Successfully investing in Estonia

 last updated on 6 October 2025 | reading time approx. 5 minutes

How do you see the current economic situation in Estonia? »
How would you describe the investment climate in Estonia? »
Which sectors offer the largest potential in Estonia? »
What challenges do German companies face during their business ventures into Estonia? »
Estonia has a pioneering role in the Baltic States in terms of digitisation. How does this affect the economy? »
In your opinion, how will Estonia develop? »

How do you assess the current economic situation in Estonia?

Estonia's economy is gradually recovering from a recent downturn. According to Eesti Pank, the economy grew by 1.5 percent in 2024 and is expected to pick up to around 2.5 percent in each of the next two years. The International Monetary Fund projects GDP growth of 1.0 percent in 2025, accelerating to 1.8 percent in 2026, supported by a looser policy mix and improved external demand.

Inflation remains a concern, with rates expected to be close to 4 percent for the next two years due to tax increases. The unemployment rate stood at 7.5 percent in December 2024.

How would you describe the investment climate in Estonia? Which sectors offer the largest potential?

Estonia offers a favorable investment climate characterized by:

Equal Treatment: No discrimination between domestic and foreign investors.
Legal Protections: Foreign investments are safeguarded by law and international treaties.
Skilled Workforce: A well-educated labor force with strong language, financial, and IT skills.
Digital Infrastructure: Advanced e-government services facilitating business operations.
Attractive Tax System: A simple and transparent tax regime.

In 2023, Estonia attracted 336 million EUR in foreign investments, creating over 1,000 high-paying jobs. To further enhance its investment appeal, Estonia launched a 160 million EUR large-scale investment incentive in March 2025. This program offers up to 20 million EUR in reimbursement for major investments exceeding 100 million EUR, aiming to attract at least 1 billion EUR in new investments in the coming years.

Estonia also scored highest in public services in the World Bank's "Business Ready" survey, reflecting its efficient regulatory framework and operational efficiencies.

Which sectors offer the largest potential in Estonia?

Several sectors in Estonia present significant growth potential:

DeepTech: Accounting for 63 percent of total startup investments in 2024, with companies like Starship Technologies and Stargate Hydrogen leading the way.
Defense Technology: Driven by regional security concerns, Estonia has seen a surge in defense tech startups, supported by a 100 million EUR government fund aiming for 2 billion EUR in revenue by 2030.
Green Energy: Significant investments in renewable energy projects, such as the Sopi-Tootsi onshore wind farm, contribute to Estonia's path towards decarbonization. The country aims to reduce greenhouse gas emissions by 70 percent by 2030 and achieve carbon neutrality by 2050.
FinTech and Climate FinTech: Estonia leads globally in climate FinTech, with a high rate of female founders and a strong startup ecosystem.

What challenges do German companies face during their business ventures into Estonia?

German companies may encounter the following challenges:

Language Barrier: English is the primary business language. It can bei difficult to find German-speaking staff.
Digital Requirements: Many official procedures are handled electronically. Without an Estonian ID card, digital signing of documents isn't possible. However, the e-residency program offers a solution for foreign entrepreneurs.
Regulatory Stability: Concerns have been raised about the lack of regulatory stability and insufficient dialogue between the public and private sectors, leading to uncertainty for businesses.
Labor Market Constraints: As a small country, Estonia may not be suitable for labor-intensive businesses due to a limited workforce.
Taxation Issues: German entrepreneurs using Estonia's e-Residency program should be aware of potential tax implications, as operating a company from Germany may subject it to German taxation under the "permanent establishment" principle.

Estonia has a pioneering role in the Baltic States in terms of digitisation. How does this affect the economy?

Estonia's advanced digital infrastructure significantly benefits its economy:

Efficiency: E-government services streamline administrative processes, reducing time and costs for businesses.
Innovation: A robust digital ecosystem fosters innovation and attracts tech startups.
Global Reach: The e-residency program enables entrepreneurs worldwide to establish and manage businesses in Estonia remotely.
Economic Growth: Digital transformation drives productivity, creates new business opportunities, and attracts foreign investments.

Estonia's Real-Time Economy initiative aims to further enhance digital transformation by enabling real-time data exchange between businesses and the government, improving decision-making and efficiency.

In your opinion, how will Estonia develop?

Estonia is poised for a gradual economic recovery, with GDP growth projected at 1.0 percent in 2025 and accelerating to 1.8 percent in 2026. The country's commitment to digital innovation, green energy, and defense technology positions it well for sustainable growth. However, addressing challenges such as regulatory stability, labor market constraints, and regional disparities will be crucial to ensure inclusive and long-term prosperity.