What is an SPV and why should you consider establishing one in Estonia?

Do you have a scalable business model that can be brought to the global market? Are you starting a major real estate project? Or do you manage an investment fund with interested investors?

However, to raise funding for these projects, you will have to navigate a sea of bureaucracy and legal paperwork, especially when dealing with international investors.

Luckily, the Estonian SPV (special purpose vehicle) offers a simple and cost-effective solution that can simplify the process for all stakeholders.

What is a Special Purpose Vehicle (SPV)?

An SPV is a legal structure created for a specific, limited purpose. It is often used in business and finance to isolate financial risks and make it easier to finance a particular project or investment. SPVs are usually structured as independent companies owned by a group of investors.

An SPV may get a loan or issue additional shares to raise capital, which is then used to fund a project or investment. Isolating financial risks in a separate legal structure helps protect the parent company or investors from possible losses and simplifies the legal and regulatory requirements associated with a project or investment.

Why is the Estonian SPV the best investment vehicle?

Easy to manage

The creation and administration of an Estonian SPV is a relatively simple and cost-effective process. The entire process can be completed online in less than a week.

This means that the costs of setting up are very competitive compared to other countries.

Moreover, once established, an SPV can be managed from anywhere in the world.

Tax incentives

One of the main benefits of using an Estonian SPV is the tax benefits. Income from the sale of shares in an investment property will be tax-free if the shares remain within the SPV and are used for business. This allows companies to reinvest their tax-free profits into new projects, fueling further growth.

In addition, Estonia has entered into double tax treaties with 59 countries, which means that investors can avoid paying taxes in several jurisdictions.

Risk reduction

Another benefit of using the Estonian SPV is risk reduction. Each SPV is created separately for each investment project, which means that if one project fails, it will not affect other assets or ongoing businesses.

This provides investor protection and helps reduce overall risk. In addition, the use of an SPV can also help insulate parent companies from possible financial losses associated with investments, since the SPV is a separate legal structure.

What should you pay attention to when creating an SPV?

To ensure a successful investment process, it is essential to have a detailed shareholder agreement that sets out the decision-making principles, reporting procedures, and conditions for investors to deposit and withdraw funds. In addition, the articles of association must be consistent with the purpose of the SPV in order to enforce the law.

For professional advice on these matters, you can contact me for guidance. To facilitate the investment process, it is recommended that all foreign investors obtain electronic residency cards and create Estonian holdings.

A holding or investment vehicle is a company intended for a private individual that consolidates the owner’s assets and provides protection against various business risks. This allows investors to invest in various asset classes such as stocks, real estate, loans, cryptocurrencies, minerals, and others.

Below is a list of the costs you need to consider when creating an SPV:

SPV Registration Government Fee Fee for Estonian address and contact person Preparation of shareholder agreement Preparation of an investment agreement between the investor and the SPV Preparation of a contract between a startup and SPV Notary expenses Translation costs Annual accounting and reporting The total amount depends on the service provider you choose.

🌟 Don’t miss the opportunity to take advantage of the Estonian SPV to expand your business and attract investments!

Contact experienced lawyer Georgi Džaniašvili for a consultation.

👨‍💼 Georgi Džaniašvili is an expert in the field of creating and structuring investment projects through SPV. Thanks to his extensive experience and knowledge, he will be able to provide you with high-quality advice and assistance in the implementation of your investment project through an Estonian SPV.

📩 Contact Georgi Džaniašvili and get professional advice that will help you overcome obstacles on the way to successful investments and scaling your business!

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