Equal treatment and protection of investors

Foreign investors have equal rights and obligations with local entrepreneurs. All foreign investors may establish a company in Estonia in the same way as local investors; no special restrictions are made.

Internal law and international agreements protect foreign investments in Estonia. Estonia has concluded treaties for the protection of investments with 26 countries including USA, Germany, France, Finland, Sweden, Norway, Switzerland. Also agreements on avoiding double taxation are made with 51 countries including EU countries.

Foreign investors have played a decisive role in building the Estonian economy of today. As a small country, Estonia has been bound to abstain from protectionism and barriers. Instead, the country has opened itself up to investors and trading partners of all nationalities. Long before Estonia joined the EU and the WTO, the country had steered its course towards open borders for goods, services, people and capital. Today it has become a venue for foreign investors from different countries. Here they find new contacts and cooperation opportunities.

Today foreign companies dominate several sectors of the Estonian economy. Banking and telecommunications are dominated by the leading Nordic players, but also e.g. the food- and electronics industries rely heavily on foreign capital. In relation to its size, Estonia has long been a leading Eastern European country in attracting foreign direct investments. The foreign impact is also demonstrated by an export share of more than half of the country's GDP.

Unlike many other Eastern European countries, Estonia has not based its attraction of foreign investments on specially designed government support schemes. Instead, the country has held firm to the principle of equal treatment of all investors, irrespective of their origin. For instance, EU-financing is available on equal terms to foreign- and domestically owned companies. In the long run, a generally favourable business environment is believed to be more constructive to the economy, than politically targeted short-term incentives.

By Richard J. Witismann on 31 July, 2018