There is a jewel bathed by the waters of the Baltic Sea that holds enormous natural beauties, but more importantly, one of the most attractive destinations for investment and business worldwide.

A beautiful landscape, enviable classical architecture, potential assets, and large technological markets have allowed Estonia to position itself in the sights of major investors around the world. Thanks to its e-Residency program, those who wish and can start a business in this small country can do so in a few hours, from anywhere on the planet. This is undoubtedly impressive.

Its economic openness, continuous promotion of foreign investment, great respect of the State for private enterprise, and one of the friendliest tax policies in all of Europe, has brought about a huge transformation in Estonian life, always for the better, of course. The huge gains this country has received in recent years have been directed towards sustained growth in all areas, and real estate is no exception.

Combining an enormous natural attraction, a huge medieval heritage, and a great modern touch, they give the capital Tallinn the possibility of providing one of the most attractive real estate markets in the whole European continent, and undoubtedly, one of the most desired by hundreds of investors. With strong property rises over the last several years, Tallinn’s housing market is offering good yields for properties in very attractive locations. More and more developments can be seen rising around central areas of the city in response to the continued demand.

Benefits of Real Estate Investment in Estonia

There are several benefits for those who are interested in a real estate investment in Estonia, and here we want to point out a few:

-Owners of real estate in this EU nation may access multiple-entry visas which give them the option of staying in the EU for three months of every calendar year.

-Properties that are bought may be rented out for extra and regular income.

-It will be simpler to access Business Loans when you have Real Estate in Estonia as the capital of the company.

-Estonian real estate has a high rating in different economic indices of the world, which increases the enormous architectural and economic attractiveness of the different properties.

-Estonia has developed an economic infrastructure aimed at boosting investment and business.

-Low mortgage interest rates for local Estonian people.

-Fast wage increases and the opportunity to invest in a great environment with strong economic growth and a pretty low inflation rate.

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Why Buying a Property in Estonia?

Real estate investment is one of the most recommended by investors and connoisseurs around the world. Estonia is a country where the labor market is steadily improving. Wages are rising and this is making more and more people want to buy a home of their own.

Housing prices are rising significantly in line with this, which leaves open a market segment where there seem to be opportunities. As a consequence of continued development and international interest in the residential properties in Tallinn, the city’s residential prices have seen significant rises since 2011, continuing the upward trend in the more recent years and rising by 8.46% in 2014 and 8.07% in 2015.

Real estate is a fairly prominent sector in Estonia. Like its entire economy, it has been characterized by a steady growth that has attracted the attention of investors from all over the world, who are looking for opportunities to continue generating profits and benefits.

What is the main incentive? For many experts, the main attraction of Estonian real estate is that it is a sector that is perfectly supported by large growths in salaries, lifestyle, and different types of industries, which is certainly more than striking.

Estonia is a growing country, which is still far from its peak. Its political, social, and economic stability, good relations with the rest of the European countries, the continuous development of new industries, and the growth of its urban spaces undoubtedly generate more and more new real estate projects, more and more spectacular and full of potential benefits for those who decide to invest in them.

Estonia is consistently ranked as a world powerhouse in human capital, digital capability, and ease of doing business; the 8th place on the 2021 Index of Economic Freedom by the Heritage Foundation says a lot about it. This creates a competitive environment in several sectors, with plenty of benefits. This is simply unbelievable for any country, especially one that took just 30 years to make such a major turnaround in economic policy.

Can I Get Citizenship by Investment in Estonia?

Unlike several countries, Estonia does not have any Citizenship by Investment Program. According to Estonian law, the only way an expat becomes an Estonian citizen is by naturalization after 8 years of legally living in Estonia. However, as an investor, you can apply for a residency permit, not only in real estate but several in economic sectors.

As an investor, you can apply to the “Golden Visa” scheme, as a major investor. This program entered into force back in 2017, and it defines a “major investor” as someone who has made a direct investment for at least EUR 1,000,000 into a company. That company must be:

-Registered in the Estonian Commercial Register (ECR)

-Making substantially investments in the Estonian economy

-An investment fund, which primarily resources go to companies entered into the ECR

The first residence permit can be issued depending on the length of the investment, later it can be issued for 10 years. The decisions on applications can be taken within 2 months on average.

After 8 years, you will be able to apply for Estonian Citizenship, meeting other conditions. It is a long process, but there are several advantages to getting this citizenship. Once you get that, you’ll have the Estonian Passport, which is one of the most powerful ones in the world. It gives visa-free access to several countries like the US, the UK, Canada, and full right to live, work and study in any EU member.

Property Taxes in Estonia

As mentioned above, Estonia has one of the most efficient and friendly tax systems for foreign investment in the entire European Union and the world. This has allowed it to attract a large number of entrepreneurs and businesses from all over the world, seeking to be part of this great economic miracle.

As for the properties, and what their owners do with them, there are a few taxes that we must analyze to know the great advantages that this small Baltic country has to offer.

-Property tax: Estonia imposes a rate varying between 0.1% and 2.5% for the tax on a property, depending on what is determined by local authorities and the value of the land. This country incurs a rather peculiar practice when it comes to collecting this type of tax. To guarantee the necessary and safe investment on the land owned, the Estonian tax regime exempts from tax payment the constructions and investments made on that land or property in question, limiting the payment of the tax to the physical space on which it is invested.

-Rental Income: Nonresident individuals earning income through renting out Estonian property are liable to pay income tax. Income earned from rental payments is subject to the flat income tax rate of 21%. This is taxed by way of withholding, which is final taxes and does not obligate the nonresident recipient to file returns.

-Capital Gains Tax: Capital gains are included in the computation for taxable income, and taxed at the standard rate of 21%. The income of nonresidents from the sale of the property is subject to income tax by way of assessment.

In conclusion, investing in real estate in Estonia is a great opportunity for gains for those who can afford it. You'll have a beautiful property in a wealthy, secure, and great country, which can also generate several monthly rent incomes.

Here in Mundo, we can help you with everything you need to know to start a business in Estonia, with all the benefits that it could bring, including real estate.

Our experts are waiting for your call. This is an opportunity of a lifetime. Don't let it get away and start your real estate investment today! 

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