Doing Business 2020 Estonia Economy Profile Estonia Page 1 Doing Business 2020 Estonia Economy Profile of Estonia Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Estonia About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Estonia Ease of Doing Business in DB RANK DB SCORE Region OECD high income Estonia Income Category High income 18 Population 1,320,884 80.6 City Covered Tallinn Rankings on Doing Business topics - Estonia 6 8 14 12 19 17 48 53 54 79 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 95.4 82.6 83.3 91.0 70.0 58.0 89.9 99.9 76.1 60.1 Starting a Business (rank) 14 Getting Credit (rank) 48 Trading across Borders (rank) 17 Score of starting a business (0-100) 95.4 Score of getting credit (0-100) 70.0 Score of trading across borders (0-100) 99.9 Procedures (number) 3 Strength of legal rights index (0-12) 7 Time to export Time (days) 3.5 Depth of credit information index (0-8) 7 Documentary compliance (hours) 1 Cost (number) 1 Credit registry coverage (% of adults) 0.0 Border compliance (hours) 2 Paid-in min. capital (% of income per capita) 13.1 Credit bureau coverage (% of adults) 22.9 Cost to export Documentary compliance (USD) 0 Dealing with Construction Permits (rank) 19 Protecting Minority Investors (rank) 79 Border compliance (USD) 0 Score of dealing with construction permits (0-100) 82.6 Score of protecting minority investors (0-100) 58.0 Time to export Procedures (number) 10 Extent of disclosure index (0-10) 8.0 Documentary compliance (hours) 1 Time (days) 103 Extent of director liability index (0-10) 3.0 Border compliance (hours) 0 Cost (% of warehouse value) 0.2 Ease of shareholder suits index (0-10) 6.0 Cost to export Building quality control index (0-15) 11.0 Extent of shareholder rights index (0-6) 5.0 Documentary compliance (USD) 0 Extent of ownership and control index (0-7) 2.0 Border compliance (USD) 0 Getting Electricity (rank) 53 Extent of corporate transparency index (0-7) 5.0 Score of getting electricity (0-100) 83.3 Enforcing Contracts (rank) 8 Procedures (number) 5 Paying Taxes (rank) 12 Score of enforcing contracts (0-100) 76.1 Time (days) 91 Score of paying taxes (0-100) 89.9 Time (days) 455 Cost (% of income per capita) 138.7 Payments (number per year) 8 Cost (% of claim value) 17.3 Reliability of supply and transparency of tariff index (0-8) 8 Time (hours per year) 50 Quality of judicial processes index (0-18) 13.5 Total tax and contribution rate (% of profit) 47.8 Registering Property (rank) 6 Postfiling index (0-100) 99.4 Resolving Insolvency (rank) 54 Score of registering property (0-100) 91.0 Score of resolving insolvency (0-100) 60.1 Procedures (number) 3 Recovery rate (cents on the dollar) 36.1 Time (days) 17.5 Time (years) 3.0 Cost (% of property value) 0.5 Cost (% of estate) 9.0 Quality of the land administration index (0-30) 27.5 Outcome (0 as piecemeal sale and 1 as going 0 concern) Strength of insolvency framework index (0-16) 13.0 Page 4 Doing Business 2020 Estonia Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. • Procedure is considered completed once final document is -Is managed by one local director. received -Has between 10 and 50 employees one month after the commencement of operations, all of them domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Estonia Starting a Business - Estonia Standardized Company Legal form Private Limited Company (osaühing or OÜ) Paid-in minimum capital requirement EUR 2,500 City Covered Tallinn Indicator Estonia OECD high income Best Regulatory Performance Procedure – Men (number) 3 4.9 1 (2 Economies) Time – Men (days) 3.5 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 1.0 3.0 0.0 (2 Economies) Procedure – Women (number) 3 4.9 1 (2 Economies) Time – Women (days) 3.5 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 1.0 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 13.1 7.6 0.0 (120 Economies) Figure – Starting a Business in Estonia – Score 88.2 97.0 99.5 96.7 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Estonia and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 95.4: Estonia (Rank: 14) 94.1: Latvia (Rank: 26) 93.5: Finland (Rank: 31) 93.3: Lithuania (Rank: 34) 92.7: Denmark (Rank: 45) 91.3: Regional Average (OECD high income) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Estonia Figure – Starting a Business in Estonia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 3.5 1.2 3 Cost (% of income per capita) 1 2.5 0.8 Time (days) 2 0.6 1.5 0.4 1 0.2 0.5 0 0 1 2 *3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Estonia Details – Starting a Business in Estonia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Check company name, submit the registration application to the Commercial Register and Less than one day EUR 145 regular deposit initial capital (online procedure) registration or EUR 190 Agency : Commercial Registry expedited registration The entrepreneur can check proposed names online at www.rik.ee. The law provides that the company business name shall be clearly distinguishable. It is also possible for entrepreneurs to deposit the initial capital in a bank via online banking as part of company registration process at the Commercial Register. The costs of registration into the Commercial Register are EUR 145 for regular registration or EUR 190 for expedited registration. A separate registration with the National Social Insurance Board, which gets its information from the Estonian Tax and Customs Board, is not required. Health insurance in Estonia is through a compulsory scheme under which employers are obliged by law to pay social tax (the source revenue for health insurance) for their employees. The rate of social tax is 33% of the taxable amount. This tax must be paid by the tenth day of the month following the taxable period, and the corresponding tax return must be submitted to the local Tax and Customs Board office of the residence or seat of the payers of social tax by the same date. If the share capital is higher than EUR 25,000 the entrepreneur needs to deposit it in a bank. However, if the decided share capital is not over EUR 25,000, it can be established at the memorandum of association that the shareholders are not obliged to make pre-payments for the shares. In that case a shareholder does not make a payment for the share, it will be personally liable to the company in the amount of his/her unpaid share contribution. In the last year, more than 70% of the companies were founded without making pre-payments. In order to be able to use a start-up bank account (opened for paying in the initial share capital) for the company's day-to-day activities the management board member(s) of the company (after the incorporation process has been completed) has/have to personally apply (at the commercial bank) for transformation of the start-up bank account of the company into a regular current account. According to the Money Laundering and Terrorist Financing Prevention Act which was adopted 26 October 2017, all Estonian undertakings must disclose data on their beneficial owners to the public registry starting from 1 September 2018. The beneficial owner information is submitted in the same service with incorporation registration and it is free of charge. The other option is to submit the information of the beneficial ownership by the notary, which would incur additional notary fees. 2 Register for VAT at the Estonian National Tax Board 3 days no charge Agency : Estonian National Tax and Customs Board The company must register itself as VAT payer if the taxable turnover of the company, excluding imports of goods, exceeds EUR 40,000, as calculated from the beginning of the calendar year. The VAT Act is available at https://www.riigiteataja.ee/en/eli/ee/527022014003/consolide/current The company’s management board must file an application for company registration, making the company liable for VAT with the Tax and Customs Board, within 3 days as of the date on which the taxable turnover of the company. The tax authority shall register a person as a taxable person by entering the data concerning the person in the register of taxable persons as on the date on which the registration obligation arose, within five working days as of the receipt of the application. Registration may be (and in the practice, often is) affected immediately after establishment. According to subsection 20(1) of the Value-Added Tax Act, an application for registration may be submitted through the information system of the commercial register in a digitally signed format or applied to a notary for the preparation of an application and submitted thereof through the information system of the e-notary. 3 Register employees with the Employment Register Less than one day no charge Agency : Estonian Tax and Customs Board (online procedure, On 1 July 2014 the amended Taxation Act establishing the employment register, where all the simultaneous with natural and legal persons that work are required to register the persons employed by them with previous procedure) the Estonian Tax and Customs Board, entered into force. Since that moment the employers are not required to submit the data on the employed persons to the Estonian Health Insurance Fund. Commencement of the employment must be recorded latest by the moment when an employee commnces the work. When terminating or suspending the employment, employers have ten days to record the termination or suspension as of the day of suspension or termination of the employment. Takes place simultaneously with previous procedure. Page 8 Doing Business 2020 Estonia Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures that can be fully completed online are an exception to this rule The warehouse: • Procedure is considered completed once final document is - Will be used for general storage activities, such as storage of books or stationery. received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage • Quality control after construction (0-3) infrastructure, a septic tank in the smallest size available will be installed or built. - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2020 Estonia Dealing with Construction Permits - Estonia Standardized Warehouse Estimated value of warehouse EUR 952,215.50 City Covered Tallinn Indicator Estonia OECD high income Best Regulatory Performance Procedures (number) 10 12.7 None in 2018/19 Time (days) 103 152.3 None in 2018/19 Cost (% of warehouse value) 0.2 1.5 None in 2018/19 Building quality control index (0-15) 11.0 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Estonia – Score 80.0 77.8 99.1 73.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Estonia and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 87.9: Denmark (Rank: 4) 84.9: Lithuania (Rank: 10) 82.6: Estonia (Rank: 19) 75.9: Finland (Rank: 42) 75.6: Regional Average (OECD high income) 73.5: Latvia (Rank: 56) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2020 Estonia Figure – Dealing with Construction Permits in Estonia – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.14 100 0.12 Cost (% of warehouse value) 80 0.1 Time (days) 60 0.08 0.06 40 0.04 20 0.02 0 0 1 *2 *3 *4 5 6 7 8 9 10 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2020 Estonia Figure – Dealing with Construction Permits in Estonia and comparator economies – Measure of Quality 14 13.0 12.0 11.6 12 11.0 11.0 10.0 Index score 10 8 6 4 2 0 Estonia Denmark Finland Latvia Lithuania OECD high income Details – Dealing with Construction Permits in Estonia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain project clearance from Fire Department 30 days no charge Agency : Fire Department According to the Rescue Act of 2010, obtaining fire safety clearance for the building project from the National Rescue Service Agency or a local government rescue service should take 10 days. However in practice it takes 30 days. If the building project does not conform to the fire safety rules, the Rescue Service can decide to give on average five workdays to eliminate deficiencies. 2 Obtain project clearance from Environment Department 29 days no charge Agency : Environment Department The Environmental Impact Assessment and Environmental Management System Act entered into effect on April 3, 2005, providing legal bases and procedures for assessing likely environmental impact, organization of eco-management and audit schemes, and the legal bases for awarding eco-labels to prevent environmental damage. The environmental impact shall be assessed upon application for, or application for amendment of, a development consent (a building permit or a permit for the building use), if the proposed activity, which is the basis for the application for, or the amendment of, the development consent, potentially results in significant environmental impact. A person who proposes an activity and intends to carry it out shall organize an environmental impact assessment and carry all the resulting expenses. It is up to the local municipality to decide whether it is at all necessary to assess the environmental impact of the project. There are two types of grounds for requiring an environmental impact assessment to be carried out. First of all there are instances in which it is obligatory to conduct environmental impact assessment. The hypothetical warehouse project should not qualify under this category. The second category is such that the local municipality is required to consider whether an environmental impact assessment is needed or not and if the local municipality decides that it is necessary, it must give reasons for such a decision. The hypothetical warehouse project might qualify under this category if for example considered to be (a part of) an industrial area development. Besides the fact that it is in hands of municipality to make a decision, there are no clear definitions on what does not exactly fall into category of projects that do not qualify for Environmental Impact Assessment (EIA). It is likely BuildCo would need to obtain a clearance but not the full scale EIA approval. The Environmental Impact Assessment and Environmental Management System Act established a term of 30 days for issuing a decision to approve the environmental impact assessment report. The time may vary from 30 days to 1 year for actual EIA approval both from Municipality and Environmental Supervisory Authority. It would also include a period of public hearing. However, since we are just getting a project clearance for a relatively simple project, the procedure should be completed within 30 days. 3 Obtain project clearance from Health Care Department 28 days no charge Agency : Health Care Department A clearance for the building project from the Health Care Department is not required. However, this authority may be consulted by the local government before granting or refusing the building permit. In practice, the local government may ask the applicant to personally communicate with these authorities. There is no time limits for such communication. Further, the Health Care Department has the right to perform state supervision over compliance with occupational health requirements when the warehouse is put into use. Page 12 Doing Business 2020 Estonia 4 Obtain project clearance from Labor Inspections Department 27 days no charge Agency : Labor Inspections Department A clearance for the building project from the Labor Inspections Department is not required by law in the stage prior to approval of the building permit. However, this authority may be consulted by the local government before granting or refusing the building permit. In practice, the local government may ask the applicant to personally communicate with these authorities. The Labor Inspectorate has the right to perform state supervision over compliance with occupational safety requirements during construction and when the warehouse is put into use. According to Occupational Health and Safety Act, Paragraph 13, the employer is obliged to notify the local department of the Labor Inspectorate in writing or in a format which can be reproduced in writing before commencing activities. The notification can also be made also via the Customer Portal of the Labor Inspectorate (https://eti.ti.ee/login/index?redir=true). Paragraph 26 provides that after receiving the notification, an inspector has the obligation to carry out an inspection. The employee of the Labor Inspectorate must set up the time of inspection with the owner of the building, but in extraordinary situations, the inspector has the right to commence supervision without informing the employer in advance. 5 Obtain building permit 25 days EUR 585 Agency : Municipality To obtain a building permit from the Municipality, BuildCo must submit an application for a construction permit and construction design documentation. According to the Building Act, the local government must approve or refuse the issuance of a building permit within 20 days from the date on which the application for the building permit and the building design documentation are submitted. The Municipality conducts internal consultations with various departments and agencies. However in practice, BuildCo is likely to follow up with these authorities. Since June 2009, an energy certificate for the new building must be included in the application. The energy audit is assumed to be conducted by the engineers of the newly built warehouse. Prior to construction, BuildCo must notify the Municipality that construction will begin. 6 Receive on-site inspection by Municipality 1 day no charge Agency : Municipality During construction, the Municipality may monitor the work to verify compliance with the requirements. If the construction does not comply with the applicable rules and regulations, the construction will be stopped. 7 Receive on-site inspection by Estonian Technical Surveillance Authority 1 day no charge Agency : Technical Surveillance Authority According to the amendment of Building Act from January 1, 2008 Estonian Technical Surveillance Authority may carry out state surveillance on construction sites, in addition to the surveillance exercised by the Municipality. Before the building is being used or in case of an emergency in a building that is already in use, the Estonian Technical Surveillance Authority does not have to inform the owner about the inspection beforehand. In other situations, the owner must be notified at least 24 hours in advance. The number of inspections is not limited by law -- it is up to the discretion of the Technical Surveillance Authority. However it should comply with the principles of good administration practices. The costs of the evaluation services, of the expert assessment of building design documentation and of the evaluation of construction works ordered to verify conformity to the requirements are borne by the Technical Surveillance Authority. If it is established that the construction works or building design documentation do not conform to the established requirements, the owner of the construction works has to compensate the Technical Surveillance Authority for the costs of the evaluation services ordered to verify conformity to the requirements, including the costs of expert assessment or evaluation. 8 Apply for permit of use and request final inspection from Municipality 1 day EUR 64 Agency : Municipality The local municipality has discretion as to which agencies can be engaged in the inspection before the permit to use the building is issued. According to the law, the local municipality must issue a permit to use the building (or issue a refusal to not use the building) within 30 days from the date on which the last document necessary for the issue of the permit is submitted. BuildCo would have the right to file an action to the administrative court in case the 30-day limit is not respected. In practice though few companies file lawsuits against the authorities. 9 Receive final inspection from Municipality and obtain permit of use 25 days no charge Agency : Municipality The date and the time of the final inspection is agreed between the builder and the municipal authority. The permit for use is not issued before the final inspection is carried out. 10 Obtain water and sewerage connection 20 days EUR 1,131 Agency : AS Tallina Vesi Takes place simultaneously with previous procedure. Page 13 Doing Business 2020 Estonia Details – Dealing with Construction Permits in Estonia – Measure of Quality Answer Score Building quality control index (0-15) 11.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed engineer. 1.0 building regulations? (0-1) Quality control during construction index (0-3) 3.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Inspections by in- 2.0 house engineer; Unscheduled inspections; Risk- based inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 1.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans University degree in 0.0 or drawings are in compliance with existing building regulations? (0-2) architecture or engineering. What are the qualification requirements for the professional who supervises the construction on the ground? (0- Minimum number of 1.0 2) years of experience; University degree in engineering, construction or construction management. Page 14 Doing Business 2020 Estonia Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final supply - Is a new construction and is being connected to electricity for the first time. - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. • Regulatory monitoring of utilities’ performance (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 15 Doing Business 2020 Estonia Getting Electricity - Estonia Standardized Connection Name of utility Elektrilevi OÜ Price of electricity (US cents per kWh) 10.3 City Covered Tallinn Indicator Estonia OECD high income Best Regulatory Performance Procedures (number) 5 4.4 3 (28 Economies) Time (days) 91 74.8 18 (3 Economies) Cost (% of income per capita) 138.7 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 7.4 8 (26 Economies) Figure – Getting Electricity in Estonia – Score 66.7 68.3 98.3 100.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Estonia and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 92.9: Lithuania (Rank: 15) 90.2: Denmark (Rank: 21) 89.0: Finland (Rank: 24) 85.9: Regional Average (OECD high income) 83.3: Estonia (Rank: 53) 82.3: Latvia (Rank: 61) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Estonia – Procedure, Time and Cost Time (days) Cost (% of income per capita) 90 120 80 Cost (% of income per capita) 100 70 60 80 Time (days) 50 60 40 30 40 20 20 10 0 0 1 2 *3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 16 Doing Business 2020 Estonia reflected here, see the summary below. Figure – Getting Electricity in Estonia and comparator economies – Measure of Quality 8.2 8 8 8 8 7.8 Index score 7.6 7.4 7.4 7.2 7 7 7 6.8 6.6 6.4 Estonia Denmark Finland Latvia Lithuania OECD high income Page 17 Doing Business 2020 Estonia Details – Getting Electricity in Estonia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Elektrilevi OÜ and await estimate and technical conditions 12 calendar days EUR 0 Agency : Elektrilevi OÜ After determining the fuse size and the location of the subscription shield the customer submits an application for a connection. The application can be submitted in person, by e-mail and through e-services on the utility's website. After submitting the application, a technical solution based on the data in the application and a contract offer are presented to the customer by Elektrilevi OÜ. . There is an external inspection during this time period by Elektrilevi OÜ but no one from the applicant’s party is required to be present during the inspection. 2 Pay estimate and await completion of external works by Elektrilevi OÜ 75 calendar days EUR 20,848 Agency : Elektrilevi OÜ Once the estimate is received the connection agreement together with the supply contract can be concluded at the customer service centre. After the conclusion of the contract, an invoice for making the first installment payment is sent. Once the fee is received, the necessary works for the connection are carried out by Elektrilevi OÜ. The customer is notified of the completion of the external works and is presented with the second installment for the connection fees which must be paid within 14 days. 3 Receive internal wiring inspection by independent inspector 3 calendar days EUR 350 Agency : Internal wiring inspector According to the Electrical Safety Act, an independent electrical inspector with a special permit for internal wiring inspections, must conduct an inspection of the internal wiring to check for compliance with the law. If the internal wiring is in compliance and conforms to the requirements, the independent electrical inspection issues a notice on the conformity, whichis submitted to the customer service centre or sent by post to Elektrilevi OÜ 4 Sign supply contract with electricity retailer 2 calendar days EUR 0 Agency : Electricity retailer When the connection fee is paid, the customer can conclude a network and electricity supply contract. Supply contract can be concluded with any supplier of electricity operating in Estonia's competitive market. 5 Await final connection from Elektrilevi OÜ 2 calendar days EUR 5,212 Agency : Elektrilevi OÜ Once the supply and the connection contracts are signed and the internal wiring tests are completed, the building will be connected to the power supply network. Takes place simultaneously with previous procedure. Page 18 Doing Business 2020 Estonia Details – Getting Electricity in Estonia – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.3 System average interruption frequency index (SAIFI) 0.2 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.elektrilevi.ee/ en/abi/hinnakirjad- tingimused-vormid- aruanded Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 19 Doing Business 2020 Estonia Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. • Reliability of infrastructure index (0-8) - Has no occupants, and no other party holds a legal interest in it. • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 20 Doing Business 2020 Estonia Registering Property - Estonia Indicator Estonia OECD high income Best Regulatory Performance Procedures (number) 3 4.7 1 (5 Economies) Time (days) 17.5 23.6 1 (2 Economies) Cost (% of property value) 0.5 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 27.5 23.2 None in 2018/19 Figure – Registering Property in Estonia – Score 83.3 92.1 97.0 91.7 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Estonia and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 93.0: Lithuania (Rank: 4) 91.0: Estonia (Rank: 6) 89.9: Denmark (Rank: 11) 82.3: Latvia (Rank: 25) 79.0: Finland (Rank: 34) 77.0: Regional Average (OECD high income) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 21 Doing Business 2020 Estonia Figure – Registering Property in Estonia – Procedure, Time and Cost Time (days) Cost (% of property value) 0.35 16 0.3 Cost (% of property value) 14 0.25 12 Time (days) 10 0.2 8 0.15 6 0.1 4 0.05 2 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 22 Doing Business 2020 Estonia Figure – Registering Property in Estonia and comparator economies – Measure of Quality 35 30 27.5 28.5 26.5 24.5 23.2 Index score 25 22.5 20 15 10 5 0 Estonia Denmark Finland Latvia Lithuania OECD high income Details – Registering Property in Estonia – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 A notary prepares the Sale-purchase Agreement & the Agreement on Transfer of the 9 days EUR 2,793.97; (Notary fee Ownership of the Real Estate, and the parties sign it at the notary’s office according to the Notary Agency : Notary Fees Act (Part 3 Article 22) It is mandatory that a notary public notarizes all transactions related to the transfer of real estate. is EUR 958.65 + 0.14% of The parties may prepare the sale and purchase agreement following the laws. However, the the amount of the notary will review it, and if the agreement is not in accordance with the law, the notary will amend transaction value the agreement or ask the parties to modify the agreement, since the notary is financially liable for exceeding EUR 639,120. any potential mistakes or law violations. As this is a case of a Firstly, parties need to make an appointment with a notary and provide the notary relevant bilateral transaction the information. Notaries prepare the contract agreement. The notaries use the E-Notary program to notary fee for certifying the obtain contract templates and necessary data about the parties and the object of a transaction transaction is double the from different registers. By entering a personal identification code or the name of a person in the full fee) E-Notary program, the program finds information on respective individuals. Upon the entry of the registered immovable number, the E-Notary program also finds data related to the registered properties. Once the contract is signed at the meeting, the notary makes a digital copy of the contract, and the contract is forwarded electronically to the Land Register. 2 Payment of the state fee (stamp duty) at a commercial bank Less than one day, EUR 1,523.54; (If the Agency : Commercial Bank online transaction value is more The state fee for making the changes in the Land Register must be paid prior to applying for than EUR 639,120, the full registration. state fee rate of 0.16% of the transaction value will apply but not more than EUR 2,560). (Appendix 2, State Fees Act of 01.01.2015)) 3 A notarized application is filed to the Land Register and corresponding entries are made to 8 days Already paid in Procedure the Land Register 2 Agency : Land Register The notarized application to the Land Register is filed to transfer the ownership of the real estate to the buyer in the Land Register Book. As of June 1, 2007, this application can be filed online through the "e-notary" system which allows the notary to submit the application electronically without using any paper application. Computerization of property records at the Land Registry have been ongoing for a few years has finally been completed at the end of 2008. Land Register shall publish a register notice regarding a Real Estate, which has not yet been entered in the Land Register only before opening a register part for an immovable in the register. The notice is published in the official publication Ametlikud Teadaanded and, if necessary, in any other manner available to the persons concerned. In case the Real Estate is already registered in the Land Register (as in this case), no publication is necessary. The documentation shall include: (i) Notarized Sale Purchase Agreement and Agreement of the Transfer of the Ownership of Real Estate (obtained in Procedure 1). (ii) Receipt of payment of state fee (obtained in Procedure 2) Takes place simultaneously with previous procedure. Page 23 Doing Business 2020 Estonia Details – Registering Property in Estonia – Measure of Quality Answer Score Quality of the land administration index (0-30) 27.5 Reliability of infrastructure index (0-8) 8.0 Type of land registration system in the economy: Title Registration System What is the institution in charge of immovable property registration? Land Register Department of Tartu County Court In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Fully digital 2.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Estonian Land Board In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Fully digital 2.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Different databases 1.0 kept in a single database, in different but linked databases or in separate databases? but linked Do the immovable property registration agency and cadastral or mapping agency use the same identification Yes 1.0 number for properties? Transparency of information index (0–6) 4.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: https://www.riigiteataj a.ee/en/eli/ee/501072 015002/consolide/cur rent Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable property Yes, online 0.5 registration in the largest business city made publicly available–and if so, how? Link for online access: https://www.riigiteataj a.ee/tolkelisa/5190/22 01/6005/2.pdf# Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: www.riigiteataja.ee. According to the law, any actions must be done within 30 days. Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency No 0.0 in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Number of property transfers in the largest business city in 2018: 14524 for Tallinn Who is able to consult maps of land plots in the largest business city? Freely accessible by 0.5 anyone Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? No cost 0.5 Page 24 Doing Business 2020 Estonia Link for online access: http://xgis.maaamet.e e/maps/XGis Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: http://geoportaal.maa amet.ee/eng/ Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the largest business city formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? Yes 2.0 Land dispute resolution index (0–8) 7.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Law of Property Act § 64´1, § 119 (1). https://www.riigiteataj a.ee/en/eli/50401201 8002/consolide Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Legal basis: State Liability Act and Land Register Act § 79´5. https://www.riigiteataj a.ee/en/eli/ee/507062 016001/consolide/cur rent https://www.riigiteataj a.ee/en/eli/ee/525032 019009/consolide/cur rent Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: State Liability Act, §7 and 17 Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary. Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Notary. Is there a national database to verify the accuracy of government issued identity documents? Yes 1.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Harju County Court businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Less than a year 3.0 appeal)? Page 25 Doing Business 2020 Estonia Are there publicly available statistics on the number of land disputes at the economy level in the first instance Yes 0.5 court? Number of land disputes in the economy in 2018: 440 cases Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 26 Doing Business 2020 Estonia Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 27 Doing Business 2020 Estonia Getting Credit - Estonia Indicator Estonia OECD high income Best Regulatory Performance Strength of legal rights index (0-12) 7 6.1 12 (5 Economies) Depth of credit information index (0-8) 7 6.8 8 (53 Economies) Credit registry coverage (% of adults) 0.0 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 22.9 66.7 100.0 (14 Economies) Figure – Getting Credit in Estonia – Score 70.0 Score - Getting Credit Figure – Getting Credit in Estonia and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 85.0: Latvia (Rank: 15) 70.0: Denmark (Rank: 48) 70.0: Estonia (Rank: 48) 70.0: Lithuania (Rank: 48) 64.3: Regional Average (OECD high income) 60.0: Finland (Rank: 80) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 28 Doing Business 2020 Estonia Figure – Legal Rights in Estonia and comparator economies 10 9 9 8 8 7 Index Score 7 6 6 6.1 6 5 4 3 2 1 0 Estonia Denmark Finland Latvia Lithuania OECD high income Page 29 Doing Business 2020 Estonia Details – Legal Rights in Estonia Strength of legal rights index (0-12) 7 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of Yes collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; Yes and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an Yes electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third Yes party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? Yes Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law No protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Estonia and comparator economies 9 8 8 8 7 6.8 7 6 6 Index Score 6 5 4 3 2 1 0 Estonia Denmark Finland Latvia Lithuania OECD high income Page 30 Doing Business 2020 Estonia Details – Credit Information in Estonia Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes No 1 Are both positive and negative credit data distributed? No No 0 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes No 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes No 1 By law, do borrowers have the right to access their data in the credit bureau or Yes No 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes No 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 7 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 152,000 0 Number of firms 41,000 0 Total 193,000 0 Percentage of adult population 22.9 0.0 Page 31 Doing Business 2020 Estonia Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James • Ease of shareholder suits index (0–10): Access to internal appointed 60% of the shareholder-elected members. corporate documents; Evidence obtainable during trial and - Has not adopted bylaws or articles of association that go beyond the minimum requirements. allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures • Extent of shareholder governance index (0–20): Sum of the made—that is, the transaction was not entered into fraudulently. extent of shareholders rights, extent of ownership and control - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and and extent of corporate transparency indices directors that approved the transaction. • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 32 Doing Business 2020 Estonia Protecting Minority Investors - Estonia Stock exchange information Stock exchange Nasdaq Baltic Stock exchange URL http://www.nasdaqomxbaltic.com Listed firms with equity securities 61 City Covered Tallinn Indicator Estonia OECD high income Best Regulatory Performance Extent of disclosure index (0-10) 8.0 6.5 10 (13 Economies) Extent of director liability index (0-10) 3.0 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 6.0 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 5.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 2.0 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 5.0 5.7 7 (13 Economies) Figure – Protecting Minority in Estonia – Score 58.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Estonia and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 72.0: Denmark (Rank: 28) 70.0: Lithuania (Rank: 37) 68.2: Regional Average (OECD high income) 68.0: Latvia (Rank: 45) 62.0: Finland (Rank: 61) 58.0: Estonia (Rank: 79) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 33 Doing Business 2020 Estonia Figure – Protecting Minority Investors in Estonia and comparator economies – Measure of Quality Estonia 5 3 8 2 5 6 Denmark 6 5 7 5 5 8 Finland 6 4 6 2 5 8 Latvia 6 4 5 5 5 9 Lithuania 7 4 7 6 4 7 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 34 Doing Business 2020 Estonia Details – Protecting Minority Investors in Estonia – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 8.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Board of directors 2.0 excluding interested members Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 3.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to No 0.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) No 0.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of fraud 0.0 or bad faith Ease of shareholder suits index (0-10) 6.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? Yes 1.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 5.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 2.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Page 35 Doing Business 2020 Estonia Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? No 0.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? No 0.0 Extent of corporate transparency index (0-7) 5.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other No 0.0 companies? Must Buyer disclose the compensation of individual managers? No 0.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 36 Doing Business 2020 Estonia Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the • Collecting information, computing tax payable second year of operation (calendar year 2018). Taxes and mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, • Social contributions, labor taxes paid by employer sales and the machine and the tax reporting period is every month. Input VAT will exceed Output VAT in June 2018. • Property and property transfer taxes • Dividend, capital gains, financial transactions taxes The corporate income tax audit process: - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 37 Doing Business 2020 Estonia Paying Taxes - Estonia Indicator Estonia OECD high income Best Regulatory Performance Payments (number per year) 8 10.3 3 (2 Economies) Time (hours per year) 50 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 47.8 39.9 26.1 (33 Economies) Postfiling index (0-100) 99.4 86.7 None in 2018/19 Figure – Paying Taxes in Estonia – Score 91.7 99.8 68.7 99.4 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Estonia and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 91.1: Denmark (Rank: 8) 90.9: Finland (Rank: 10) 89.9: Estonia (Rank: 12) 89.0: Latvia (Rank: 16) 88.8: Lithuania (Rank: 18) 84.3: Regional Average (OECD high income) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 38 Doing Business 2020 Estonia Figure – Paying Taxes in Estonia and comparator economies – Measure of Quality 105 99.4 100 98.1 97.5 Index score 95 93.1 90 89.1 86.7 85 80 Estonia Denmark Finland Latvia Lithuania OECD high income Page 39 Doing Business 2020 Estonia Details – Paying Taxes in Estonia Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Social security 0.0 online and jointly 31.0 33% gross salaries 37.22 contributions Dividend tax 1.0 online 5.0 20/80 distributed 7.71 dividends Land tax 1.0 online 2.5% property value 1.89 Unemployment 0.0 online and jointly 0.8% gross salaries 0.78 insurance contributions Heavy vehicle tax 1.0 online EUR 275 fixed fee 0.12 depending on type of vehicle + road toll State fee (stamp 1.0 online EUR 630 fixed fee 0.09 duty) on property according to transfer schedule Value added tax 1.0 online 14.0 20% value added 0.00 not included (VAT) Advertising tax 1.0 online EUR 0.55 /m2 / fixed fee 0.00 small amount day Stamp duty 1.0 online contract value 0.00 small amount Employee paid - 0.0 online and jointly 2% gross salaries 0.00 withheld Compulsory pension contributions Employee paid - 0.0 online and jointly 1.6% gross salaries 0.00 withheld Unemployment insurance contributions Fringe benefit tax 0.0 online and jointly 66.25% fringe benefits 0.00 exempted from tax as of January 1, 2018 Fuel tax 1.0 included in price 0.00 small amount of fuel Totals 8 50 47.8 Page 40 Doing Business 2020 Estonia Details – Paying Taxes in Estonia – Tax by Type Taxes by type Answer Profit tax (% of profit) 7.7 Labor tax and contributions (% of profit) 38.0 Other taxes (% of profit) 2.1 Page 41 Doing Business 2020 Estonia Details – Paying Taxes in Estonia – Measure of Quality Answer Score Postfiling index (0-100) 99.4 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process none Percentage of cases exposed to a VAT audit (%) 0% - 24% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 1.0 97.5 Time to obtain VAT refund (weeks) 2.0 100 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 1.5 100 Time to complete a corporate income tax correction (weeks) No tax audit per case 100 study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 42 Doing Business 2020 Estonia Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about • Inspections by other agencies (if applied to more than 20% of exchange rates. shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 43 Doing Business 2020 Estonia Trading across Borders - Estonia Indicator Estonia OECD high income Best Regulatory Performance Time to export: Border compliance (hours) 2 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 0 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 1 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 0 33.4 0 (20 Economies) Time to import: Border compliance (hours) 0 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 0 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 1 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 0 23.5 0 (30 Economies) Figure – Trading across Borders in Estonia – Score 99.4 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Estonia and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 99.9: Estonia (Rank: 17) 97.8: Lithuania (Rank: 19) 95.3: Latvia (Rank: 28) 94.3: Regional Average (OECD high income) 92.4: Finland (Rank: 37) 100: Denmark (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 44 Doing Business 2020 Estonia Figure – Trading across Borders in Estonia – Time and Cost Time (hours) Cost (USD) 2.5 1.2 2 1 2 Time (hours) Cost (USD) 0.8 1.5 1 1 0.6 1 0.4 0.5 0.2 0 0 0 0 0 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 45 Doing Business 2020 Estonia Details – Trading across Borders in Estonia Characteristics Export Import Product HS 85 : Electrical machinery and equipment and HS 8708: Parts and accessories of motor vehicles parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles Trade partner Sweden Germany Border Paldiski Estonia-Latvia border crossing Distance (km) 6 190 Domestic transport time (hours) 2 4 Domestic transport cost (USD) 229 265 Details – Trading across Borders in Estonia – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 0.0 0.0 customs authorities Export: Clearance and inspections required by 0.0 0.0 agencies other than customs Export: Port or border handling 2.0 0.0 Import: Clearance and inspections required by 0.0 0.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 0.0 0.0 Page 46 Doing Business 2020 Estonia Details – Trading across Borders in Estonia – Trade Documents Export Import CMR waybill CMR waybill Commercial Invoice Commercial Invoice Packing List Packing list Intrastat Intrastat SOLAS certificate Page 47 Doing Business 2020 Estonia Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. • Court costs - The value of the dispute is 200% of the income per capita or the equivalent in local currency of USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. Page 48 Doing Business 2020 Estonia Enforcing Contracts - Estonia Standardized Case Claim value EUR 34,272 Court name Harju County Court City Covered Tallinn Indicator Estonia OECD high income Best Regulatory Performance Time (days) 455 589.6 120 (Singapore) Cost (% of claim value) 17.3 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 13.5 11.7 None in 2018/19 Figure – Enforcing Contracts in Estonia – Score 72.5 80.7 75.0 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Estonia and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 78.8: Lithuania (Rank: 7) 76.1: Estonia (Rank: 8) 73.9: Denmark (Rank: 14) 73.5: Latvia (Rank: 15) 67.8: Regional Average (OECD high income) 66.4: Finland (Rank: 45) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 49 Doing Business 2020 Estonia Figure – Enforcing Contracts in Estonia – Time and Cost Time (days) Cost (% of claim value) 700 30 Cost (% of claim value) 589.6 600 23.3 23.1 23.6 25 485 485 21.5 500 455 469 Time (days) 17.3 20 400 16.2 370 15 300 10 200 100 5 0 0 Denmark Estonia Finland Latvia Lithuania OECD high income Page 50 Doing Business 2020 Estonia Figure – Enforcing Contracts in Estonia and comparator economies – Measure of Quality Estonia 2.5 3.5 4 3.5 Denmark 2.5 4.5 3.5 3.5 Finland 2.5 2 2.5 1.5 Latvia 3 5.5 2 3 Lithuania 3 4.5 4 3.5 OECD high income 2.5 3.2 2.4 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Estonia Indicator Time (days) 455 Filing and service 60 Trial and judgment 320 Enforcement of judgment 75 Cost (% of claim value) 17.3 Attorney fees 9 Court fees 7.3 Enforcement fees 1 Quality of judicial processes index (0-18) 13.5 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 3.5 Court automation (0-4) 4.0 Alternative dispute resolution (0-3) 2.5 Page 51 Doing Business 2020 Estonia Details – Enforcing Contracts in Estonia – Measure of Quality Answer Score Quality of judicial processes index (0-18) 13.5 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 3.5 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.5 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? Yes 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? Yes 1.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? Yes 1.0 Court automation (0-4) 4.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? Yes 1.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? Yes 1.0 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 2.5 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 52 Doing Business 2020 Estonia 2. Mediation/Conciliation 1.0 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or No conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 53 Doing Business 2020 Estonia Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have • Assessors’ and auctioneers’ fees been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 54 Doing Business 2020 Estonia Resolving Insolvency - Estonia Indicator Estonia OECD high income Best Regulatory Performance Recovery rate (cents on the dollar) 36.1 70.2 92.9 (Norway) Time (years) 3.0 1.7 0.4 (Ireland) Cost (% of estate) 9.0 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. Strength of insolvency framework index (0-16) 13.0 11.9 None in 2018/19 Figure – Resolving Insolvency in Estonia – Score 38.9 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Estonia and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 92.7: Finland (Rank: 1) 85.1: Denmark (Rank: 6) 74.9: Regional Average (OECD high income) 60.1: Estonia (Rank: 54) 59.8: Latvia (Rank: 55) 46.7: Lithuania (Rank: 89) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 55 Doing Business 2020 Estonia Figure – Resolving Insolvency in Estonia – Time and Cost Time (years) Cost (% of estate) 3.5 15.0 16 3.0 3 14 Cost (% of estate) 12 Time (years) 2.5 10.0 2.3 9.0 9.3 10 2 1.7 1.5 8 1.5 1.0 6 1 4.0 0.9 3.5 4 0.5 2 0 0 Denmark Estonia Finland Latvia Lithuania OECD high income Page 56 Doing Business 2020 Estonia Figure – Resolving Insolvency in Estonia and comparator economies – Measure of Quality Estonia 5.5 2.5 3 2 Denmark 6 3 2 1 Finland 6 3 3 2.5 Latvia 5 2.5 2 2.5 Lithuania 4 2.5 1 0.5 OECD high income 5.3 2.8 2.1 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Estonia and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 88.5 88.0 90 80 70.2 70 60 50 41.4 40.3 40 36.1 30 20 10 0 Estonia Denmark Finland Latvia Lithuania OECD high income Page 57 Doing Business 2020 Estonia Details – Resolving Insolvency in Estonia Indicator Answer Score Proceeding liquidation Because Mirage is not able to make its loan payment and the bank will not renegotiate the loan, it is most probable that BizBank would first send Mirage a bankruptcy warning in case of non-payment. If Mirage still fails to pay, BizBank will file a bankruptcy petition against Mirage. Moreover, because Mirage is already unable to pay, the board of Mirage would itself be under obligation to file a bankruptcy application against Mirage without delay. Reorganization could not be considered in a situation where Mirage is already in fact unable to meet its financial obligations as opposed to the situation where the difficulty to meet its obligations is likely to occur in the future. Outcome piecemeal sale In order to keep the hotel operating, creditors would have to finance its operations. The bank is likely to be interested in returning its money as soon as possible and not in lending more money to the hotel, therefore, it would advocate for a piecemeal sale of the assets. The proportion of businesses that survive insolvency as a going concern is significantly small. It is possible only when the bankruptcy trustee can find an interested buyer who pays the market value, but it is unlikely to happen. Time (in years) 3.0 Generally, it takes around 3 years to resolve liquidation in Estonia. The main procedural steps include: - filing of a bankruptcy petition; - appointment of an interim trustee (within 10-20 days after the acceptance of the bankruptcy petition); - court ruling of the county court (court of first instance) declaring bankruptcy, which can be appealed within 15 days after the publication of bankruptcy notice and the judgment of the court of second instance can also be appealed within 30 days; - first general meeting of creditors appointing the bankruptcy committee, confirming the insolvency representative (trustee), and deciding on the continuation or termination of the activities of the undertaking (within 15-30 days after the declaration of bankruptcy); - notification of claims by creditors (no later than 2 months after publication of the bankruptcy notice); - general meeting(s) of creditors for the defense of claims (within 1-3 months after the deadline for notification of claims); - disputes over recognition of claims, recovery of assets, etc. (may take years); - preparation of the proposal for distribution of assets by the representative after the general meeting for the defense of claims, which may be contested within 10 days in court; - sale of assets (time varies); - distribution of assets according to the distribution plan (1 month). Cost (% of estate) 9.0 The cost associated with the case would amount to 9% from the value of the hotel. The major expenses will include fees of the insolvency representative (5%), attorneys’ fees (2%), accountants' fees (1%) and other fees (1%). Recovery rate 36.1 (cents on the dollar) Page 58 Doing Business 2020 Estonia Details – Resolving Insolvency in Estonia – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre- 0.5 commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 2.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? Yes 1.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency No 0.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 59 Doing Business 2020 Estonia Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 60 Doing Business 2020 Estonia Employing Workers - Estonia Details – Employing Workers in Estonia Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 60.0 Maximum length of fixed-term contracts, including renewals (months) 120.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 595.2 Ratio of minimum wage to value added per worker 0.2 Maximum length of probationary period (months) 4.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.0 Premium for night work (% of hourly pay) 25.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 24.0 Paid annual leave for a worker with 5 years of tenure (working days) 24.0 Paid annual leave for a worker with 10 years of tenure (working days) 24.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 24.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.6 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 12.9 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.6 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.3 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 4.3 Page 61 Doing Business 2020 Estonia Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 4.3 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 4.3 Unemployment protection after one year of employment? Yes Page 62 Doing Business 2020 Estonia Business Reforms in Estonia From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2016 Starting a Business: Estonia made starting a business simpler by allowing minimum capital to be deposited at the time of company registration. DB2014 Enforcing Contracts: Estonia made enforcing contracts easier by lowering court fees. DB2012 Paying Taxes: In Estonia a municipal sales tax introduced in Tallinn made paying taxes costlier for firms, though a later parliamentary measure abolished local sales taxes effective January 1, 2012. DB2011 Dealing with Construction Permits: Estonia made dealing with construction permits more complex by increasing the time for obtaining design criteria from the municipality. Getting Credit: Estonia improved access to credit by amending the Code of Enforcement Procedure and allowing out-of-court enforcement of collateral by secured creditors. Paying Taxes: Estonia increased the unemployment insurance contribution rate. Resolving Insolvency: Amendments to Estonia’s recent insolvency law increased the chances that viable businesses will survive insolvency by improving procedures and changing the qualification requirements for insolvency administrators. Employing Workers: Estonia eliminated the applicable priority rules for dismissals as well as the obligation to notify and obtain the approval of a third party in case of redundancy dismissals. It also removed restrictions on night work and reduced notice period and severance payment applicable in case of redundancy dismissals. DB2010 Registering Property: Estonia made registering property easier by computerizing property records at the land registry and thereby enabling notaries to carry out the process online. Resolving Insolvency: Estonia enhanced its insolvency process by establishing a new reorganization procedure to enable financially distressed companies to restructure their debt and apply other means to restore financial health and profitability. DB2008 Starting a Business: Estonia made starting a business easier and less costly by introducing standard articles of association and a fixed fee schedule for company registration. Page 63 Doing Business 2020 Estonia Page 64