA explains that tokens which give investors certain rights in the issuer company or whose value is tied to the future profits or success of a business are likely to be considered securities in the meaning of § 2 of the SMA. Therefore, the offering of such tokens may constitute as the issue of securities and, depending on its exact nature, be governed by the rules that of public offering as prescribed in § 12 of the SMA. That being the case, it is required to register a respective prospectus in the EFSA.


As regards to ICOs encompassing the offering of instruments qualified as securities, it is important to note that the entities facilitating such ICOs or secondary trading of such tokens may be considered as providing investment services as stipulated in § 43 of the SMA. In particular, by organising such an offer or issuing tokens or bringing together the interests for acquisition and transfer of tokens under uniform conditions. The abovementioned services may be provided as a permanent activity only by authorised entities.

The EFSA notes that ICOs may also be governed by the Credit Institutions Act (CIA). This might be in the case where the main activity of the business is to provide loans on its own name and account and such activity is being financed through the repayable funds received from the public in the form of an ICO.

To conclude with, the EFSA states that although a new technology is involved, and what is being sold is referred to as a token instead of a share or equity, a token may still qualify as a security as set forth in the Estonian legislation. Businesses should complete an analysis on whether a security is involved.