Estonia belongs to about 180 international organizations. Estonia has bilateral investment promotion and protection agreements with the USA, Switzerland, Germany, Great Britain, the Czech republic, Austria, Ukraine, Belgium and Luxembourg.
Non Tariff Barriers
In accordance with its European Union membership since May, 1st of 2004, Estonia applies the European Union trade policy such as antidumping or anti-subsidy measures. The European Union import regime applies to Estonia. If Estonia has adopted the main part of the community legislation on May, 1st of 2004, a transitional period has been granted to the country regarding some EU rules like freedom of movement for workers or cabotage inside some countries. For further information about each candidate country’s compliance with the acquis, please consult the Enlargement of the Negotiation Guidance Notes - Europa published by the European Commission.
While the European Union has a rather liberal foreign trade policy, some products need import licenses. There are some restrictions, especially on farm products, following the implementation of the CAP (Common Agricultural Policy): the application of compensations on import and export of farm products, aimed at favoring the development of agriculture within the EU, implies a certain number of control and regulation systems for the goods entering the EU territory.
Since its accession to the European Union on May, 1st of 2004, Estonia has adopted the EU Common External Tariff. Consequently, trade with Estonia is totally free from customs duties, provided that the country of origin of the goods is one of the other 27 EU Member States. Nevertheless, when introducing goods into Estonia, exporters shall fill in an intrastate declaration.
When the country of origin of the goods exported to Estonia is not part of the European Union, customs duties are calculated Ad valorem on the CIF value of the goods, in accordance with the Common Customs Tariff (CCT).
The duties for non-European countries are relatively low, especially for manufactured goods (4.2% on average for the general rate), however textile, clothing items (high duties and quota system) and food-processing industry sectors (average duties of a 17.3% and numerous tariff quotas, PAC) still know protective measures.
In order to get exhaustive regulations and customs tariffs regarding their products, exporters shall refer to the TARIC code and its database, which includes all applicable customs duties and all customs trade policy measures for all the goods.
Estonia is part of the European Union and its customs are therefore subject to intra-Community procedures. As part of the "SAFE" standards set forth by the World Customs Organization (WCO), the European Union has set up a new system of import controls, the "Import Control System" (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Program eCustoms, has been in effect since January 1, 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union. The required documentation required is:
a signed commercial invoice
certificate of origin/goods certificate.
You will need to pay a customs duty on goods during customs formalities when importing goods into free circulation. The amount depends on the type of the goods, country of origin and quantity. Besides customs duties, you will need to pay VAT and, for some goods, an excise duty: alcohol, tobacco, motor fuel.
After experiencing an economic downturn, the Estonian economy rebounded strongly. Disposable income has increased consistently, with a USD 26,470 GDP per capita in 2021 (IMF). As a result, consumer expenditure rose by 3.2% in 2019 (OECD). Estonians are more comfortable turning to consumer credit to fund purchases, particularly for durable goods. The real estate market is healthy and the demand for mortgages remains strong. Businesses and most logistic services are concentrated in and around the capital city, Tallinn.
Estonia has moved from a centrally planned economy to a modern and liberalized system. Therefore, consumers' behaviour has also changed over the years. Estonian consumers remain price-sensitive, however, the growth in disposable income fueled consumer spending. The Estonian market is relatively small and is characterized by an ageing population (the median age is around 43.7 years - CIA World Factbook, 2020 est.), with the “silver surfers” sector expected to become more and more crucial in the market. Consumers are familiar with E-commerce and social media, therefore the internet generally has a strong impact on Estonians’ purchasing decisions. As in the country there is a wide choice of foreign brands, consumers don’t necessarily buy Estonian products, though they prefer to buy local when it comes to foodstuff.
Retail trade enterprises expect their sales to continue rising (by 6.1% in 2017, according to a the Swedbank annual survey) and they plan to create more jobs, like in the previous years. The profitability is still a concern, however. Profit to turnover has been on a declining trend in recent years. Surging labour costs hamper profitability like in other sectors in Estonia.
Situation in the retail market is only becoming more challenging in the future. Firstly, the purchasing power of wage-earners will grow much less this year than in the past. This, in turn, would limit households’ consumption. Secondly, competition will grow. In addition to the increasing popularity of e-commerce, new retailers could enter the market. As there are retailers who earn part of their turnover through online sales, and Estonians also order goods from abroad, the actual share of e-commerce is much higher than 3%. According to a recent Swedbank survey3, 39% of retail trade enterprises were engaged in e-commerce, mostly to support traditional sales.
Developments across sub-sectors vary, however. While the sales of primary necessities, including food and motor fuel, still constitute the largest part in consumers’ basket, people spend more and more on other goods. Currently, supermarkets amount to around 40% of the total retail sales in Estonia. Automotive fuel comes second with a 13% share, followed by stores specialising on household goods, construction materials and other goods. The purchasing power of Estonian consumers has risen rapidly in recent years due to a strong wage growth and stable prices, and, therefore, people can afford to spend more on entertainment, hobbies, etc. Sales of convenience goods has grown much less than the sales in stores specialising on non-essential goods, compared to one year or five years ago.
Private wholesalers and trading firms are particularly strong in certain specialised sectors, such as electronics, electrical components and instruments, pharmaceutical and health care products, technical products and machinery, and raw materials and chemicals.
There are several competitors in the Estonian supermarket industry:
Maxima: Lithuanian group operating in hypermarket, supermarket and convenience store format: 84 points of sale in Estonia
Selver: Estonian group operating in hypermarket and supermarket formats: 71 points of sale in Estonia
Coop (previously ETK): over 330 stores, in Estonia more than 100 supermarkets under the Konsum banner, and 14 supermarkets under the Maksimarket banner
S Group: Swedish group owns 9 hypermarkets under the name Prisma
OG Elektra AS: Estonian group distributing in 67 outlets in Estonia (supermarkets and convenience stores) under the brand name Grossi
Estonia has a high internet penetration rate, at 91.4% (out of a population of 1.3 million). The smartphone penetration rate is estimated to be slightly above 50%. Estonia ranks 10th in the EU's Digital Economy and Society Index (DESI) 2018 based on European Commission data. Estonia topped the rankings in online public services and scored above the EU average in digital skills of the population and internet usage. Statista estimates that 99% of Estonian 25-34 year-olds, and 95% of 35-44 year-olds connect to the internet on a daily basis. The older generations also log on regularly with 45-54 year-olds and over 55s showing an 86% and 74% daily penetration rate, respectively. The most popular web search engines in Estonia are Google (95.7%), Bing and Yandex RU (1.7% and 0.8% respectively).
According to Statistics Estonia, in 2017 post and online retail grew by 37% compared to the previous year (whereas normal retail grew by 6% only). Sales of goods by post and online amounted to EUR 239.4 million. However, the proportion of postal and online retail compared to the total retail market value (EUR 6.32 billion) is still low, at 3.6% in 2017. More than 58% of Estonians aged between 16 and 74 have used e-commerce. The most popular types of goods bought online are: travel and accommodation services (purchased by 61% of e-shoppers), concert, cinema and theatre tickets (57%), clothing and sports equipment (49%). 85% of e-commerce users purchased products from Estonian sellers, 45% from the EU and 41% from other countries (2017). Statistics Estonia estimates that there are around 6,000 e-stores in the country. The majority of online shoppers in Estonia prefer to buy via desktop. The most visited local B2B online shops are Kaup24, On24, Hansapost, 1a and Shoppa. The main B2G website is Eesti. The most common payment methods used for online purchases are internet bank payments through a bank link service (56%), card payments (13%) and e-wallet solutions like PayPal (9%). Facebook has 640,000 users in Estonia, Instagram is less popular, with 290,000 users (this social network is used mainly by younger groups of people, with more than 90% of its Estonian users being under 45). The most popular messaging app is Facebook Messenger. Russian-speakers favour Russian social media, especially Odnoklassniki and VKontakte.
Organizing Goods Transport
Main Useful Means of Transport
The development of transport has been particularly rapid in the last 5 years mostly due to the development of transit trade. The majority of goods are handled in Tallinn port and sea transportation is widely developed within the country.
Telecommunications and IT sectors is one of the fastest growing industry in Estonia. This is due to the penetration of internet use in the country and the will of the government to allow for an e-government. Biotechnology and the many research centres of Estonia offer great developments for the future of the medical field. Transit services and logistics are also becoming an increasing industrial sector thanks to Estonia's location. For more information about the industrial sector, please visit InvestInEstonia.
DISCLAIMER: The Ministry accepts no liability for any claim, liability, loss or expense arising from use of information on this site, including but not limited to tariff schedules. Reliance on this information is at the user's sole risk.