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Estonia joined the European Union (EU) in May of 2004 and the single-currency eurozone in January of 2011. As a member of the eurozone, Estonia has adopted liberal economic policies, and created a favorable environment for foreign direct investment and foreign trade. The Estonian government does not impose any restrictions on currency transfers; sending money to Estonia or transferring money internationally from Estonia is not restricted, whether within or outside the EU.
As part of the Schengen Area and eurozone, currency can be freely transferred to Estonia and sent out of Estonia, and there are no restrictions on international money transfers or currency conversions. Estonia freely encourages foreign direct investment and does not impose restrictions or limitations related to investments or international transfers, including loan or lease payments, or remittances on earnings or investment capital. Estonia also seeks to monitor and control money-laundering abuses by maintaining membership in the Council of Europe Committee of Experts on the Evaluation of Anti-Money Laundering Measures, as well as the financial anti-terrorism task force, Financing of Terrorism (MONEYVAL).
Because of Estonias membership in the single-currency eurozone, sending money to Estonia from within Europe has been vastly simplified. The introduction of the single currency euro in 1999 created a single payment system for member countries and has made the transfer of money cheap and fast. This single payment system extends to other European countries that have maintained their independent currencies, including Iceland, Liechtenstein, and Norway.
Estonias membership in the eurozone, liberal economic policies, and favorable investment climate have made it one of the leading countries in foreign direct investment in Central and Eastern Europe. Through 2013, Estonia had attracted US$20.7bn of foreign investment, according to the US State Department. Investments were in the financial sector (24%), manufacturing (16%), real estate-related activities (16%), wholesale and retail trade (13%), and professional, scientific and technical activities (9%). Although Estonia is a small country with a limited workforce and concerns about shortages in the labor force, it does offer a number of benefits, including a transparent regulatory environment and business opportunities in a variety of industries ranging from biotechnology to wood processing. Currently, Estonias closest trade ties are with Germany, Sweden, Finland, and Russia.
The creation of the eurozone and its monetary union resulted in the adoption of a single monetary policy established by the European Central Bank (ECB). The Government of Estonia and Estonias central bank, the Bank of Estonia, supervise the domestic banking system and oversee all financial transactions, including the operation of cash and electronic payments, to ensure they meet the guidelines set forth by the ECB.
The Government of Estonia and the Bank of Estonia maintain an independent Financial Intelligence Unit, under the central banks authority, to monitor suspicious financial transactions, help enforce anti-terrorism measures, and prevent money laundering through international money transfers.
Estonia maintains a simple, flat rate taxation system. All income taxes, personal and corporate, are taxed at a rate of 21%, and corporations income taxes are exempted from the corporate income tax if the companys profits are reinvested. By exempting reinvested corporate profits from income taxation, Estonia hopes to encourage companies to expand their operations in Estonia. Distributed company profits, including dividends, are also taxed at the 21% rate.
The country treats foreign and domestic capital in the same way, meaning there is no favorable treatment for either. There are no special investment incentives for foreign investors, nor do domestic investors receive preferential treatment. Currently, citizens of the EU, Switzerland, and the United States are exempt from the quota which regulates and limits the number of residence and immigration permits issued by the Estonian government. As Estonia is in the process of updating and refining its immigration policies, please consult the Estonian economic ministry website for regular updates to these conditions.
Estonia entered the euro currency area in January of 2011 and uses the euro, which is based on a system of 100 cents, for all its financial transactions. Euro banknotes are printed in denominations of EUR5, EUR10, EUR20, EUR50, EUR100, EUR200 and EUR500, while coins are widely used and available in values of 1, 2, 5, 10, 20 and 50 cents, and EUR1 and EUR2. eurozone member countries central banks issue banknotes and coins for their own country. Coins have national designs on one side and common designs on the other.
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