---
title: How Abillio in Estonia Differs From LHV, OÜ, and FIE
date: 2026-05-07T07:34:18Z
modified: 2026-05-07T08:48:57Z
permalink: "https://abill.io/et/blog/abillio-vs-lhv-vs-fie-vs-ou-estonia/"
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Estonia offers several ways to work as a freelancer or independent professional, but each comes with different trade-offs. Some prioritize simplicity, others flexibility, and some are designed for long-term business building.

Below is a practical comparison of the four main models: Abillio, LHV entrepreneur account, FIE (sole proprietor), and OÜ (private limited company) that can be used for freelancers with Estonian tax residency.



| Feature | Abillio (Authorization Model) | LHV Entrepreneur Account | FIE (Sole Proprietor) | OÜ (Company) |
| --- | --- | --- | --- | --- |
| Setup required | ✅ None | ✅ None | ⚠️ Simple registration | ⚠️ Full company setup |
| Legal structure | Work through Abillio OÜ | Personal entrepreneur account | Individual business activity | Separate legal entity |
| Who invoices clients | Abillio | Freelancer | Freelancer | Company |
| Tax handling | ✅ Handled by Abillio | ✅ Auto-deducted | ⚠️ Self-managed | ⚠️ Self-managed |
| Accounting required | ❌ No | ❌ No | ⚠️ Basic accounting | ⚠️ Full accounting |
| Income tax | Automatically withheld | 20% flat tax | 22% on profit | 0% retained / 22% distributed profits |
| Social tax | Included when applicable | Partial component included | Paid on profit | Paid on salary |
| Health insurance | ✅ Available if minimum threshold is met | ⚠️ Only at higher income levels | ✅ Yes, if social tax paid | ⚠️ Only through salary |
| State pension | ✅ Included through social tax | ✅ Included in tax | ✅ Included | ⚠️ Included through salary |
| 2nd pillar pension | Optional | Optional | Optional | Optional |
| Unemployment protection | ⚠️ Depends on structure/contributions | ❌ Not included | ❌ Not included | ⚠️ Only if salaried |
| Expense deductions | ❌ No direct deductions | ❌ Not allowed | ✅ Yes | ✅ Yes |
| Income limit | ❌ None | ⚠️ €40,000/year | ❌ None | ❌ None |
| Liability | ✅ No personal company liability | ⚠️ Personal | ❌ Unlimited personal liability | ✅ Limited liability |
| Admin complexity | ✅ Very low | ✅ Very low | ⚠️ Medium | ❌ High |
| Best for | Professionals wanting low admin and compliant structure | Small side income | Small local activity | Scaling and long-term business building |

## LHV: Simple, But Limited

The LHV entrepreneur account is easy to start with, but it comes with important limitations:

- €40,000 annual income limit
- No automatic social protection
- Health insurance only becomes available at relatively high income levels (~€2,450/month)
- No expense deductions allowed

Best suited for low-volume side income.

## FIE: Flexible, But Personally Risky

FIE offers:

- Expense deductions
- Straightforward self-employment

However:

- Personal liability remains unlimited
- Social tax still needs to be paid
- Administrative work is still required

Best for small-scale local activity.

## OÜ: Powerful, But More Involved

An OÜ is the most scalable structure and works well for long-term business building.

Advantages:

- 0% tax on retained profits
- Flexible income planning
- Strong structure for international business

Trade-offs:

- Requires accounting and compliance
- Social protection only comes through salary payments
- Active owners are generally expected to pay themselves a reasonable salary

Best for scaling and long-term business operations.

# How Does Abillio Work in Estonia?

Abillio operates through a **käsundusleping (authorization/service agreement)**.

Instead of creating your own company or registering as self-employed:

- You authorize Abillio to act on your behalf
- Abillio invoices clients through its legal entity
- Abillio handles invoicing, tax withholding, and compliance
- You receive net payouts after taxes

### What makes it different:

- No company setup
- No accounting
- No tax filings
- Access to social protection when minimum contribution thresholds are met

This creates a middle ground between traditional freelancing and employment, giving independent professionals a simpler and more structured way to work with both local and international clients.

## **Frequently Asked Questions (FAQ)**

### What is the difference between Abillio and an OÜ in Estonia?

Abillio allows freelancers to work without creating a company, while an OÜ is a separate legal entity that requires accounting and compliance.

### Is the LHV entrepreneur account good for freelancers?

The LHV entrepreneur account works well for small side income, but it has a €40,000 annual limit and limited social protection.

### Can freelancers get health insurance in Estonia?

Yes. Health insurance availability depends on the structure used and whether sufficient social tax contributions are paid.

### Does Abillio handle taxes in Estonia?

Yes. Abillio handles invoicing, tax withholding, and compliance on behalf of freelancers.