Organization

Estonia Non-Profit Guide

Setting up an MTÜ for an open-source project — requirements, costs, and step-by-step process

← FiWorks Labs
Comparison

Non-Profit (MTÜ) vs For-Profit (OÜ)

MTÜ Recommended

Non-Profit Association
Registration fee€20
Minimum capitalNone
Founders required2 minimum
ResidencyNone required
Registration time~5 business days
Annual reportingYes, simpler
Profit distributionNot allowed
Tax on retained profit0%

OÜ

Private Limited Company
Registration fee€265
Minimum capital€0.01 (can be deferred)
Founders required1 is enough
ResidencyNone required
Registration time~5 business days
Annual reportingYes, full
Profit distributionAllowed
Tax on dividends22%
Why MTÜ for open source? An MTÜ can receive donations and grants, charge for services (consulting, support, training), pay salaries and hire contractors, own assets, and sign contracts. All revenue must serve the mission — which is exactly how an open-source project operates. The €20 registration fee and zero capital requirement make it almost trivially easy to set up.
Prerequisites

What You Need Before Starting

Documents

Documents to Prepare

Memorandum of Association

The founding document. Must include:

Articles of Association

The governance rules. Must contain:

Tip: Create a separate standing orders document for operational rules. Amending the articles costs €10 each time in state fees; standing orders can be modified at no cost.
Process

Registration Steps

1

Get e-Residency cards

Both founders apply at e-resident.gov.ee. Cost: ~€120 each. Pick up at an Estonian embassy or consulate (3–8 weeks).

2

Prepare documents

Draft the Memorandum of Association and Articles of Association. Templates available from Estonian service providers or the e-Residency community.

3

Secure a legal address

Sign up for a virtual office service in Estonia (~€10–20/month). This provides the registered address required by law.

4

Submit online

Register at the e-Business Register. Both founders sign digitally with their e-Residency cards. Pay the €20 state fee.

5

Wait for confirmation

Processing takes approximately 5 business days. You receive an Estonian registry code.

6

Open a bank account

Open a business bank account with an Estonian bank or fintech (Wise, LHV, etc.). Some require an in-person visit; Wise Business can be done fully online.

Ongoing

Annual Obligations

ObligationDetails
Annual report Due every May. Two parts: annual accounts + management report. Required even if there was no activity. Must be approved by the General Assembly before submission. Only one board member signature needed (since 2016).
General Assembly Must convene at least once per year to approve the annual report. Can be held online via email or digital voting — no physical meeting required.
Accounting Must maintain transparent financial records. Recommended to hire an accountant (~€50–100/month for a small organization).
Taxation

Tax Rules

TaxApplies?Details
Corporate income tax 0% No profit distribution allowed, so the 22% dividend tax never applies. Retained and reinvested earnings are untaxed.
Payroll taxes Yes ~33% employer social tax + employee income tax. Same rules as any Estonian employer.
VAT Conditional Registration required only if annual turnover exceeds €40,000.
Public benefit status Optional Apply through Tax and Customs Board. Grants income tax exemption for donors — makes donations more attractive.
Rules

What an MTÜ Can and Cannot Do

Can Do

  • Receive donations and grants
  • Charge for services (consulting, support, training)
  • Pay salaries and hire contractors
  • Own assets and sign contracts
  • Generate revenue — as long as it serves the mission
  • Apply for EU funding and grants
  • Hold intellectual property

Cannot Do

  • Distribute profits to members or founders
  • Have profit generation as its primary purpose
  • Issue shares or equity
Budget

Realistic Cost Estimate

Year 1 (Setup + Operations)

ItemCost
e-Residency cards (2 founders)~€240
Registration state fee€20
Legal address (virtual office, 12 months)~€120–240
Accountant (12 months)~€600–1,200
Total year 1~€1,000–1,700

Ongoing Annual Costs

ItemCost
Legal address~€120–240/year
Accountant~€600–1,200/year
Total ongoing~€720–1,440/year
Bottom line: Under €1,700 to get started and under €1,500/year to maintain. That's the cost of a legal entity that can receive EU grants, hire people, hold IP, and sign contracts.
References

Sources