Estonia

Investing

FDI in figures

Foreign direct investment is regularly growing since 2006 to reach 1,962 billion Euros in 2007.

Foreign Direct Investment	2004	2005	2006
FDI of inward flow (millions USD)	971	2,879	1,674
FDI inward stock (millions USD)	n.c.	n.c.	12,664.0
Performance Index*, world ranking	17	7	8
Potential Index**, world ranking	34	34	n.c.
Number of Greenfield investments	43	63	54
FDI inwards (in % of GFCF)	30.5	79.8	30.1
FDI stock (in % of GDP)	n.c.	n.c.	77.2

Source: UNCTAD, World Investment Report

Note: * The UNCTAD Inward FDI Performance index is based on a ratio of the country's share in global FDI inflows and its share in global GDP. ** The UNCTAD Inward FDI Potential index is based on 12 economic and structural variables such as GDP, foreign trade, FDI, infrastructures, energy use, R&D, education, country risk.

Why you should choose Estonia

Strong points: Estonia has a great potential in attracting foreign direct investment and has been one of the leading countries in Central and Eastern Europe in terms of inward investment pro capita. Main advantages are: a sound and liberal economic policy, an excellent business climate with a highly trained and flexible labor force, European Union membership, location at a crossroads between Europe and Russia.
Weak points: Estonia has a small domestic market and in terms of competition in the Estonian market, Finnish and Swedish products are highly dominant. Besides, it should be noted that the purchasing power is not as high as it could be in other Nordic countries or Western states.
Government measures to motivate or restrict FDI: Estonia has one of the most liberal investment and trade policies in Europe. In terms of trade policy, government intervention, property rights, Estonia has advanced policies. Above all, the taxation rate is quite low with comparison to other Nordic countries, which is one of the strong points of the country. To encourage companies and attract foreign direct investment, all corporate reinvested profits are exempted of income tax since 2000.

Administrative procedures relative to foreign investment

Freedom of establishment: Freedom of establishment is guaranteed.
Acquisition of holdings: A majority holding interest in the capital of a local company is legal in Estonia. However, it is possible to get information directly from the Estonian Agency of Investment which is the unique body with the aim of informing foreign investors.
Obligation to declare: Estonia does not apply any restrictions or limitations on foreign investment. However, certain activities (mainly those linked to medicine and safety) remain subject to an "activity license".
Competent organization for the declaration: Estonian Investment Agency
Requests for specific authorizations: Estonia has no exchange controls or restrictions on foreign investment. The amount of foreign capital invested in Estonian business enterprise is unlimited and companies can be in full foreign ownership. Foreign companies enjoy equal rights with local ones. A license should be obtained for activities in the following areas: mining, public utilities, reconstruction of railways, airports, ports and dams, long distance telecommunications, retail sales of pharmaceuticals, production of alcohol and tobacco, gambling, banking. The basic rules for licensing are included in the Regulation of the Estonian Government from May 8, 1990 on Issuing Statutory Activity Licenses.