It is rare for a single country to be both a “digital state” where companies can be established with a single click and to direct public resources so clearly towards startups. Estonia does exactly that: over 1,400 startups, leadership in the number of unicorns per capita in Central & Eastern Europe, and behind this is a multi-layered state support system.
Why is Estonia a model country for startups?
Estonia’s success story is not just about a few famous unicorns. Considering the scale of the country, the resulting picture is impressive:
- Over 1,400 active startups and leadership in the number of unicorns per capita in CEE,
- A startup-friendly tax system designed by the state,
- A highly developed digital state infrastructure (e-Government, e-Residency, etc.),
- Direct grant programs, state-supported VC funds, and mobility tools like the Startup Visa.
The Estonian government does not just “encourage” the startup ecosystem; it positions it as a strategic growth tool. Public support spans a wide range from early-stage grants to large investments, tax incentives to attracting international talent.
The critical question for Turkish entrepreneurs is: How can you benefit from these mechanisms? Below, we summarize the main state supports offered to startups in Estonia, along with practical entry points.
Direct state grants: Estonian Business and Innovation Agency (EIS)
The center of grants provided to startups and SMEs in Estonia is the Estonian Business and Innovation Agency – EIS (formerly known as Enterprise Estonia). Most programs are run through this institution, and applications are usually taken online.
Core & R&D focused grants
If you are establishing a technology, software, deep-tech, or science-based business model, this is precisely where Estonia excels. A few key areas focused on R&D and innovation are as follows:
Innovation & Development Grant
Innovation & Development Grant supports technology ventures in early and growth stages to develop new products or services.
- Grant amount: Approximately €75,000 – €350,000,
- Support rate: Up to 80% of project costs,
- Scope: R&D, prototype development, testing, certification, product validation,
- Target audience: Technology and innovation-focused startups.
A critical resource for ventures that have not yet scaled their product commercially but have a technically strong core.
Applied Research Grant
Estonia also wants to bring laboratory and university-based projects to the field. The Applied Research Grant is a large-scale R&D grant designed for this purpose.
- Grant amount: Up to €2 million,
- Focus: Advanced R&D projects developing new technologies, products, or services,
- Who is it for: Deep-tech, science-based, and high-risk innovation projects.
This program is suitable for ventures that have surpassed the classic “MVP” level and require serious scientific infrastructure.
Product Development Grant
If you have a prototype and are ready to commercialize and scale up production, the Product Development Grant comes into play at this stage.
- Grant amount: Up to €500,000,
- Purpose: Transforming the prototype into a market-ready product, scaling, launch, and marketing activities,
- Advantage: Mitigates costs of mass production, international marketing, and scaling.
Programme for Applied Research – Small Projects
There is a “small projects” format for smaller but focused R&D projects.
- Total budget: Approximately €6 million,
- Grant per project: Up to €250,000,
- Focus areas: Digital solutions, artificial intelligence, cybersecurity, health technologies, smart and sustainable energy, etc.
If you are not running a large laboratory project but are working on significant technological innovation, this framework is much more accessible.
Small innovation grant (Innovation Grant)
Estonia also wants classic SMEs to enter the innovation cycle. For this, there is a lower amount innovation grant.
- Grant amount: Approximately €7,500,
- Own contribution: Approximately 20% entrepreneur contribution,
- Target: Entry stage for new product or technology trials.
This support alone will not skyrocket the company but provides an important first step in preparation for larger EIS programs.
For entrepreneurs in the establishment phase: Start-up Grant
When establishing a company from scratch in Estonia, not only technology but also the growth potential of your business model is considered. The Start-up Grant (New Entrepreneur Support) is designed for entrepreneurs trying to generate their first revenues.
- Purpose: To support new ventures with revenue growth and employment creation potential,
- Target audience: New companies with growth and scaling potential,
- Scope: Initial investments, team building, marketing, product launch, etc.
The grant amount and conditions are updated according to periodic calls. For current figures and application criteria, it is necessary to check the Estonian Business and Innovation Agency page.
If you are considering moving the structure you established in Turkey or another country to Estonia, such grants can provide an important financial cushion for adapting your business model to the Baltic and EU markets by “pivoting”.
Programs focused on growth, digitalization, and export
Estonia aims not only for startups to produce products but also to globalize. Therefore, there are separate programs aimed at scaling, digitalization, and export.
Development Programme Support
This program focuses on strengthening the corporate capacity of companies.
- Grant amount: Approximately €100,000 – €500,000,
- Focus: Digitalization, process optimization, entry into new markets, sustainability investments.
Enterprise Development Programme
This program, designed for more mature companies, provides significant support to businesses that have exceeded a certain scale.
- Conditions: Active for at least 2 years, at least 8 employees,
- Grant amount: Up to €500,000,
- Own capital condition: The company is expected to contribute approximately 55% own capital,
- Target: International growth, innovation, digital transformation, sustainability.
Export and internationalization grants
Export-focused grants are significant, especially for startups operating in creative sectors and niche areas.
- Export capacity development grant: Up to €75,000 per project,
- Scope: Strategies for entering new markets, brand positioning, international fairs and events.
Companies in SaaS, gaming, design, and creative industries looking to expand from Estonia to Europe frequently benefit from this item.
Digitalization support (Support Digitalisation)
Although Estonia is already a highly digital country, it wants to take private companies even further.
- Grant amount: Up to €35,000,
- Own contribution: 30–50%,
- Target: Digitalization investments such as ERP, CRM, automation, data analytics.
Large-scale investments and scale-up incentives
If your venture is growing rapidly and requires production, logistics, or physical infrastructure, Estonia offers mechanisms for that as well.
Support for Investments
- Grant amount: Up to €3 million per project for industrial and manufacturing companies,
- Own capital ratio: Approximately 85% company contribution,
- Focus: Capacity increase, new production lines, efficiency investments.
Large-scale investment grant
Estonia also operates a large investment support mechanism for mega investments over €100 million.
- Threshold: At least €100 million investment size,
- Target: Investments that provide significant employment and know-how transfer to the country’s economy.
Such projects are usually structured through direct negotiations with government agencies, under special conditions.
State-supported VC funds: SmartCap and capital programs
One of the distinguishing elements of the Estonian ecosystem is that the state has taken on the role of a venture capital investor, not just a grant-giving institution.
SmartCap: National investment fund
The Estonian government has committed a total of €50 million to the startup ecosystem through a national investment fund called SmartCap.
- The source is distributed to various funds and instruments over approximately 4–5 years,
- €17 million is planned to be allocated from the budget in 2025,
- The remaining €32.2 million comes from Baltic Innovation Fund and EstFund repayments.
The main aim of SmartCap is:
- To bridge the “funding gap” between early-stage and growth-stage,
- To encourage private sector VCs to take more risks.
Direct or indirect investments are provided to both technology startups and green solutions through sub-instruments like the Risk Capital Fund and Green Fund.
EU funds and EIC Accelerator
Companies established in Estonia or through e-Residency can access not only national resources but also European Union funds.
- Research and innovation projects within the Horizon Europe framework,
- Deep technology and high scalability potential ventures are supported through the EIC Accelerator.
Under the EIC Accelerator:
- Grant: Up to €2.5 million,
- Optional equity investment: Between €10–15 million.
The Estonian government and EIS provide guidance to startups on methodology, application preparation, and eligibility in the process of accessing these funds. Process descriptions and guides are detailed on both the EIS and e-Residency portals.
Tax advantages and legal infrastructure
The support provided by the Estonian government to startups is not only grants and investments; tax policy is also one of the critical components of this strategy.
Estonian CIT model: No tax on undistributed profits
Estonia’s corporate tax system is one of the most referenced models in the world:
- The company does not pay tax as soon as it makes a profit,
- If you leave the profit in the company and redirect it to reinvestment, you do not pay corporate tax,
- Tax only arises at the moment of profit distribution (dividends, etc.).
This structure is particularly critical for startups that want to grow quickly; it allows the use of profits for growth without disrupting cash flow or waiting for investment rounds.
Digital state and e-Residency
Estonia’s level of digitalization significantly reduces bureaucratic burdens:
- Company establishment can often be completed online within a few hours,
- Thanks to e-signature, e-invoice, and e-government integration, accounting and legal processes are largely automated,
- The e-Residency program allows anyone from anywhere in the world to establish and manage a company in Estonia remotely.
This digital infrastructure creates a significant operational advantage, especially for software, consulting, remote working teams, and “born global” SaaS companies.
Mobility: Startup Visa and international talent attraction
Estonia offers a special Startup Visa program and other mobility tools to attract global talent to startups. This allows entrepreneurs from outside the EU to establish and settle in Estonia.
- The Startup Visa accelerates residency and work permit processes if you get your business model approved by the Estonian Startup Committee,
- There are also streamlined procedures for team members and family members,
- Startups can attract team members from all over the world to fill talent gaps.
This mobility aspect makes it more practical and legally predictable for a technology company established in Turkey to move its management center or R&D branch to Estonia.
Strategic opportunities for Turkish entrepreneurs
The supports provided by Estonia stand out for Turkey-based ventures in three main scenarios:
- SaaS / technology startups looking to enter the EU market: Incorporation with e-Residency, EIS grants, Estonian CIT advantages, and access to EU funds.
- Deep-tech & R&D focused teams: A multi-layered funding structure with Applied Research Grant, Product Development Grant, EIC Accelerator, and SmartCap supported funds.
- Remote working, cross-border teams: Incorporating through Estonia and employing staff from Turkey or other countries; payroll, tax, and social security structures suitable for this.
Where does Corpenza fit into this equation?
Although the wide opportunities offered by Estonia seem attractive, choosing the right program, structuring your company correctly, and optimizing international tax and social security obligations require professional planning.
As Corpenza:
- We provide company establishment and structuring (holding – operational company – IP company structures) in Estonia and Europe,
- Feasibility analyses of business models and company structures in e-Residency and Startup Visa processes,
- Tax optimization with international accounting, payroll (payroll/EOR), and posted worker models for teams remaining in Turkey while establishing a company in Estonia,
- Structuring income flows within the framework of double taxation agreements and fund compliance in R&D and innovation-focused structures,
- Providing suitable incorporation models and cash flow planning for ventures considering applying for EU funds.
We offer end-to-end consulting in these areas.
Especially if your teams work in multiple countries, it is critical to manage the risks of tax, insurance, and “permanent establishment” correctly while employing employees through the Estonian company while they continue to reside in Turkey. At this point, obtaining professional support to establish a structure that does not create risks in other countries while preserving the advantages of Estonia makes a significant difference.
Conclusion: Estonia can be a leverage point for global growth with the right setup
Estonia offers one of the world’s most systematic publicly supported startup ecosystems with its startup-friendly tax regime, strong R&D and innovation grants, state-supported VC funds, digital state infrastructure, Startup Visa, and e-Residency.
For Turkish entrepreneurs, this does not only mean “less tax”. When structured correctly, Estonia can become:
- An institutional gateway to the EU,
- A large-scale grant and investment pool for R&D and innovation projects,
- A flexible yet legally solid operational center for remote working teams.
However, like every incentive, the conditions, scopes, and budgets of Estonian supports change periodically. Therefore, before taking action, it is important to examine both current official sources and to work with experts to redesign your business model on an international scale.
Important disclaimer
This article has been prepared for general informational purposes. None of the information here constitutes legal, financial, tax, or investment advice and should not be interpreted as such. The conditions of grants, incentives, taxes, and visa programs in Estonia may change over time; it is essential to check the relevant country’s official institutions and current legislation before applying. It is important to seek support from professional advisors who are familiar with Estonian and Turkish legislation before making concrete decisions.
