Technically, you can invest but your options are limited. When using Xolo Leap, investment activities are supported in Pro and Premium service plans and your Estonian company is allowed to make the following investments:
- Buy-sell shares in publicly traded companies and funds
- Buy-sell cryptocurrencies for investment purposes only
- Invest in start-ups or other private companies registered in the EU or in the UK (from January 2021) (either a convertible loan or equity), receiving a minority stake and no controlling rights (less than 20%)
- Lending via internationally recognized crowd-funding platforms if they provide you with a business account
- Lending to/from start-ups or other private companies registered in the EU or in the UK (from January 2021) based on a loan agreement (incl. parties' details, loan amount, market interest rate, payment deadline)
This means the following investments are not allowed (not an exhaustive list):
- Buying real estate, land, a car, or any other physical assets
- Buying physical gold/silver
- Buying a controlling/majority share in another company
- Lending to/from a friend or any other individual directly
- Lending to yourself (as a shareholder/board member of the company)
Please note that for investing and lending via platforms you first need to open a BUSINESS ACCOUNT for your company. Not all service providers have the option to open a business account, so please make sure that the partner you choose can open a business account for you. Deposits and payments to accounts that are not registered for your company are regarded as transactions for private benefit (which are taxable). It means that even if you personally have an investment account open with a service provider you cannot use that account to invest your company's money, because the assets on that account would legally belong to the individual, not the company.
It is also important to note that for accounting purposes, you would need to provide us with a balance report or statement with the total value of the investments on a yearly basis. Please make sure that the platform/marketplace that you use can provide you with this data or that you are able to compile the report yourself. For reporting purposes, it is the sole responsibility of the board member to review and confirm the BALANCE of the assets (what investments you had, where, and how much) that the company had at the end of the financial year.
Investing cannot become the core business activity itself. This means that the investment activities cannot replace the initial core business of the company (e.g. instead of providing software development services the company starts trading activities), because otherwise the company may be required to have a separate activity license in Estonia.
Advice regarding investment opportunities is beyond our competence. But there are other professional service providers you can turn to. For instance, LHV is also known for its investing capabilities. You can read more about it on their website.
You can lend money to your company for investing, but the funds must come directly from the shareholder's account to the company's bank account. It means that you are not allowed to invest anyone else's money in the name of your company, because otherwise the company will be required to have a separate activity license in Estonia. To comply with the rules set by Xolo, you can transfer up to €10 000 from your personal account to your business bank account by adding 'Loan from shareholder' as the description of the transfer. Transferring amounts larger than €10 000 (total loan amount) might require extra paperwork from you, explaining the origin of the funds, how the money was acquired, etc. Please be ready to provide this evidence upon request by Estonian tax authorities, your banking partner, or Xolo.