Crypto License

Virtual Currency Service Provider

The procedure of obtaining a licence for a crypto currency trading and exchange project is a complex and time-consuming process that demands a certain level of knowledge and experience. Our company is one of the first in the market to offer professional, legal consulting for companies that are interested in receiving a cryptocurrency exchange licence that will enable you to bypass a myriad of legal questions from the side of the authorities.

As of today, only a few countries in the world are issuing cryptocurrency exchange licenses. Our company is able to assist you with obtaining a crypto license in Estonia.

Estonia

3-6 months to obtain license and commence operations

€ 12k minimum amount in accordance with legislation

€ 300k budget for the start of the project for 1 year


Kindly note that provided numbers are approximate and can vary depending on each particular case.

High-level conditions for business, everything online and other benefits are available

About
Estonia is located in Northeastern Europe, bordered by the Baltic Sea to the west, the Gulf of Finland to the north, Latvia to the south, and Russia to the east. It is divided into 15 counties and 79 local municipalities, with Tallinn as its capital city. Estonian is the official language of Estonia, and the currency is the euro (EUR).

The Estonian economy is highly flexible, open to international capital and trade flows and supported by a modern business infrastructure. Opportunities provided by Estonia's business environment and role as a gateway to growth will drive further investment and deeper regional linkages.

Estonia has a strong and stable financial sector characterised by zero failures during the financial crisis. It portrays notable Nordic and German influence.
Establishing a company in Estonia
The private limited company (osaühing or OÜ in Estonian) is the most common form of business in Estonia.

The advantages of a private limited company:
  • Simple and quick registration;
  • A relatively low share capital requirement (2500 euros);
  • Shareholders have no personal proprietary liability for the private limited company's obligations.


A private limited company can be established without contributing share capital if the proposed area of activity does not require capital investments. The share capital of such a company will be formed by the liabilities of the founders amounting to the sum they promised to provide as share capital contribution.

Depending on the company's area of activity and size, a varying number of additional steps must be taken. You will first need to open a bank account for the private limited company where the company's share capital is to be deposited. You will already have transferred this sum to the court's deposit account or the bank's e-start-up account when you formed the company. It is not possible to open a bank account without the company's Commercial Register number.
Requirements
Virtual currency service provider license The activity of financial service providers is regulated by the Money Laundering and Terrorist Financing Prevention Act.

The Financial Intelligence Unit is responsible for the national supervision of compliance with the requirements of the activity licence and the prevention of money laundering and terrorist financing.

The submitted application will be processed within 60 days of submission of all the required information. This can be extended up to 120 days.

The activity licence will be issued electronically and is valid for an unspecified term (unless the activity licence is applied for a specific term).

An entrepreneur applying for an activity licence in the field of providing virtual currency services must have a share capital of at least 12 000 euros which has been fully paid in cash.

The location of the head office shall be assessed on the basis of the residency and nationality data of the members of the board of directors (a member of the board of directors must be either an Estonian resident or national). The place of business must be a physical office which is actually used by staff of the enterprise to perform the tasks stipulated in the Money Laundering and Terrorist Financing Prevention Act while providing the service.

In order to apply for an activity licence for a provider of virtual currency services, a state fee of 3300 euros needs to be paid to the Ministry of Finance. The state fee has to be paid before submitting the application.

Requirements for the applicant In order to be approved, an entrepreneur must fulfil the following conditions of the subject of review of an activity license:

  • The enterprise, a ma member of its management body, a procurator, the beneficial owner and the owner do not have a valid penalty for an offence against the authority of the state or for money laundering or any other intentionally committed criminal offence.
  • The enterprise, a member of its management body, a procurator, the beneficial owner and the owner have a good business reputation. The existence of a good business reputation shall be assessed by the provider of the activity licence, taking into account the person's past activities and circumstances connected to this. A good business reputation is presumed to exist unless there are circumstances that cause it to be questioned.
  • The contact person, designated by the entrepreneur pursuant to Section 17 of the Money Laundering and Terrorist Financing Prevention Act, complies with the requirements stipulated by the law. Only a person who has the required education, professional qualifications, necessary capabilities, personal characteristics and experience and impeccable reputation necessary to perform the duties of a contact person may be designated as such.
  • If the entrepreneur has a subsidiary for the purpose of operations and the activity licence applied for in the name of the enterprise is sought, the subsidiary must also comply with the above requirements.
  • An entrepreneur applying for an activity licence in the field of the provision of virtual currency services must have its registered location, head office and principal place of business located in Estonia. Alternatively, it is a foreign company operating in Estonia through a branch which is registered in the Commercial Register and its registered location and head office are in Estonia. The location of the head office shall be assessed on the basis of the residency and nationality data of the members of the board of directors (a member of the board of directors must be either an Estonian resident or national). The place of business must be a physical office which is actually used by the staff of the enterprise to perform the tasks stipulated in the Money Laundering and Terrorist Financing Prevention Act while providing the service.
  • An entrepreneur applying for an activity license in the field of providing virtual currency services must have a payment account with a credit institution, an electronic money institution or a payment institution established in Estonia or in a Contracting Party of the European Economic Area, which provides cross-border services or has established a branch in Estonia.
Benefits
High-level conditions for business.
The entrepreneurial ecosystem in Estonia is highly valued worldwide, supplying professional support while ensuring your comfort at every stage of business development.


Fast and easy. A company can be established online in 15 minutes and taxes can be dealt with in just 5 minutes!


Everything is online. Unique digital services make the life of entrepreneurs easier. The model of Estonian e-government is the most innovative in Europe!


Friendly environment. Estonia is one of the most crypto-friendly jurisdictions in the world. In obtaining the cryptocurrency license, you can be sure that your business will be operating in a safe and legal space.


Liberal tax system. Communication with the VFSC for the receipt of licence and licence issuance; Incorporation and obtaining a license usually takes 3-6 months.
Required steps
Option 1 A private limited company can be registered electronically in the Company Registration portal of the e-Business Register only, if:
  • all persons related to establishment (members of the management board, founding members, etc.) are able to sign the application of initial entry and establishment documents digitally;
  • the private limited company is established without an immediate share capital contribution or with a monetary contribution made electronically in the course of preparing an application in the Company Registration Portal of the e-Business Register.
Option 2 To streamline the process of establishing a private limited company through a notary, you will need to submit the following information:
  • memorandum of association, if the company is registered at a notary or, if the company is registered under electronic expedited procedure, a template articles of association, the form for which is provided;
  • articles of association (except for in the case of electronic registration under expedited procedure);
  • application;
  • information on communications devices;
  • bank certificate regarding deposit of share capital;
  • certificate regarding payment of state fee (except in the case of electronic registration)


Notary offices will also have the samples of documents necessary for establishing a private limited company.

The registrar will review the petition for entry within 5 working days from its arrival and in expedited procedure, by no later than the next working day from its arrival.

In the Company Registration Portal, the founded company can register as a person liable to value added tax and register their employees during the process.
Taxes
The following transactions are subject to Estonian VAT:
  • Taxable supplies of goods and services (the place of supply of which is Estonia).
  • Taxable imports of goods.
  • Taxable intra-community acquisitions of goods.
The standard VAT rate is 20%. A reduced rate of 9% is applied to books, periodicals (with a few exceptions), hotel accommodation services, and listed pharmaceuticals.

If the taxable supplies of Estonian resident businesses or a PE of a non-resident business in Estonia exceed 40,000 euros in a calendar year, VAT registration is required. Voluntary registration is also possible. Certain transactions of non-resident businesses require Estonian VAT registration without any threshold.

In addition to payment of social tax, unemployment insurance contributions, and compulsory accumulative pension scheme contributions (see below), employers should withhold personal income tax (PIT) at the flat rate of 20% after deduction of the employee's contribution to the unemployment insurance scheme, compulsory accumulative pension scheme, and, if relevant, personal deduction which may be up to 500 euros per month.

Employers operating in Estonia (including non-residents with a PE or employees in Estonia) must pay social tax on certain payments to individuals at the rate of 33% (where 20% is used for financing public pension insurance and 13% is used for financing public health insurance).

The tax period is generally a calendar month, but a calendar year for certain tax objects such as exceeding borrowing costs.

Estonia has transposed the OECD Common Reporting Standard (CRS) as well as Council directive 2014/107/EU amending Directive 2011/16/EU as regards mandatory automatic exchange of information in the field of taxation into domestic law. Estonian financial institutions covered by the CRS must annually report certain income and asset information on certain non-resident account holders to the Estonian tax authorities.
Important information on license application process
1Number of companies licensed As of early July 2021, the number of companies licensed in the provision of cryptocurrency services totals in about 400 companies. At the same time, a year ago the number of companies was three times more.

The decrease in the number of licenced companies was caused by new requirements from the regulator. Many companies were unable to comply with the new requirements so their licences were revoked or temporarily suspended. This should be considered as a good sign as shelter and dormant companies are cleared from the market. 2 Local consulting Since the start of licensing in Estonia, the activity of local lawyers and other advisors has actively increased, who, for inadequately significant amounts of fees created companies in Estonia and received licenses for them. This practice is still active to this day and, unfortunately, this activity on behalf of many law firms does not bring bona fide players to the market.

Since the Estonian state authorities are always ready to provide adequate support in resolving issues, and, to do this in English, it must be done directly, and not through consultants, who, among other things, are not interested in resolving issues, but only in imitation of activities for large rewards. Hereby, we draw attention to the fact that there should always be a clear understanding of the company's real needs and regulatory requirements. 3 Changes pending In September 2021, a proposal was made to the Estonian government to approve a new law to regulate the field of cryptocurrency licensees in Estonia. The requirements are comparable to those that traditional banks are required to comply with.

Among other things, requirements were proposed to increase the minimum capital for licenced companies as well as to implement reporting to the regulator.

If adopted, the new law will contain many more significant requirements than the current law for companies with a cryptocurrency license, as well as for companies that will apply for a license. Learn more about the proposed changes here.

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