Estonia vs Luxembourg: where to incorporate?
Luxembourg is built for funds and holding structures, not for a founder with a laptop. The headline rate is 14%, the real aggregate is closer to 24%, and a SARL still needs €12,000 and a notary. Figures verified August 2026.
Estonia vs Luxembourg: where to incorporate?
Luxembourg is built for funds and holding structures, not for a founder with a laptop. The headline rate is 14%, the real aggregate is closer to 24%, and a SARL still needs €12,000 and a notary. Figures verified August 2026.
Estonia vs Luxembourg: where to incorporate?
Luxembourg is built for funds and holding structures, not for a founder with a laptop. The headline rate is 14%, the real aggregate is closer to 24%, and a SARL still needs €12,000 and a notary. Figures verified August 2026.
The short answer
The short answer
The short answer
Choose Estonia if
Choose Estonia if
Choose Estonia if
You reinvest most of what you earn, you sell into the EU and need an EU VAT number, or you want accounting, invoicing and contracts in one subscription.
Choose Luxembourg if
Choose Luxembourg if
Choose Luxembourg if
You are building a holding or fund structure, you sell to EU consumers at volume and want the 17% VAT rate, or you already have a qualified manager and premises in Luxembourg.
The number that decides it
Luxembourg’s aggregate rate in the capital is about 23.87%, not the 14% on the headline. Estonia charges 0% on retained profit and 22% of the pre-tax pot when you distribute.
Luxembourg’s aggregate rate in the capital is about 23.87%, not the 14% on the headline. Estonia charges 0% on retained profit and 22% of the pre-tax pot when you distribute.
Estonia and Luxembourg at a glance
Estonia and Luxembourg at a glance
Estonia and Luxembourg at a glance
🇪🇪 Estonia
🇪🇪 Estonia
🇪🇪 Estonia
🇱🇺
🇱🇺
Luxembourg
Luxembourg
Luxembourg
Entity type
Osaühing (OÜ)
Osaühing (OÜ)
Société à responsabilité limitée (SARL)
Société à responsabilité limitée (SARL)
Minimum capital
€0.01, and you can defer paying it
€0.01, and you can defer paying it
€12,000 fully subscribed — cash payment deferrable 12 months since 2 June 2026
€12,000 fully subscribed — cash payment deferrable 12 months since 2 June 2026
State fee
€290 to register online — the €265 state fee plus the €25 registry API fee
€290 to register online — the €265 state fee plus the €25 registry API fee
Registry fees plus a notary at €1,000–2,500 for a standard SARL
Registry fees plus a notary at €1,000–2,500 for a standard SARL
Time to register
15 minutes to an hour — but the e-Residency card takes weeks
15 minutes to an hour — but the e-Residency card takes weeks
Two to four weeks, including the business permit
Two to four weeks, including the business permit
Can you do it remotely
Yes, fully — you collect the e-Residency card in person once
Yes, fully — you collect the e-Residency card in person once
Only partly — the notary and the business permit both expect real local substance
Only partly — the notary and the business permit both expect real local substance
Mandatory local roles
Legal address and contact person, both FIU-licensed
Legal address and contact person, both FIU-licensed
A business permit with a qualified manager, and premises in Luxembourg
A business permit with a qualified manager, and premises in Luxembourg
Tax on profit you keep
0%, for as long as you keep it
0%, for as long as you keep it
14% up to €175,000 and 16% above €200,000 — about 23.87% all in, in Luxembourg City
14% up to €175,000 and 16% above €200,000 — about 23.87% all in, in Luxembourg City
Tax on profit you take out
22/78 of the payout — 22% of the pre-tax pot, 28.21% on the net
22/78 of the payout — 22% of the pre-tax pot, 28.21% on the net
15% withholding on dividends as a rule, widely reduced by treaty and EU rules
15% withholding on dividends as a rule, widely reduced by treaty and EU rules
VAT and threshold
24%, register above €40,000
24%, register above €40,000
17% — the lowest standard rate in the EU — register above €50,000
17% — the lowest standard rate in the EU — register above €50,000
Mandatory audit
Not at founder scale
Not at founder scale
Not at founder scale
Not at founder scale
Annual filings
One annual report to the Business Register; monthly returns with payroll or VAT
One annual report to the Business Register; monthly returns with payroll or VAT
Annual accounts to the RCS, eCDF filings and a corporate tax return
Annual accounts to the RCS, eCDF filings and a corporate tax return
Banking as a non-resident
EU IBAN through Estonian banks, or Wise and Revolut
EU IBAN through Estonian banks, or Wise and Revolut
Private-banking oriented, slow and expensive for small companies
Private-banking oriented, slow and expensive for small companies
Market access
EU single market, an EU VAT number, OSS and IOSS
EU single market, an EU VAT number, OSS and IOSS
EU single market, an EU VAT number, OSS and IOSS
EU single market, an EU VAT number, OSS and IOSS
Year-2 running cost
From €124 for the mandatory address and contact person, plus accounting
From €124 for the mandatory address and contact person, plus accounting
Accounting, the registered premises, the permit upkeep and the domiciliation agent
Accounting, the registered premises, the permit upkeep and the domiciliation agent
What each one is
What each one is
What each one is
🇪🇪 Osaühing (OÜ)
🇪🇪 Osaühing (OÜ)
🇪🇪 Osaühing (OÜ)
The Estonian private limited company. Registered fully online through e-Residency, taxed only when profit leaves the company, and inside the EU single market with an EU VAT number.
🇱🇺
🇱🇺
Société à responsabilité limitée (SARL)
Société à responsabilité limitée (SARL)
Société à responsabilité limitée (SARL)
The Luxembourg private limited company. The standard vehicle for European funds and holding structures, with strong treaty coverage and the lowest VAT rate in the EU — and the heaviest entry requirements of any EU country here.
Setting the company up
Setting the company up
Setting the company up
How incorporation works
Estonia
Fully remote through e-Residency: the company is filed in the e-Business Register in 15 minutes to an hour. The one physical step is collecting the e-Residency card at an embassy, which takes weeks.
Luxembourg
A standard SARL is incorporated before a notary, which is a real appointment, not a form. Before trading you also need a business permit, which expects a manager with relevant qualifications and actual premises — the part that non-resident founders underestimate.
How incorporation works
Estonia
Fully remote through e-Residency: the company is filed in the e-Business Register in 15 minutes to an hour. The one physical step is collecting the e-Residency card at an embassy, which takes weeks.
Luxembourg
A standard SARL is incorporated before a notary, which is a real appointment, not a form. Before trading you also need a business permit, which expects a manager with relevant qualifications and actual premises — the part that non-resident founders underestimate.
Setup cost and timeline
Estonia
€290 state fee online and €0.01 of share capital that can be deferred. With Enty, €350 including the state fee, and the company is usually registered the same day.
Luxembourg
€12,000 of capital fully subscribed, plus a notary at €1,000–2,500 and registry fees. Since 2 June 2026 the cash portion can be deferred for up to twelve months, which helps cash flow but does not remove the commitment.
Setup cost and timeline
Estonia
€290 state fee online and €0.01 of share capital that can be deferred. With Enty, €350 including the state fee, and the company is usually registered the same day.
Luxembourg
€12,000 of capital fully subscribed, plus a notary at €1,000–2,500 and registry fees. Since 2 June 2026 the cash portion can be deferred for up to twelve months, which helps cash flow but does not remove the commitment.
Local roles you must appoint
Estonia
No local director needed, but two licensed services are mandatory: a legal address and a contact person. From €124 a year, included in Enty’s paid plans.
Luxembourg
A business permit with a qualified manager and real premises in Luxembourg. That is a substance requirement, not a formality, and it is the deepest difference from Estonia.
Local roles you must appoint
Estonia
No local director needed, but two licensed services are mandatory: a legal address and a contact person. From €124 a year, included in Enty’s paid plans.
Luxembourg
A business permit with a qualified manager and real premises in Luxembourg. That is a substance requirement, not a formality, and it is the deepest difference from Estonia.
Business types and ownership
Estonia
Single and multi-shareholder OÜs with no nationality limits, including e-commerce and crypto models that many providers refuse.
Luxembourg
Single and multi-shareholder SARLs, no nationality limits on shareholders. The simplified SARL-S drops the capital to €1 and skips the notary, but is limited to individuals and to one per person.
Business types and ownership
Estonia
Single and multi-shareholder OÜs with no nationality limits, including e-commerce and crypto models that many providers refuse.
Luxembourg
Single and multi-shareholder SARLs, no nationality limits on shareholders. The simplified SARL-S drops the capital to €1 and skips the notary, but is limited to individuals and to one per person.
Money, tax and filings
Money, tax and filings
Money, tax and filings
Tax on profit you keep
Estonia
0%. Retained profit is not taxed at all, for as long as it stays inside the company — that is the whole mechanism.
Luxembourg
14% up to €175,000 and 16% above €200,000, plus the employment fund contribution and municipal business tax — about 23.87% in Luxembourg City. Charged whether you distribute or not.
Tax on profit you keep
Estonia
0%. Retained profit is not taxed at all, for as long as it stays inside the company — that is the whole mechanism.
Luxembourg
14% up to €175,000 and 16% above €200,000, plus the employment fund contribution and municipal business tax — about 23.87% in Luxembourg City. Charged whether you distribute or not.
Tax on profit you take out
Estonia
22/78 of the payout: 22% of the pre-tax pot, or 28.21% expressed against the net sum you receive. Charged inside the company before the money reaches you.
Luxembourg
15% dividend withholding as the default, widely reduced or eliminated by treaties and the EU parent-subsidiary rules. Estonia charges 22/78 inside the company instead.
Tax on profit you take out
Estonia
22/78 of the payout: 22% of the pre-tax pot, or 28.21% expressed against the net sum you receive. Charged inside the company before the money reaches you.
Luxembourg
15% dividend withholding as the default, widely reduced or eliminated by treaties and the EU parent-subsidiary rules. Estonia charges 22/78 inside the company instead.
VAT and thresholds
Estonia
24% since 1 July 2025, registration from €40,000 — a lower ceiling than most, but it comes with an EU VAT number plus OSS and IOSS.
Luxembourg
17%, the lowest standard rate in the European Union, with registration above €50,000. This is Luxembourg’s clearest win over Estonia’s 24%.
VAT and thresholds
Estonia
24% since 1 July 2025, registration from €40,000 — a lower ceiling than most, but it comes with an EU VAT number plus OSS and IOSS.
Luxembourg
17%, the lowest standard rate in the European Union, with registration above €50,000. This is Luxembourg’s clearest win over Estonia’s 24%.
Banking as a non-resident
Estonia
Estonian banks onboard founders with a real connection to the country; everyone else runs on Wise or Revolut with an EU IBAN.
Luxembourg
Luxembourg banking is oriented towards funds and private wealth. For a small operating company it is slow, expensive and often uninterested; most founders end up on EU payment institutions.
Banking as a non-resident
Estonia
Estonian banks onboard founders with a real connection to the country; everyone else runs on Wise or Revolut with an EU IBAN.
Luxembourg
Luxembourg banking is oriented towards funds and private wealth. For a small operating company it is slow, expensive and often uninterested; most founders end up on EU payment institutions.
Annual filings
Estonia
One annual report to the Business Register, plus monthly returns once there is payroll or a VAT number. Audit does not apply at founder scale.
Luxembourg
Annual accounts filed with the RCS, eCDF electronic filings and a corporate tax return. An external auditor is only required well above founder scale.
Annual filings
Estonia
One annual report to the Business Register, plus monthly returns once there is payroll or a VAT number. Audit does not apply at founder scale.
Luxembourg
Annual accounts filed with the RCS, eCDF electronic filings and a corporate tax return. An external auditor is only required well above founder scale.
Which one fits your business
Which one fits your business
Which one fits your business
🇪🇪 Estonia fits if
🇪🇪 Estonia fits if
🇪🇪 Estonia fits if
You reinvest instead of paying yourself
You reinvest instead of paying yourself
Profit left in the company is not taxed at all, so every year you do not distribute is a year you do not pay.
You sell into the EU
You sell into the EU
An EU VAT number plus OSS and IOSS access is something a non-EU company cannot give you.
You want one bill for the back office
You want one bill for the back office
Accounting, invoicing, contracts and e-signing in one subscription instead of four suppliers.
🇱🇺
🇱🇺
Luxembourg
Luxembourg
Luxembourg
You are building a holding or fund structure
You are building a holding or fund structure
This is what Luxembourg is actually for, and it does it better than anywhere else in the EU.
You sell to EU consumers at volume
You sell to EU consumers at volume
A 17% VAT rate against 24% is worth real money once consumer sales are the bulk of revenue.
You have local substance already
You have local substance already
A qualified manager and premises in Luxembourg turn the hardest requirement into a non-issue.
Where Estonia loses
Where Estonia loses
Where Estonia loses
Three places where the other country is simply better. If they matter more to you than untaxed retained profit and the EU single market, go there.
Three places where the other country is simply better. If they matter more to you than untaxed retained profit and the EU single market, go there.
The lowest VAT rate in the EU
The lowest VAT rate in the EU
17% against Estonia’s 24%, with registration only above €50,000. For consumer sales inside the EU that is a real margin.
The best home for holdings and funds
The best home for holdings and funds
Treaty coverage, participation exemptions and fund vehicles that Estonia has no equivalent of.
Institutional credibility
Institutional credibility
For investors and banks dealing in serious money, a Luxembourg entity carries weight an Estonian OÜ does not.
How incorporation with Enty works
How incorporation with Enty works
How incorporation with Enty works
Open with e-Residency
Open with e-Residency
1-3 days
€60
+ €290 state fee
1
5-minute application on Enty
2
We file directly with the Estonian registry
3
Company registered!
1-3 days
Plan to get an e-Residency card? Buy incorporation now and get €150 off
We lead you through the whole process
No e-Residency yet
No e-Residency yet
14 days
Fastest formation with a notary on the market
€1,000
+ €290 state fee
1
10-minute application on Enty
2
20–30 min video call — identity check and notarisation, fully online
3
We file directly with the Estonian registry
4
Company registered!
14 days
Several shareholders, crypto or e-commerce? We take the complicated cases too.
Several shareholders, crypto or e-commerce? We take the complicated cases too.
Several shareholders, crypto or e-commerce? We take the complicated cases too.
Methodology and sources
Methodology and sources
Methodology and sources
SARL minimum capital of €12,000 and the deferral of the cash portion from 2 June 2026, the SARL-S rules and the business permit requirement from the Luxembourg Business Registers and the Ministry of the Economy. Corporate income tax of 14% up to €175,000 and 16% above €200,000, the employment fund contribution, municipal business tax and the aggregate of about 23.87% in Luxembourg City from the Administration des contributions directes. VAT rate of 17% and the €50,000 threshold from the Administration de l’enregistrement.
Estonian state fee of €290 — the €265 registry fee plus a €25 API fee. Cost comparisons are computed in our own cost model, not quoted from third parties.
Figures verified 21 August 2026.
Figures verified
Frequently asked questions
Frequently asked questions
Frequently asked questions
Is Luxembourg really a 14% jurisdiction?
Not in practice. Corporate income tax is 14% up to €175,000 and 16% above €200,000, but the employment fund contribution and the municipal business tax sit on top — roughly 23.87% in total in Luxembourg City.
That is close to Estonia’s 22% of the pre-tax pot, except Estonia only charges it when profit leaves the company.
Is Luxembourg really a 14% jurisdiction?
Not in practice. Corporate income tax is 14% up to €175,000 and 16% above €200,000, but the employment fund contribution and the municipal business tax sit on top — roughly 23.87% in total in Luxembourg City.
That is close to Estonia’s 22% of the pre-tax pot, except Estonia only charges it when profit leaves the company.
Is Luxembourg really a 14% jurisdiction?
Not in practice. Corporate income tax is 14% up to €175,000 and 16% above €200,000, but the employment fund contribution and the municipal business tax sit on top — roughly 23.87% in total in Luxembourg City.
That is close to Estonia’s 22% of the pre-tax pot, except Estonia only charges it when profit leaves the company.
Do I need €12,000 to start a Luxembourg company?
For a standard SARL, yes — €12,000 must be fully subscribed, though since 2 June 2026 the cash portion can be deferred for up to twelve months.
The simplified SARL-S needs only €1 and no notary, but is restricted to individuals and to one company per person. Estonia’s minimum is €0.01.
Do I need €12,000 to start a Luxembourg company?
For a standard SARL, yes — €12,000 must be fully subscribed, though since 2 June 2026 the cash portion can be deferred for up to twelve months.
The simplified SARL-S needs only €1 and no notary, but is restricted to individuals and to one company per person. Estonia’s minimum is €0.01.
Do I need €12,000 to start a Luxembourg company?
For a standard SARL, yes — €12,000 must be fully subscribed, though since 2 June 2026 the cash portion can be deferred for up to twelve months.
The simplified SARL-S needs only €1 and no notary, but is restricted to individuals and to one company per person. Estonia’s minimum is €0.01.
What is the business permit and can I get one remotely?
It is an authorisation to trade, granted to a company with a manager who has relevant professional qualifications and standing, and with actual premises in Luxembourg.
It is a substance test, so it is the one part that does not work well from abroad. Estonia has no equivalent requirement.
What is the business permit and can I get one remotely?
It is an authorisation to trade, granted to a company with a manager who has relevant professional qualifications and standing, and with actual premises in Luxembourg.
It is a substance test, so it is the one part that does not work well from abroad. Estonia has no equivalent requirement.
What is the business permit and can I get one remotely?
It is an authorisation to trade, granted to a company with a manager who has relevant professional qualifications and standing, and with actual premises in Luxembourg.
It is a substance test, so it is the one part that does not work well from abroad. Estonia has no equivalent requirement.
Can I set up a Luxembourg company without a notary?
Only with the simplified SARL-S, which skips the notary but caps you at one per person and is open to individuals only.
A standard SARL requires a notarial deed. Estonia requires no notary at all when you use e-Residency.
Can I set up a Luxembourg company without a notary?
Only with the simplified SARL-S, which skips the notary but caps you at one per person and is open to individuals only.
A standard SARL requires a notarial deed. Estonia requires no notary at all when you use e-Residency.
Can I set up a Luxembourg company without a notary?
Only with the simplified SARL-S, which skips the notary but caps you at one per person and is open to individuals only.
A standard SARL requires a notarial deed. Estonia requires no notary at all when you use e-Residency.
Is Luxembourg’s 17% VAT worth the extra cost?
It depends on what you sell. If most of your revenue is consumer sales inside the EU, 17% against Estonia’s 24% is a genuine margin advantage that can outweigh the higher setup.
If you sell B2B, VAT is neutral and the extra cost buys you nothing.
Is Luxembourg’s 17% VAT worth the extra cost?
It depends on what you sell. If most of your revenue is consumer sales inside the EU, 17% against Estonia’s 24% is a genuine margin advantage that can outweigh the higher setup.
If you sell B2B, VAT is neutral and the extra cost buys you nothing.
Is Luxembourg’s 17% VAT worth the extra cost?
It depends on what you sell. If most of your revenue is consumer sales inside the EU, 17% against Estonia’s 24% is a genuine margin advantage that can outweigh the higher setup.
If you sell B2B, VAT is neutral and the extra cost buys you nothing.
Can a non-resident own an Estonian company outright?
There is no residency or nationality requirement for shareholders or board members of an OÜ.
Can a non-resident own an Estonian company outright?
There is no residency or nationality requirement for shareholders or board members of an OÜ.
Can a non-resident own an Estonian company outright?
There is no residency or nationality requirement for shareholders or board members of an OÜ.
Do I have to travel to Estonia?
No. With an e-Residency card everything is online; without one, a 20–30 minute video identity call replaces the trip.
Do I have to travel to Estonia?
No. With an e-Residency card everything is online; without one, a 20–30 minute video identity call replaces the trip.
Do I have to travel to Estonia?
No. With an e-Residency card everything is online; without one, a 20–30 minute video identity call replaces the trip.
Is an Estonian OÜ tax resident in Estonia?
The company is. You are not — your own tax residency is decided by where you live, and Estonia does not change it.
Is an Estonian OÜ tax resident in Estonia?
The company is. You are not — your own tax residency is decided by where you live, and Estonia does not change it.
Is an Estonian OÜ tax resident in Estonia?
The company is. You are not — your own tax residency is decided by where you live, and Estonia does not change it.
When do I have to pay in the share capital?
Not at registration. It can be deferred, and the minimum is €0.01.
When do I have to pay in the share capital?
Not at registration. It can be deferred, and the minimum is €0.01.
When do I have to pay in the share capital?
Not at registration. It can be deferred, and the minimum is €0.01.
Which bank will my company use?
We help you open an account with one of our EU banking or payment partners, including Wise and Revolut, at no extra fee from us.
Which bank will my company use?
We help you open an account with one of our EU banking or payment partners, including Wise and Revolut, at no extra fee from us.
Which bank will my company use?
We help you open an account with one of our EU banking or payment partners, including Wise and Revolut, at no extra fee from us.
What does Enty actually do?
Registration, the mandatory legal address and contact person, accounting, invoicing, contracts and e-signing, in one subscription from €33 a month.
What does Enty actually do?
Registration, the mandatory legal address and contact person, accounting, invoicing, contracts and e-signing, in one subscription from €33 a month.
What does Enty actually do?
Registration, the mandatory legal address and contact person, accounting, invoicing, contracts and e-signing, in one subscription from €33 a month.
Start today in Estonia. Running in 1 to 14 days
No credit card to start
No e-Residency required
Complex cases supported
Start today in Estonia. Running in 1 to 14 days
No credit card to start
No e-Residency required
Complex cases supported
Start today in Estonia. Running in 1 to 14 days
No credit card to start
No e-Residency required
Complex cases supported