What Changed for Estonian Companies in 2026, and What the Public Register Now Reveals

Recent reports suggesting that Estonia has "quietly killed" e-Residency or that VAT numbers are being refused reflect significant changes in the Estonian company landscape. While the e-Residency program continues, regulations concerning economic substance have become notably stricter in 2025 and 2026. This overview summarizes the key regulatory changes based on official sources and examines a frequently overlooked aspect: the extent to which the public business register now discloses information about a company's economic substance.

The primary change: economic substance is now essential

Estonian authorities now require companies to demonstrate genuine economic activity rather than relying solely on registration. The Estonian Tax and Customs Board (Maksu- ja Tolliamet, EMTA) conducts business-activity reviews (ettevõtlusega tegelemise kontroll), contacting companies whose registrations do not appear to correspond with actual operations and requesting evidence of economic activity connected to Estonia. The e-Residency program now positions digital identity as a tool for managing an operational business and emphasizes that companies must reflect substantive operations rather than function as mere mailboxes.

This is not a ban on remote-managed companies. It is a move away from treating an Estonian OÜ as a frictionless shell, and toward expecting the company to show where it actually operates.

VAT Registration Now Requires Substantive Business Activity

The most evident manifestation of these changes is in VAT registration. Estonia increased its standard VAT rate to 24% on 1 July 2025 (previously 22%). More significantly for foreign founders, the EMTA now applies a substance-based approach when granting VAT numbers. Although the mandatory registration threshold remains €40,000 of taxable turnover with the place of supply in Estonia, registration now requires demonstrable business activity within Estonia. According to the Value Added Tax Act, if a person's engagement in business is not sufficiently demonstrated, the tax authority may request additional evidence and may refuse registration or remove from the register any company not conducting business activity (§ 20 and § 22). Companies that obtained VAT registration without genuine Estonian activity have been subject to EMTA reviews and, in some cases, have been required to deregister.

It is important to clarify that the €40,000 threshold pertains to taxable turnover with the place of supply in Estonia, not to global revenue. Many cross-border B2B consulting services are managed through the EU reverse-charge mechanism and may not necessitate an Estonian VAT number. For case-specific guidance, consultation with a qualified tax adviser is recommended.

Information Disclosed by the Public Business Register

Publicly available data provides insights not found in marketing materials. The concept of "substance" is reflected in the official Estonian Business Register and in figures published by the tax authority. Several data fields, when considered collectively, indicate whether a company is an active enterprise or a dormant registration:

Turnover and tax payments, published quarterly by EMTA, indicate whether financial transactions are occurring within the company. Employee count reflects whether personnel are being compensated. The annual report (majandusaasta aruanne) details revenue, profit, and equity over multiple years. The registered address reveals whether the company operates from its own premises or from a mass-registration address shared by numerous entities. Information about board members and shareholders can indicate whether individuals are associated with multiple companies.

No single indicator is conclusive on its own. However, collectively, these factors constitute the type of evidence considered by EMTA, and all are publicly accessible. For detailed instructions, refer to the guide on how to review an Estonian company, and for further context regarding data transparency, consult the overview of the Estonian Business Register.

Assessing the Continued Value of E-Residency

For businesses with substantive operations, e-Residency remains advantageous. An Estonian OÜ continues to function as a legitimate EU company with a reputable digital administration, and the program is maintained under a multi-year government strategy. The practice of using such entities solely as paperwork-based tax structures has ended. For companies with genuine activity, the 2026 regulatory changes are primarily administrative. For shell entities, the new requirements are specifically intended to address such cases.

The practical implication is consistent for both founders evaluating their own companies and businesses assessing potential Estonian partners: Economic substance is now transparent, and the public register serves as the primary source for this information.