A business start-up subsidy is financial aid (currently up to 4,474 euros) whose objective is to provide motivation and support in starting a business.
The labour market service provided for jobseekers of retirement age is co-financed by the European Social Fund of the European Union by regulation No. 222 of the Minister of Health and Labour of 4 December 2014 on the basis of ‘Provision of labour market services to facilitate employment opportunities’ .
The labour market service provided for individuals with decreased working ability is co-financed by the European Social Fund of the European Union by regulation No. 57 of the Minister of Social Protection and the Minister of Health and Labour of 27 March 2015 on the basis of ‘Provision of labour market services to the target group of work reforms’ .
Business start-up subsidies
A business start-up subsidy is financial aid whose objective is to provide motivation and support in starting a business.
The subsidy is granted for the commencement of economic activity through a new company being founded or as a sole proprietor.
It may be applied for from the Unemployment Insurance Fund by an unemployed person or a non-working person of retirement age registered as a jobseeker who:
- has attained at least 18 years of age; and
- has completed business training; or
- has vocational or higher education in economics or experience in business.
The fund deems experience in business to be activity as a sole proprietor, a shareholder in a company or a member of the Management Board thereof for at least one year. With any less experience than this, there is no way to be sure that the applicant has sufficient knowledge of business and the ability to set up a sustainable company.
Experience as Management Board member of non-profit association
Pursuant to subsection 1(1) of the Non-profit Association Act, a non-profit association is a voluntary association of persons which cannot have the earning of income from economic activity as its objective or main activity.
Since the subsidy is only granted for setting up a company or starting to operate as a sole proprietor whose objective or main activity is to earn income, there is no way to be sure that an applicant who has experience as a member of the Management Board of a non-profit association has sufficient knowledge of business and the ability to set up a sustainable company. For this reason, on the basis of business experience, the applicant does not qualify to apply for a business start-up subsidy. In such a case, it is necessary for the applicant to have vocational or higher education in economics or to have completed business training.
Applying for subsidy on the basis of business training
If you would like to apply for a business start-up subsidy on the basis of business training, the total volume of the training must be at least 56 hours and knowledge must have been obtained in the following fields:
- the nature of business, the personal characteristics of an entrepreneur, the requirements of the Commercial Code, forms of business and the differences between them;
- analysis of business ideas, business plans and the principles of the preparation thereof, the preparation of individual business plans;
- products and marketing (market, target groups and related forecasts, advertising, sales and distribution channels);
- financial planning (revenue and expenditure, forecasts, cash flow plan, income report, etc.);
- the basics of accounting;
- the basics of taxation, levying taxes;
- labour law (different types of and entry into contracts and the rights and obligations of parties);
- the organisation of occupational health and safety in a company;
- information channels, support structures and opportunities for subsidy application important to an entrepreneur.
Business training also includes subjects completed at university, provided that the content and volume thereof comply with requirements. To be sure that the volume is sufficient, talk to your consultant. Business training may also be completed through the Unemployment Insurance Fund.
Business start-up subsidies are not granted:
- for setting up the economic activities of an existing entrepreneur or for expanding their activities;
- for acquiring shares in an existing company;
- to a person with regard to whom a prohibition on business is in force;
- to a person who owes taxes to the state or a local authority;
- to a person whose business plan is high-risk;
- to a person who owns (or owned during the six months preceding the submission of the application for the subsidy) a share in a general or limited partnership or more than 50 per cent of another company;
- to a person who received a business start-up subsidy on the basis of the Labour Market Services and Benefits Act in the three years preceding the submission of the application;
- for operating in a field which is contrary to the public interest;
- for contributions to share capital, the payment of a lease contract deposit, covering training costs, down payments and/or instalments of a loan agreement;
- for conducting transactions with a recipient of the subsidy;
- for transactions in which one party is a recipient of the subsidy and the other is a relative (in accordance with section 80 of the Family Law Act) or the spouse of the recipient;
- for transactions with a company in which a recipient of the subsidy is a partner, shareholder or member of the Management Board;
- for road transport entrepreneurs who transport goods for hire or reward in order to acquire road transport vehicles;
- for export-related activities aimed at third countries or Member States, namely activities which are directly linked to the quantities exported, to the establishment and operation of a distribution network or to other current expenditure linked to the export activity;
- for the purchase of land or property.
- If the recipient is of retirement age, the costs incurred in the purchase of a motor vehicle are not eligible.
The costs covered by the subsidy must be justified, transparent, described in detail and directly necessary to carry out the business plan.
An unemployed person applying for the subsidy must submit the following to the Unemployment Insurance Fund::
- an application
- a business plan
- a CV
- copies of documents evidencing compliance with the requirement specified in clause 19 (1) 2) of the Labour Market Services and Benefits Act.
We recommend submitting the documents either digitally or via the self-service portal. The application, business plan and additional documents must be in Estonian.
The applicant confirms with their signature that there are no circumstances which disqualify them from receiving the subsidy and indicates, in addition to their contact details and data of acquiring education or business experience, the amount of the subsidy being applied for. The maximum amount of the subsidy is 4,474 euros.
The application form can be found on the right-hand side under ‘Forms and Documents’. You can also submit the application and additional documents via the self-service portal by clicking on the following link: Submission of business subsidy application.
Under ‘Forms and Documents” on the right-hand side you will find extra materials for preparing a business plan which are designed to give you instructions on writing a business plan and to explain the main principles of the preparation of such a plan.
There you will also find a business plan form which is recommended (but not mandatory) when preparing a business plan.
Copies of documents
Pursuant to clause 19 (2) 2) of the Labour Market Services and Benefits Act, an applicant is obligated to prove their business experience. If the data from the Commercial Register does not include business activities as a sole proprietor, a respective certificate must be obtained from the Tax and Customs Board and submitted as a document evidencing business experience.
Term and procedure for reviewing applications
- The term for reviewing an application is up to 30 working days as of the submission of the application.
- If the application is approved, the subsidy is paid out within 10 working days.
Whether the applicant is contacted during the reviewing of the business plan for further clarification of circumstances depends on the volume and scope of omissions. If the omissions are significant and more extensive analysis or clarification is needed on the part of the applicant to correct them, the applicant is not contacted. In such a case, the applicant is issued with a decision regarding refusal to grant the business start-up subsidy (high-risk business plan).
Procedure and term for contestation
If an applicant disagrees with a decision, they have the right to file a challenge with the Unemployment Insurance Fund pursuant to the procedure provided for in the Administrative Procedure Act or with Tallinn Administrative Court pursuant to the procedure provided for in the Code of Administrative Court Procedure within 30 calendar days of the date of being informed of the decision.
Accompanying obligations upon receipt of subsidy
- Within six months of the subsidy being transferred, the recipient must found a new company or register as a sole proprietor and commence the activities set out in the business plan.
- The recipient must use the subsidy for its intended purpose in accordance with the table of investments included in the business plan within one year of the subsidy being received.
- The economic activities of the recipient set out in the business plan must not come to an end until one year has passed since the date on which the subsidy was transferred.
- The recipient must submit to the Unemployment Insurance Fund a report on the utilisation of the subsidy at least twice a year after the subsidy is transferred.
- The recipient must allow the fund to review, within three years of the subsidy being transferred, documents proving that the subsidy has been used for its intended purpose.
- The recipient must allow the fund to conduct, within two years of the subsidy being transferred, on-the-spot inspections at their place of operations.
- The recipient must return the subsidy in full if they fail to commence or end the economic activities without good reason.
- The recipient must not transfer their share of the share capital of a company which was set up with the subsidy until one year has passed since the date on which the subsidy was transferred.