Estonia - Country Commercial Guide
Investment Climate Statement (ICS) 
Last published date:

The U.S. Department of State’s Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world. They analyze a variety of economies that are or could be markets for U.S. businesses.  The Investment Climate Statements are also references for working with partner governments to create enabling business environments that are not only economically sound, but address issues of labor, human rights, responsible business conduct, and steps taken to combat corruption.  The reports cover topics including Openness to Investment, Legal and Regulatory Systems, Protection of Real and Intellectual Property Rights, Financial Sector, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

Executive Summary

Estonia is a safe and dynamic country for investment, with a business climate very similar to the United States. As a member of the EU, the Government of Estonia maintains liberal policies to attract investments and export-oriented companies. Creating favorable conditions for foreign direct investment (FDI) and openness to foreign trade has been the foundation of Estonia’s economic strategy. The overall freedom to conduct business in Estonia is well protected under a transparent regulatory environment.

Estonia is among the leading countries in Eastern and Central Europe on a FDI per capita basis. By 2022, Estonia had attracted USD 33.5 billion (stock) of investment, of which 27 percent was in the financial sector, 19 percent in real estate, and 13 percent in science and technology. United States FDI stock in Estonia is USD 480 million, and Estonian FDI stock in United States reached USD 485 million at the end of 2022, exceeding U.S. investment in Estonia for the first time.

Estonia has been hard hit by Europe’s energy crisis. A sharp increase in electricity prices drove annual inflation to 19.4 percent in 2022, and inflation is forecast at 9.3 percent in 2023. Rapidly increasing costs have increased pressure on Estonian industrial competitiveness. Preliminary data indicates Estonia’s GDP decreased by 1.3 percent in 2022, and GDP is expected to grow 0.4 percent in 2023.

In the area of climate and environmental policies, Estonia is working to decarbonize its economy by reducing its dependency on oil shale in electricity generation, increasing the energy efficiency of buildings, and introducing carbon free transport.

Estonia adopted an investment screening mechanism in January 2023 that will enter into force September 1, 2023. Estonia will review direct and indirect investments by non-EU investors in strategically important and sensitive sectors.

With a flat tax of 20 percent, the Estonian tax system is considered one of the simplest regimes globally. Undistributed profits are not subject to taxation. This may change for companies with an annual turnover of more than 750 million euros as the EU implements the OECD’s global minimum tax agreement.

Estonia offers opportunities for businesses in a number of economic sectors including information and communication technology (ICT), green energy, smart cities, and defense technologies.

Estonia has strong trade ties with Finland, Sweden, and Germany. Estonia suffers from a shortage of labor, both skilled and unskilled.

To access the ICS, visit the U.S. Department of State Investment Climate Statements website.