[onnimonni]

They certainly can. I think even people outside of EU can open companies in Estonia.

The problem is that you need to pay taxes in the country where the work was physically done. So if you have Estonian company while living in Germany typically the same taxes need to be filed and paid compared to having a GmbH in Germany. Plus you need to also do the taxes in Estonia as well so you would end up having double bureaucracy instead.

You can read about tax agreements between your country of residence and estonia to find out more. I'm not a lawyer and this is simplification and Can even be wrong but it's the best understanding I have so far.