Guidance

Overseas business risk: Estonia

Updated 14 March 2022

1. Political and economic

Estonia is a small but dynamic country, which has made a name for itself for innovation in digital governance, tech sector and start-up scene. The population of roughly 1.32 million is divided ethnically with 69% Estonian, 25% Russian and 6% other. At 45,227 sq km, it is the smallest and most northerly of the Baltic States. Estonia borders Russia to the east, Latvia on the south and is only 80km across the Gulf of Finland from Helsinki. The official language is Estonian, though in some areas a significant number of the population speak Russian.

Since regaining independence in 1991, Estonia has progressed rapidly both in terms of internal modernisation and external integration with the international community (joining the EU and NATO in 2004). Parliamentary elections determine the composition of the 101-member Riigikogu (Parliament), with Reform Party and Centre Party forming the current government in January 2021. The other major parties are populist-nationalist Estonian Conservative People’s Party (EKRE), centre-right Pro Patria and centre-left Social Democrats. Kaja Kallas (Reform Party) has served as Prime Minister since January 2021 and Alar Karis as President since October 2021.

Estonia’s economic recovery from the CV19 crisis has been one of the fastest in the EU. Although government debt rose from 9% to 19% by the end of 2020, this remains one of the lowest debt-to-GDP ratios in EU. Growth for 2021 is expected to be around 8%, but forecast to slow to below 3% in 2022. Estonia has one of the highest inflation rates in the EU, averaging nearly 5% in 2021, but expected to grow even more in 2022, reaching 7%. Unemployment has begun to decrease and is around 6%. The average monthly wage was slightly over €1,550 in Q3 of 2021. Worsening labour shortages are driving pay increases, in 2021 this was around 8%. Estonia joined the Eurozone in 2011, and became the OECD’s 34th member country in 2010. According to Statistics Estonia, the UK ranked as Estonia’s 10th largest trading partner for total trade (covering exports and imports of goods and services) in the four quarters to the end of Q3 2021, and accounted overall for roughly 4% of Estonia’s exports and 2% of Estonia’s imports. On the same basis, these figures also show:

• Estonia’s largest trading partners to be neighbouring EU countries around the Baltic Sea – Finland, Germany, Latvia, Sweden and Lithuania. They collectively accounted for roughly 44% of Estonia’s goods & services exports, and 52% of goods & services imports.
• Sizable trade with Russia, covering around 5% of exports 9% of imports.
• The significance of the US as an export market for Estonia, totalling roughly 9% of exports.

According to the Office of National Statistics, Estonia was the UK’s 86th largest trading partner in the four quarters to the end of Q3 2021. Total trade in goods and services (exports plus imports) during this time was £671 million; £359m of exports and £312m of imports. Prominent UK exports to Estonia include business and information services, and capital machinery. Prominent UK imports from Estonia include wood & cork products. In 2019, the stock of FDI from the UK in Estonia was £653 million, while the stock of FDI from Estonia in the UK was £24 million. The vast majority of companies are micro, small, and medium-sized with almost 99% of companies having 50 or fewer employees. There are approximately 600 UK companies registered in Estonia. The market is currently dominated by Nordic companies, but there is ample scope for increased UK exports and investment to Estonia. Estonia’s economic strengths are its digitally skilled, well-educated and qualified work force, openness for new technology, pro-business environment, sound government fiscal position, and strategic location between the Nordics, Russia and other CEE countries. One of the main Estonian weaknesses is the shortage of labour and thus the rapid increase of labour costs for many years. Estonia offers e-Residency, a government-issued digital identity and status providing access to its digital business environment. This allows companies to securely authenticate online and begin trading while being location-independent. English is widely spoken and frequently used in business, allowing easier access for UK companies. Estonia is an easy place to conduct business, ranking 5th in the OECD’s Digital Connectivity Index and 18th in the World Bank’s Ease of Doing Business Index. Estonia also has the best Transparency Index rating in Eastern and Central Europe. Estonia has the most start-ups per capita, and the most angel investment per capita in Europe. In January 2022 Estonia had 9 unicorns. The UK government can provide finance or credit insurance specifically to support UK exports to Estonia through UK Export Finance – the UK’s export credit agency. For up-to-date country specific information on the support available, see UK Export Finance’s country cover policy and indicators here.

Information on political risk, including political demonstrations, is available in FCDO Travel Advice.

2. Human Rights

There are no significant human rights problems in Estonia.

Estonia is an electoral democracy, with free and fair elections. Freedom House ranked Estonia as “Category 1 - Free” in Political Rights and Civil Liberties. Corruption is a relatively minor problem, ranked 13 out of 180 countries surveyed in Transparency International’s 2021 Corruption Perceptions Index.

Public access to government information is respected, with government decisions published almost instantly online. Religious and academic freedom are respected. The Reporters Without Borders Press Freedom Index in 2021 placed Estonia 15th in the world in the degree of freedom enjoyed by journalists, news media and internet users. Estonia is actively engaged with human rights issues within the framework of the EU, UN, OSCE, and the Council of Europe. Estonia was also a member of the UN Human Rights Council (2012-2015), and successfully concluded the third Universal Periodic Review of Human Rights at the United Nations in 2021.

3. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world.

In addition, a commercial organisation carrying on a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

According to the NGO Transparency International Corruption Perception Index (CPI) Estonia was ranked in 13th place in 2021.

A new anti-corruption strategy in Estonia for 2021-2025 was agreed by government in February 2021. While the number of corruption cases has decreased since the previous strategy was adopted in 2013, the new strategy identifies certain areas where transparency may be improved. Areas of improvement include for example transparency of state and local government activities, just business environment, investigation of corruption cases, whistle-blower protection and awareness raising.

Since 2018, Estonia has attracted headlines over the discovery of money laundering schemes mainly involving suspicious money being laundered through Estonian branches of Scandinavian banks by non-residents. A number of criminal investigations have since been started and combatting illicit finance is a priority for Estonian Government and Financial Regulatory Authority.

Banks in Estonia have substantially improved their risk controls in recent years as a result and rules and regulations have been tightened. This has, however, created a situation were non-residents may face difficulties in opening bank accounts in Estonia.

Estonia is represented in Transparency International by the organisation Transparency International Estonia (in Estonian Korruptsioonivaba Eesti). The main aims of this organisation are analysing and highlighting the risks of corruption, awareness raising and strengthening cooperation between public institutions and private persons in the fight against corruption.

For more information please contact:

Transparency International Estonia
Ms Carina Paju
Executive Director
Telliskivi 60a
10412 Tallinn
Tel: +372 5330 9965

E-mail info@transparency.ee

Transparency International website

Visit the Business Anti-Corruption portal page providing advice and guidance about corruption in Estonia and some basic effective procedures you can establish to protect your company from them.

Read the information provided on our bribery and corruption page.

4. Terrorism threat

There is a low threat from terrorism. But you should be aware of the global risk of indiscriminate terrorist attacks which could be in public areas, including those frequented by expatriates and foreign travellers.

Information about fundamentals of counter terrorism in Estonia is available at the website of the Estonian Internal Security Service

Read the information provided on our terrorism threat page.

5. Protective Security Advice

There is some risk from tourist-targeted crime, particularly petty theft. Be aware of the risk of pick pocketing and mugging, especially in bars, pubs, nightclubs and hotels in Tallinn’s Old Town. Be vigilant in bars as thieves sometimes spike drinks in order to rob. Be vigilant, take sensible precautions and avoid unlit side streets and parks at night. If possible, leave your valuables in a hotel safe.

Theft of property should be reported in person to

Tallinn Central Police Station
Kolde pst 65, Tallinn, Estonia
Tel: +372 6 12 3000

You will need to obtain a police report if you have lost your passport.

Read the information provided on our Protective security advice page.

6. Intellectual Property

According to the Estonian Patent Office, the results of human creativity require legal protection, i.e. intellectual property requires legal protection.

Different types of intellectual property (works of art and literature, trademarks, inventions etc.) require specific legal protection.

Works which are not industrially manufactured are protected by copyright.

Intellectual property rights are different from copyright and related rights, because these rights are not granted automatically. Particular procedures should be followed in the Patent Office to obtain these rights.

The main types of intellectual property are:

• trademarks
• patents and utility models
• industrial design
• industrial property includes also:
• geographical indications
• integrated circuits

For more information please contact:

Estonian Patent Office
Toompuiestee 7,
15041 Tallinn, Estonia
T: +372 627 7900

Email: helpdesk@epa.ee

Estonian Patent Office website:

Estonian Author’s Society
Eesti Autorite Ühing
Lille 13
10614 Tallinn, Estonia
Tel: +372 6 684 360

E-mail: eau@eau.org

Estonian Author’s Society website

Also refer to the web site of the World Intellectual Property Organisation (WIPO), and the Madrid Protocol for the international registration of marks.

Read the information provided on our Intellectual Property page.

7. Organised crime

According to the EUROPOL Organised Crime Threat Assessment the organised crime dynamics in Estonia (as well as in the other Baltic countries) are determined by their location between countries supplying cigarettes and synthetic drugs and the destination countries for those products.

The institutions which fight various forms of organised crime in Estonia are the Central Criminal Police and The Tax and Customs Board. The Central Criminal Police concentrate on corruption and serious economic crime, money-laundering, narcotics and information technology crimes. The Tax and Customs Board lead on smuggling of all commodities including narcotics and cigarettes and have responsibility for combating all crimes against the Estonian tax system.

7.1 The Central Criminal Police

Tööstuse 52, 10416 TALLINN
Tel +372 612 3800

E-mail: ppa@politsei.ee

Central Criminal Police website:

7.2 Estonian Tax and Customs Board Investigation Department

Lõõtsa 8a,15176, Tallinn

Tel: +372 880 0811 (private persons)

+372 880 0812 (business clients and VAT)

+372 880 0814 (customs info)

+372 880 0815 (e-tax)

Tel (24h tip-off line): +372 800 4444

E-mail: emta@emta.ee

Estonian Tax and Customs Board Investigation Department website

Read the information provided on our organised crime page.

8. Useful information

Exporting Guide to Estonia

9. Contact

Contact the Department for Business and Trade (DBT) team in Estonia for further information.