A branch (filiaal) is not a new company, but a representative office of your existing firm in Estonia. No separate legal entity is created: the branch operates on behalf of the parent company, and the parent company is liable for all its obligations with its own assets.
This is the key distinction when choosing between a branch and a subsidiary OÜ. A branch is cheaper to set up and requires no capital, but in return you expose the parent company to Estonian risks and disclose its documents in the public register. We will analyse your situation before you pay for translations and apostilles.
| Parameter | Value |
|---|---|
| Status | Not a legal entity – part of the parent company |
| Liability | Full liability of the parent company |
| Authorised capital | Not required |
| Branch manager | Mandatory, at least one |
| Address in Estonia | Mandatory |
| Head office documents | Apostille + certified translation into Estonian |
| Name | Company name + the word ‘filiaal’ |
| Registration period | Up to five working days after submission |
| Reporting | Separate accounts + the parent company’s report to the register |
It is the second point, not the register, that determines the timeframe. Start by applying for an apostille in your own country and write to us at the same time — that way, two weeks won’t turn into two months.
For most clients who come looking to set up a branch, a subsidiary OÜ ultimately proves to be a better fit. There are two reasons for this.
The first is liability. A subsidiary is a separate legal entity with limited liability. A branch’s debts are borne directly by the parent company.
The second is transparency. To register a branch, you must submit the articles of association and an extract from the parent company’s register to the Estonian register, and then file its annual report every year. If the parent company does not publish its financial statements in its home country, they will become publicly available via the Estonian branch.
A branch is advantageous in three situations: the counterparty or a tender requires a contract specifically with the parent company; the licence or reputation is tied to the parent legal entity and cannot be transferred to the new OÜ; the presence in Estonia is temporary — for a specific project or contract.
A branch is a permanent place of business, so the profit it generates in Estonia is subject to Estonian rules. The logic is the same as for a company: as long as the profit remains in the business, there is no income tax; tax becomes payable when the profit is withdrawn.
There is a nuance here that is worth discussing with us before registration: the transfer of funds from a branch to its parent company is not a dividend; it is a transfer within a single legal entity. However, the withdrawal of profits from a permanent establishment is still subject to taxation – and what constitutes a withdrawal depends on the double taxation agreement with your country and on how the expenses are allocated. This is not a matter that can be resolved with a one-size-fits-all approach.
Separate accounting for the branch is mandatory. If turnover exceeds €40,000, registration as a VAT payer is required; if the branch works directly with Estonian suppliers from the outset, this is usually done on a voluntary basis.
The branch must have a manager – a natural person representing the parent company in Estonia. There are no requirements regarding citizenship or residence. If the manager lives outside Estonia, the Register requires a contact person to be appointed and an Estonian address to be provided for correspondence.
The address must be a valid one: correspondence from the Register of Enterprises and the Tax and Customs Board will be sent to this address. You can obtain a registered office address and a contact person from us as part of a single registration package.
The name of the branch cannot be chosen freely: it must consist of the parent company’s name and the word ‘filiaal’. A branch cannot have its own marketing name – if branding is important, this is yet another argument in favour of setting up a subsidiary OÜ.
If you have not yet decided between a branch and a subsidiary, please contact us before ordering an apostille. The cost of making a mistake here is greater than the difference in the price of the service
A branch is a separate unit of a foreign company that is entered in the Estonian Commercial Register. It has its own registration number, address and manager — but no assets or articles of association of its own.
When a branch signs a contract, it is the parent company that is legally the contracting party. Therefore, any claims, debts or tax liabilities of the branch cannot be left in Estonia – they will be passed on to the head office.
The basic set of documents is as follows: an extract from the register of the country of registration, the articles of association, a decision by the competent authority on the establishment of the branch and the appointment of its manager, and a document confirming the signatory’s authority.
There are two requirements that people most often stumble over. Firstly: the documents must be apostilled (or consularised if the country is not a signatory to the Hague Convention). Second: the translation must be carried out by a sworn translator. The registry will not accept a translation from a translation agency ‘with a stamp’.
The extract has a limited validity period. It is best to order it once the other documents are ready, rather than starting with it.
The registry processes the application within five working days. The actual timeframe consists of three components: the apostille in the parent company’s country, the sworn translation, and the registry’s decision.
On average, the whole process takes between two and six weeks, and the variation is almost entirely due to the speed of the apostille process in your country.
A branch has two distinct obligations. The first is to maintain its own accounts in accordance with Estonian regulations, separately from the parent company. The second is to submit the parent company’s annual report, together with a translation, to the Estonian registry once a year.
The second point often comes as an unpleasant surprise to many. If the parent company is a large group, having its consolidated accounts translated each year costs a considerable amount of money. A subsidiary OÜ has no such obligation: it submits its own accounts.
| Parameter | Branch | Subsidiary OÜ |
|---|---|---|
| Legal entity | No | Yes |
| Liability | Full liability of the parent company | Limited to the capital |
| Authorised capital | Not required | From €0.01 |
| Its own name | No, only the company name + ‘filiaal’ | Yes, any available name |
| Head office documents | Required, with an apostille | Not required to this extent |
| Annual report | Own accounts + head office report | Only our own |
| Public status of the parent company | High | Low |
| Start-up costs | Higher (apostille, translations) | Lower |
The paradox is that a branch without capital often ends up costing more than a subsidiary with capital of just a few cents – due to apostilles and certified translations.
The bank looks at the parent company, not the branch: it checks its ownership structure, ultimate beneficial owners, country of registration and sanctions status. If there are issues with the parent company, the branch won’t hide them – quite the opposite, in fact.
What to do if a traditional bank has refused is explained on the page about bank accounts – the options involving an EMI also work for branches.
Winding up a branch is simpler and cheaper than winding up a company: there are no assets to distribute; all that is required is a resolution from the parent company and a notification to the register. However, any outstanding debts to the tax authorities or employees will not disappear – they will remain the liability of the parent company.
Three lines are all it takes: country of registration, legal form, and the branch’s intended activities. We’ll send you a personalised list of documents, a cost estimate and the actual timeframe, taking into account the apostille process in your country. If setting up a subsidiary OÜ is more advantageous for you, we’ll let you know. We’ll reply within one working day; the consultation is free of charge.
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