the promise from the e-citizen program in estonia are very actractive.
I would really like to found a limited company there, but I cannot figure out the real total cost of the venture.
Does any of you have any experience ?
How did it worked out ? What are the total cost ?
How much cost to maintain the company ?
What if I need to employee someone ?
Thanks :)
I'd love to know specifics of "attractiveness" side of it. They will run you through multiple police reports, collect fingerprints (as they explained in followup emails). Taxation benefits are unclear, but taxation paperwork burden and accounting nightmares to reconcile you incomes, revenues and taxes across all your current residency jurisdictions is virtually guaranteed.
Estonia socially and historically weren't that much foreigners-friendly country either.
> They will run you through multiple police reports, collect fingerprints (as they explained in followup emails).
Yes, the details they ask are going to be similar to applying for a passport or a residency permit in most countries. They are giving out a government-approved identity document, so they are going to run checks on your identity. From the sounds of it, it seems simpler than getting an US visa, or an European biometric passport that lets you into the US without a visa.
> Taxation benefits are unclear
The main benefit is no corporate income taxes. Businesses only pay taxes when money is paid out as dividend, salary or other benefits to individuals. All income that stays in the company is not (yet) taxed.
The total tax rates (all different business+employee portions) are approximately 20% for dividend, and 40% for salary if the individual is also in Estonia. So not really internationally competitive for salary taxes, but reasonable for dividend.
But you are correct - if the money is paid out to someone outside of Estonia, things get a lot more complicated. You most likely would not need to pay Estonian social security or income taxes, but on the other hand your country will most likely tax you instead.
> Estonia socially and historically weren't that much foreigners-friendly country either.
It is hopefully getting a lot better over time. But the average Estonian seems to have two completely separate viewpoints for "foreigners":
* People who moved to Estonia during the Soviet occupation, and decided to stay here after it ended. They are viewed with suspicion and sometimes outright hostility, as if they were responsible for the bad things that happened in the last century, and are here waiting for a chance to repeat them.
* Everyone else. If you are in Estonia for business, studies, tourism, or any other reason, and know the local word for "hello", you will find friendly reception.
I believe this is fair enough, some countries tax income, some other don't (I guess, not really sure which countries don't tax the personal income) you would need to pay those tax anyhow, I don't think anybody is here to try to avoid taxes...
Or there is something I am missing ?
The two reasons advertised for running a business in Estonia are:
* The paperwork is digital, and pretty quick and simple. But of course, even if it is quick and simple compared to plenty of other countries, it is still a new foreign environment. Handling a bit more paperwork locally might be easier than handling less paperwork in a foreign country over the internet. I would expect this to be an attractive choice for example for entrepreneurs in Italy or Greece, but perhaps not in the US.
* Legally paying less corporate taxes. As long as you keep the money in the company for future expenses and investments, there is no tax on profit. This has been attractive to companies in Finland and Sweden who are moving some of their operations here.
I was just trying to say that if someone's main reason for getting Estonian e-residency and starting a company in Estonia is to legally pay less tax in total, then they will need to investigate their local tax laws for "income earned from dividends abroad" before making that decision as well.
Let me know if you have any other questions!
I am the author of the post, and my main concerned are about the fixed cost of run a company from estonia...
There are any expense that you need to pay no mater if you do business or not ?
Can I do my own accounting or I need someone who speak/write estonee ?
Do I need a phisical address in estonia to set up a company ?
After the initial 180 EUR registration fee, there are no recurring fees.
If it's a very small company, then you need to submit accounting documents once per year. If you have employees, or if you make more than 16k EUR in sales per year (and therefore need to register for VAT), then once per month. Couple of times per year you might get questionnaires from the statistics office that need to be filled out. These do not incur fees, unless you get an accountant.
> Can I do my own accounting or I need someone who speak/write estonee?
It is feasible to do the accounting and everything on your own if you spend a few days reading instructions online. The online systems, and relevant laws tend seem to be all available in English as well. However, if you fall into the "reports once per month" group, then getting an accountant is still probably a better use of your time. I could do it myself, but I prefer to pay 40 EUR / month to an accountant not to have to worry about the deadlines and things.
> Do I need a phisical address in estonia to set up a company ?
Not sure, sorry.
And if you are an US citizen, then you have to file and pay US taxes regardless of where you live, or where you earn income from.