Registration of natural person as sole proprietor
Before starting business activities, all sole proprietors must apply for their entry in the commercial register. Sole proprietors are entered in the commercial register based on the application submitted by the person concerned (§ 3 of the Commercial Code).
To register a sole proprietor with the commercial register, an application for entry in the register must be submitted (digitally signed or certified by a notary) to the commercial register. The application must contain the following information:
- business name (requirements for a business name in sections 7 to 15 of the Commercial Code), in case a name of farm is used, the reference to the number of the registered immovable property in the land register should be added;
- postal address of sole proprietor (number of apartment and house; name of street or farm, name of settlement, local government, county and postal code);
- details of sole proprietor (first name and surname, Estonian personal identification code or the birth date);
- beginning and end of the financial year (please note that irrespective of the sole proprietor's financial year, a period of taxation is still a calendar year);
- if needed, information on the suspension of business activities, seasonal or temporary activity (§ 3 (3) of the Commercial Code);
- means of communication (phone, fax, e-mail, website etc.);
- information on the planned principal activity. Unlike other sole proprietors, farmers may have two activities registered in the commercial register (for example, in a tourism farm the farmer may be engaged in production of agricultural products and accommodation services at the same time).
- receipt of the payment of state fee.
More information can be found on the website of the Ministry of Justice on the page "Sole proprietor" (in Estonian).
Notaries are registered by the Estonian Chamber of Notaries whereas bailiffs are registered by the Estonian Chamber of Bailiffs and Trustees in Bankruptcy.
The tax authority uses the information on sole proprietors obtained from the commercial register, the Estonian Chamber of Notaries and the Estonian Chamber of Bailiffs and Trustees in Bankruptcy. Therefore, it is important that the information on sole proprietors entered in the register be correct. Hereby it should be borne in mind that sole proprietors must perform their tax liabilities as long as they are entered in the register as a sole proprietor.
Sole proprietor as a salaried worker
Being a sole proprietor does not exclude working under an employer. Whereas a sole proprietor and a natural person is the same person, the natural person may earn income in various ways (for example, income from employment, income from transfer of securities, business income, etc.), but they must differentiate their different kinds of income on the income tax return of natural person.
Registration of a sole proprietor is public information
All interested persons may check out via the Information System of the e-Commercial Register whether the person has been registered as a sole proprietor.
For your information
- The obligations arising from the tax legislation shall also extend to sole proprietors who have not registered themselves with the commercial register;
- the rights provided for in the tax legislation apply to sole proprietors as from the date of their registration in the commercial register. Thus, only the persons registered in the commercial register as a sole proprietor may make deductions from their business income as specified in Chapter 6 of the Income Tax Act .
- Transfer of securities owned by a natural person does not constitute business. Purchase-sale of securities and gains therefrom shall always be taxed as gains from transfer of property.
- Taxpayers may, at their own discretion, include also rent and royalties in their business income.
Last updated: 06.06.2022
Last updated: 10.12.2021