General Partnership (Täisühing) in Estonia — Drop Servicing Formation Guide
Choose a jurisdiction with strong payment gateway support (Stripe, PayPal) and low withholding taxes on foreign contractor payments, as you will be paying freelancers globally.
Last verified: June 10, 2026
Corporate Tax
22.0%
State Tax
0.0%
Formation Cost
$14
Annual Fee
$0
Forming a General Partnership (Täisühing) in Estonia as a Drop Servicing means a total tax burden of 22.0% and an official formation cost of $14. There is no minimum capital requirement. Standard formation takes 3-5 business days, or 1 day expedited. No local director is required; the process can be managed remotely. This guide covers the steps, tax breakdown, banking options, and compliance requirements — all from verified data.
First-year total cost
≈ $1,087
Ongoing (per year)
≈ $900
Why General Partnership (Täisühing) for Drop Servicing?
Drop servicing (or service arbitrage) involves selling digital services to clients and outsourcing the fulfillment to freelancers or white-label agencies. As a founder, your main focus is on marketing, sales, and client relationship management, while the actual work is handled by third parties.
Ideal for
- Marketers and sales professionals
- Entrepreneurs with strong networking skills
- Founders looking for location-independent businesses
- Those wanting to start an agency without technical skills
Challenges to watch
- Maintaining quality control over outsourced work
- Managing cash flow between client payments and freelancer fees
- Handling cross-border contractor tax compliance
- Building trust and brand reputation
Key decision criteria
- Access to global payment processors (e.g., US LLC or UK LTD)
- Tax implications of hiring international contractors (W-8BEN for US)
- Clear B2B contracts and terms of service
- VAT/Sales tax rules for digital services in your clients' countries
General Partnership (Täisühing) formation requirements
Minimum capital
None
Standard timeline
3-5 business days
Expedited timeline
1 day
Local director
Not required
Registered office
Virtual office allowed
Notarization
Required
No local director is required, but if the management board is located outside Estonia, a local contact person must be appointed.
Estimated breakdown (based on avg. $80,000 revenue)
Simulate with your own revenue →
VAT / Sales Tax
Standard rate 24%. Registration threshold: 40,000 EUR. Non-resident providers of digital services to Estonian consumers must register for VAT under the OSS scheme or locally, applying the standard 24% rate.
Banking & payments for Drop Servicing
Opening a traditional bank account in Estonia as a non-resident requires proving a strong business connection to the country, such as local employees or suppliers. However, e-residents can easily open fully functional business accounts with EU/EEA fintechs like Wise or Revolut entirely online.
Supported payment gateways
Remote-friendly accounts
Wise
Highly popular among e-residents for its seamless online onboarding and multi-currency accounts.
Revolut Business
Offers comprehensive digital banking services, corporate cards, and multi-currency support for EU companies.
Wamo
A fintech alternative offering EUR/GBP IBANs and fast online onboarding tailored for e-residents.
Estonia incentives & advantages
0% Corporate Tax on Reinvested Profits
Allows businesses to grow their capital tax-free.
e-Residency Program
Remote company formation, digital document signing, and online tax filing.
General Partnership (Täisühing) formation steps
Step 1: Obtain e-Residency. Apply for an Estonian e-Residency card to enable digital signatures and remote registration (takes 3-5 weeks).
Step 2: Draft the Partnership Agreement. Create a comprehensive agreement detailing profit sharing, management roles, and liability among partners.
Step 3: Secure a Legal Address and Contact Person. Hire a licensed virtual office provider in Estonia (mandatory for non-residents).
Step 4: Choose a Business Name. Ensure the name is unique in the Estonian Commercial Register and includes the appendage 'Täisühing' or 'TÜ'.
Step 5: Submit the Application. File the registration application and partnership agreement via the e-Business Register using your digital ID.
Step 6: Pay the State Fee. Pay the €20 state fee for registering a general partnership.
Step 7: Open a Business Bank Account. Apply for a business account with an EU/EEA fintech (e.g., Wise, Revolut) or a traditional Estonian bank.
Step 8: Register for VAT (if applicable). Register with the Estonian Tax and Customs Board if annual turnover exceeds €40,000.
Drop Servicing FAQ
Which country is best for a drop servicing company?
The US (LLC) and UK (LTD) are highly popular due to easy access to Stripe/PayPal, global credibility, and straightforward rules for paying international contractors.
Do I need to pay withholding tax when paying freelancers?
It depends on your company's jurisdiction and the freelancer's tax residency. For a US LLC, collecting a W-8BEN form from non-US contractors usually exempts you from withholding tax.
How do I handle VAT or Sales Tax?
You must track where your clients are located. If selling B2B, the reverse charge mechanism often applies. For B2C, you may need to register for VAT/Sales Tax in the client's jurisdiction once you cross specific revenue thresholds.
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Related guides
Complete General Partnership (Täisühing) guide
Taxes, requirements, banking, compliance
General Partnership (Täisühing) cost calculator
One-time and annual cost breakdown
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