Estonia is a country that was previously part of the USSR and was the first to join the EU. Such enormous economic growth is mainly because the government has emphasized the development of IT technologies and created a good investment climate. Today, the country still needs to change its tradition, which helps to thrive. Crypto regulations in Estonia appeared much earlier than in other countries. This jurisdiction has become a true pioneer in this matter and has tried to do everything possible so that blockchain technologies can actively develop.
Today, many crypto organizations choose the Estonia crypto license because this jurisdiction has many advantages. Simplified taxation is in effect here, there is an excellent financial climate, and there are no complex requirements for the applicant. Today we want to discuss in more detail why this jurisdiction is so attractive and how to get a work permit here.
Yes, residents of this country can store crypto assets, use them to pay for goods and services, exchange, sell and buy. They can use various exchanges, electronic wallets, and other tools. If you want to use something other than crypto assets within the legal framework, you need to use the services of a licensed company only. So, each organization that provides services for exchanging or storing crypto assets must obtain a work permit.
To get a crypto permit, you must be prepared to pay a relatively large fee. So, you need a state fee of 3,300 euros. This fee is fixed regardless of the size of the company. Earlier, the price was 10 thousand euros, but the government has significantly reduced this fee. Also, you need to deposit authorized capital in 100 to 250 thousand euros. You can only do this with the help of a qualified lawyer. If you turn to our company for help, the cost will depend on the services that you need:
You can do some of the work yourself, for example, open a bank account or find an office, in which case obtaining a license will be cheaper. But, if you do not want to waste time or do not have the opportunity to spend a lot of time in Tallinn, then you can entrust all the difficult work to our specialists.
Usually, you can get a work permit within 3 months. To begin with, you need to register a company and, collect the necessary documents, check how your company meets all the requirements. After applying, the state authorities have 2 months to review your application. If they have questions, they can extend the review up to 6 months.
The government of this country overcame corruption and created an excellent investment climate, which made it possible to attract investors from different countries. In addition, government agencies have done everything to develop the IT industry and established favorable taxation. It set up the e-residency program, which allowed organizations to work remotely from around the world. This program brings in more than 1 billion euros annually. Every company here has to pay a tax of 20%, regardless of size, which makes this jurisdiction incredibly attractive for different crypto organizations. Thus, this jurisdiction has many essential advantages:
In addition, obtaining a permit in this jurisdiction will give you the right to work legally throughout the EU.
In this jurisdiction, crypto organizations can operate legally only to obtain a work permit. Otherwise, all companies that do not receive a work permit will be recognized as fraudsters and fined, and the software will be blocked. A permit in this jurisdiction makes your company more prestigious among investors and potential clients. Thus, it becomes much easier for companies that have received a work permit here to attract additional investments from different countries and develop rapidly.
A crypto license is issued on a perpetual basis; however, there are several reasons why your company may lose its work permit:
You can quickly lose your license if your company has yet to start working within six months. So, by the time you get permission, you should have ready the software you plan to work with. The law does not prohibit companies from changing a director or board member but requires the new person to pass a basic background check. The new director must have work experience in this light and specialized education, specific skills, and knowledge to manage such a company. The AML officer must constantly monitor the company’s activities and report to the regulatory authorities. If they do this irregularly or make mistakes, the company may be suspected of fraud or money laundering, which can lead to losing a crypto license. If, for some reason, you lose your work permit, you lose the necessary level of trust, which means that it will not be possible to obtain a license again in other jurisdictions.
If businessmen want to obtain a crypto license in Estonia, the organization must comply with the provisions of this jurisdiction. As already mentioned, this jurisdiction is interested in developing the crypto business. Therefore it does not set complex requirements. Among the most important are the following:
In addition, your company must have a corporate IBAN account. Local banks do not open accounts for crypto companies, but you can use the services of other European banks that operate in this territory. Your organization must have a physical office in that country where local security specialists will work. Their responsibilities will include monitoring compliance with KYC and AML policies and compiling and submitting reports to government authorities upon request. After applying for a license, you must pass an interview with government agencies to confirm your skills and knowledge and answer questions about the company’s operation. If businessmen are ready to work honestly and openly to comply with the law, they will not have problems obtaining a cryptolicense.
EU countries have recognized cryptocurrencies as a means of payment, but they are regulated differently in each country. So in Estonia cryptocurrency is controlled more like goods, not electronic money. If you are afraid of Estonian cryptocurrency regulation, there is no particular reason for this. There are very loyal laws that allow crypto organizations to develop rapidly. Here you will be offered to obtain 2 types of permits. It depends on what activities your company makes a profit from. If you receive income from the exchange of crypto assets, you need a license for such a business. But, if you store assets or keys and get paid for them, you need a permit for wallets.
Your company must have a sustainable business plan for 2 years, and you must follow this. Otherwise, the government authorities may have questions. They also can provide reports on the company’s activities sparingly. If inspectors have questions about these reports, they can revoke the license.
By law, all legal entities are required to pay VAT. However, several organizations are exempt from paying this tax. It usually includes government agencies and companies that benefit society or are involved in charity work. This country has pretty simple taxation rules. Financial transactions using such assets are not subject to VAT. It is mainly because crypto assets here are perceived from a legal point of view more like goods and not electronic money. Crypto organizations are taxed in the same way as other legal entities:
Your company decides how to distribute dividends, so, likely, you won’t have to pay the final tax at all. As you can see, taxation here is much simpler than in other jurisdictions, such as Lithuania or Poland. It is one of the main reasons why many organizations choose this particular country.
Your company is subject to VAT if you profit from holding crypto assets. It is because crypto wallets are a technological means for storing private keys and are not required for transactions, which are exempt from taxation. However, taxation may depend on the list of services provided by the company.
Estonia’s cryptocurrency regulation exempts miners from paying taxes. It is believed that the work of this sector is connected more with BTC. In addition, transactions that use mined crypto assets generate an offer exempting taxes.
If you use the paid services of various platforms, this does not exempt you from paying VAT. It is believed that crypto platforms do not provide financial assistance (in this country, crypto is perceived more as a commodity and not as electronic money), so you are not exempt from paying this tax.
Previously, this jurisdiction offered crypto companies to issue 2 types of licenses – for wallets and exchanges. However, it was decided to combine them into one. Today, it does not matter what services you provide using crypto assets; you need to obtain one work permit. To obtain a license, your company must meet specific requirements:
To learn more about the regulation of cryptocurrency in Estonia, you should get a full consultation from our experts.
If businessmen want to create a cryptocurrency organization, they must be prepared for the fact that they have to go through a long and somewhat difficult path:
Each stage is of great importance, but our company specializes in solving legal issues, so we want to discuss them in more detail.
You must register a company in the chosen jurisdiction to get a crypto currency exchange license. Next, you need to prepare documents, as well as open a bank account. The problem is that local banks do not tend to open accounts for crypto companies as they consider it risky, so you should pay attention to foreign banks that operate in this jurisdiction. After opening an account, you must fully deposit the authorized capital here.
You also must ensure you comply with all KYC and AML requirements. After that, you can apply for a permit. State authorities check all information within 2 months. If they have questions, they can return the documents for revision, and you will have a few days to resolve the problem.
To obtain a work permit, you must collect a large document package. It can be challenging to understand all the intricacies, so it is better to leave this work in the hands of professional lawyers.
However, our specialists will ask you to provide complete information about you and the team members and how your company functions.
Since Estonia is part of the EU, stringent AML rules apply here. So, every crypto company must prevent money laundering and financial terrorism. Such organizations must adhere to the same rules as financial institutions. In 2022 this law was amended; here, special attention is paid to establishing due diligence obligations about PUVA to reduce the risks of money laundering and terrorist financing. Now all crypto companies, including those that work with DeFi, must adhere to this law. Here, companies cannot provide services anonymously. So, all clients must go through the verification process. The organization cannot provide services to people who have previously been involved in fraud, money laundering, or financing terrorism. In addition, you are required to provide customer information to government regulations upon request. For example, regulators require:
Compliance with AML is given great importance here. So, we advise you to contact our specialists so that they check the work of your company for compliance with these requirements, so that you can be sure that there will be no problems with the law.
Depending on the type of tokens you issue and offer, they may be subject to securities, commodities, or e-currency laws. Thus, it depends on the kind of token and services that the law regulates your activity. Understanding these issues is extremely difficult, so you should seek help from specialists. If you do not follow the legal framework of the ICO, you may be recognized as a fraudster and threatened with imprisonment of up to 5 years.
In Estonia crypto industry is regulated by a large number of different government bodies:
Each of them is responsible for its range of work, so the Ministry of Finance, for example, is responsible for implementing tax, fiscal and financial policies and
As you can see, it is rather difficult for a person who needs a legal education to understand the legal framework. In addition, since the crypto industry is very young, the laws governing it are constantly changing, and keeping track of all the changes takes time and effort. That is why it makes sense to seek help from lawyers specializing in this issue. Our company employs a large team of professionals who will help you complete all the documents and get a license as quickly and efficiently as possible.
CryptoLicense is a company that specializes in helping you obtain a crypto work permit. It has a large staff and a lot of experience in the industry. Among the main advantages of such cooperation are:
We provide services for obtaining a crypto license and in the following jurisdictions:
Crypto license Estonia
The specialists of our company are ready to cooperate with large corporations and small startups. They are well aware of the peculiarities of this jurisdiction’s work and will help obtain a work permit in the shortest possible time. If you want to work legally in the EU, a good solution would be to get a crypto exchange license in this jurisdiction. There are straightforward and transparent rules for regulating this industry, low taxes, and low requirements for applicants. Here your organization will be able to develop, find new investors, and increase its audience legally.
Any organization that is ready to work legally must pass the test and then can start working.
You must get a work permit if you want to exchange, buy or sell crypto assets.
You must pay a fee of 3,300 euros.
Yes, every organization is required to pay taxes. We wrote about this in more detail above.
Senior Partner, Lawyer
Senior Partner, Lawyer