October 23, 2015
By: Stanislav Yurin

The Law

(On reading the manuals)

Because this is how legislation on this planet works (but the toaster doesn't): Law is a toaster

First things first. To be sure I am not somehow deluding or encouraging anyone in the wrong way, this is what you need: to read and obey every letter of Estonian laws, every other source of information to be considered of the far secondary importance.

Someone may say that “to obey every letter” is a well-known exaggeration. You should now realise if that you are going to operate in the remote mode with an alien government, without any human eye-contact or a local middleman, which can usually forgive you some minor errors or even give any connivance and perks. The cost of any error is pretty high, and may result to fines, buying expensive next-day air tickets, and even facing prosecution, and in any case will add up to your everyday anxiety of running business, bringing you unnecessary chronic stress.

Fortunately, Estonia has very digestible and transparent legislation, all gathered on the website of the State Gazette (Riigi Teataja) with most crucial legislation translated into English. You are also encouraged to open an account on the site and subscribe to the updates of the most important documents.

While most of the time you'll be perfectly OK with obtaining legal information in Estonia in English (or Russian), the only official legal language is still Estonian. That means that we will be sending documents back to government on Estonian. How bad is that? Honestly, I don't know, at least for now. The first experiment on this will be after establishing a new company (see next post).
Also, always good option is to learn a bit of Estonian yourself, at least to the point when you can capture the context, the thing I am trying to do myself right now.

Mandatory reading list.

I can not stress enough that, though it will not save you from any type of headache, the obligatory prerequisite for not getting in the most stupid troubles while doing business in some foreign country is to read law first and do second. The mandatory reading list will take you from several hours to several days to digest, depending on how comfortable are you with law documents in general.

Thankfully, the codes and laws in Estonia are written in a simple, almost tutorial-like manner.

  • Commercial Code Contains all the basics you should know about legal entities formation and functioning. You should read it several times. Before doing anything, before filing company application, when filing your company application, before filing annual report, when filing annual report, when approaching other legal entities, and in the case of any new legal move in general. Many law firms as well as several web start-ups are already known for providing “1-click solutions” to the whole process of company registration, but this is the firm recipe for shooting yourself in the leg. Register your company yourself, and even when reaching for professional assistance, know your options. Knowing this document from cover to cover is highly beneficial.
  • Income Tax Act You probably want to read at least Chapter 5 on the taxation of non-residents (that’s you, unless you are willing to spend half of the year in Estonia).Also really good tutorial on Estonian Tax and Customs Board site.
  • Accounting Act The title is self-explanatory, at least in do-it-yourself phase we are going to try this at home.. and see what happens.
  • Value-added Tax Act Honestly, nobody on Earth knows what VAT is and how it really works. But we still should deal with this, with aforementioned document as a good starter.
  • State Fees Act You are hardly going to read this huge document as a whole, though performing context search on various state fees (license, applications etc) is always useful.
  • Money Laundering and Terrorist Financing Prevention Act The last thing you want to experiment with is falling under this act due to, say, some stupid accounting accident or because you are used to more relaxed financial climate in your home country. Bad guys are definitely reading this one, and good ones should do this at least once in a lifetime too.
  • Personal Data Protection Act Like they say, "with great powers comes great responsibility". Using Estonia electronic society benefits infers obeying the rules on handling the personal data.
  • Gambling Act There is legal gambling and online gambling in Estonia. As most of IT professionals are coming across this industry at least several times in a career, this document may be of interest to some. Do not expect though, that a gambling venture could be kickstarted only by the means of your e-resident card.

This is it for today. Should make you busy for a while.

Tags: legal