In order to successfully set up the cryptocurrency exchange and/or wallet service license an Estonian limited liability company has to be set up. This process can be carried out remotely with no visit required, it usually takes about 5 business days for the registry to process.
The Estonian entity is a regular private limited company which after the license approval will be regarded as a financial institution. However, there are no specific reporting and/or accounting requirements that would be different from managing a regular entity, only inquiries from the FIU may be made periodically about the activities of the company, especially in regard to following the predefined AML/KYC policies. We provide full on-going support, including certified accounting and legal compliance support.
Even though it is theoretically possible to apply for the license(s) with a foreign corporate entity then in practice an Estonian company should be set up. Furthermore, we recommend using private person shareholder(s) structure rather than corporate shareholder(s) for the Estonian entity, because the latter will make it more complex the setup, e.g. in case of corporate shareholder(s) the FIU may request non-criminal record extract also for the corporate shareholder, which may prove to be impossible to obtain in some jurisdictions (especially for offshore entities). Our legal team is available to consult in this matter according to the specific case, please contact us for further information.
The key points are as following:
-At least 1 shareholder (private person or corporate entity). No restrictions to citizenship or residence. For optimal setup structure please consult our legal team.
-At least 1 director/management board member. Foreign residents are allowed, no restrictions to citizenship or residence. Can be same as shareholder.
-No secretary nor local physical office required (only local registered office and registered agent – we hold the license to provide these services).
-Beneficial owners’ details are disclosed to the authorities.
-Virtual currencies (e.g. Bitcoin and altcoins) exchange services are not subject to VAT.
-Services invoiced (e.g. sales invoices) in virtual currencies are subject to regular VAT rules.
-Corporate profits are not taxed (CIT=0%) until the profits are distributed (as dividends).
-Income tax 20% is charged on gross dividends (calculated as 20/80 of the net dividend). Special conditions apply for a 14% rate (for legal entities).
The bank account is not required for the company formation and license application phase. Hence it can be addressed after the company and licenses are active, which is mostly the requirement also from the banks before approach. We work with several traditional banks and fintech payment service providers to ensure the opening of a business bank account for your Estonian crypto licensed company.
We do our best to support in the process but cannot provide a guarantee as the end-result will depend on your business model, background and co-operation during the KYC process. Still, most of our clients have been able to open an operational account in less than a month.
It is important to note that currently Estonian banks may prove to be very difficult to work with regarding crypto companies, but we suggest alternative banking options in Europe.
Please also note that for crypto companies’ higher level of AML/KYC principles are applied, which also means that the licenses have to be active before the approach for full compliance. We can support with appropriate banking solution consideration after we have full overview of the planned activities and financial forecasts to consider the best path forward.