7 Advantages of Setting Up a Holding Company in Estonia

TL;DR: Estonia offers digital freedom, tax deferral on profits, EU access, and simplicity for international shareholders—all reasons why savvy entrepreneurs choose it for holding structures.

💡 Related: How Dividends Are Taxed in Estonian Holding Companies

📌 See also: Compare Silva Hunt service packages for holding setups

If you’re interested in setting up a holding company in Estonia, our team of experts and partners is here to guide you through the incorporation process.

Why Estonia for Your Holding Company?

In the realm of global business, establishing a holding company in Estonia offers numerous advantages for entrepreneurs and investors. This article explores why Estonia stands out as a prime location for such entities, emphasizing the unique opportunities and business benefits available for international founders and e-Residents alike.

Interested in setting up a holding company in Estonia? At Silva Hunt, we’re committed to providing you with effective strategies and expert knowledge to facilitate your business success.

Understanding Holding Companies

Whether launching a new venture or restructuring existing ones, the right business structure is key. A holding company is an entity that owns shares in other companies—its subsidiaries. According to the Estonian Commercial Code, a parent company has majority voting rights or significant influence over another company.

These structures are valuable for risk management—they help isolate operational risk from investment capital.

Types of holding companies include:

• Active holding company – engages in economic activities directly and through subsidiaries.
• Administrative holding company – governs strategic and capital flow decisions of subsidiaries.
• Financial holding company – serves for asset management and funding expansion.
• Organizational holding company – oversees internal structure and responsibility allocation.
• Passive shareholder – holds ownership without managing day-to-day activities.

In Estonia, holding companies can function with any of these purposes. While headquarters provide centralized functions, Estonian holding companies focus primarily on ownership and tax optimization.

7 Reasons Why Setting Up a Holding Company in Estonia is Beneficial

1. Business-Friendly Tax System

Estonia’s corporate tax system is unique in Europe. Profit is not taxed annually—it is only taxed upon distribution. As of 2025, the dividend tax rate is 22%, calculated on a net basis. This allows you to reinvest profits tax-free indefinitely until payout.

2. Well-Functioning Digital Government

Estonia’s e-Residency program allows you to register and manage your company online. Shareholders and board members can use smart ID cards to access services like the business register and digital signatures remotely.

3. Ownership Clarity and Simplicity

Holding companies can be 100% owned and managed by the same person. Updates in the business register are public, transparent, and can only be executed by official representatives. Share transfers can be done either via a notary or—if registered in the Estonian securities system—by simple written agreement.

4. Tax-Free Share Transfers

Under Estonian tax law, selling shares of a holding company is not subject to capital gains tax, unless the company owns Estonian real estate. This makes it ideal for clean exits or restructuring.

5. No Tax on Share Sales by Holding Companies

If an Estonian holding company sells shares in a subsidiary—whether based in Estonia or abroad—no income tax is triggered unless the profit is distributed as dividends. This allows for tax-neutral capital movement and reinvestment.

6. Availability of Professional Services

Estonia offers a wide range of professional service providers that support compliance—from providing a legal address to managing accounting, tax reports, and filing annual returns. An official provider list is available on the e-Residency website.

7. Expert Tax Advice

Professional consultation is vital to optimize structures and navigate changes in the Estonian tax system (notably updated in 2025). Advisors can help reduce risks and increase capital efficiency for international entrepreneurs.

Final Thoughts

Setting up a company in Estonia remains one of the most efficient ways for global entrepreneurs to manage cross-border investments and benefit from the country’s innovation-friendly ecosystem. With deferred taxation, full digital administration, and expert local services, Estonia continues to lead in international business infrastructure.

Silva Hunt is a e-Residency service provider who offers a safe haven to active companies while being experienced in structuring holding companies.
If you are ready to open a Holding Company in Estonia or have questions about Holding Companies, check our packages and prices here.