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Frequently Asked Questions2019-07-05T13:45:49+00:00
Dudas

Frequently Asked Questions

Opening a company is a very important decision, and we want you to know all the details in a completely transparent way. We have classified the most frequent questions into five groups so you can find all the information easily.

You can also request a consulting session with us (199€/h+VAT) to get a personalized study of your situation and the pros and cons of opening a company in Estonia through our contact form.

Initial steps
Where do I start?

Questions about the e-Residency, how it works, etc…

It is easy! You just need to visit our registration page and fill in your name and email.

Once you sign up, you will receive a magic link to access the e-Secure dashboard. Make sure you enter the right email, otherwise, you won’t be able to access the system. If you don’t receive it, please, contact us through our contact form. Once inside, if you haven’t already, you will need to request the e-Residency in the official Estonian government website.

Then, you just need to click the button “I already requested the e-Residency”, so we can start preparing the creation of your company while we wait for the Estonian government to grant you the e-Residency.

No, it’s not necessary. You would only need to visit Estonia in case you want to open a bank account in a traditional Estonian bank (such as LHV or Swedbank). Fortunately, there are many fin-tech alternatives out there you can use that don’t require you to travel to Estonia.

The e-Residency is a revolutionary program launched by the Estonian government some years ago. After its independence from the former Soviet Union, Estonia took decisive steps to become a digital nation, digitalizing all its administration and governmental processes, and allowing its citizens to perform virtually any official paperwork 100% online.

The last step of that digitalization process was the e-Residency, a program that allows anyone, from any nationality, living anywhere, to become an e-Resident, obtaining an ID card with a secure certificate to identify you.

This card does not grant any citizenship or physical residence rights in Estonia, but allows you to do a lot of things, including signing digital documents or founding a company without ever visiting Estonia.

Usually it takes three weeks for your application to be approved. During this period, it’s important that you have a look regularly at your inbox -and also your junk folder- because the Estonian authorities may require additional data, or a new picture of you or your passport. Sometimes, these emails reach the spam folder.

Then, if your application has been successful -the most usual case if you don’t have a criminal record- they will send you an e-Residency pack to the nearest Estonian embassy. You actually choose the place where they will send you your e-Residency pack when you apply for it. This can take one week or sometimes even two.

In total, the process can take approximately 4 to 5 weeks.

When applying for e-Residency, you need to specify the place where you will pick up your e-Residency pack (including your e-Residency ID). Being an official ID, that can identify you just as your passport does, you need to pick it up yourself at the Estonian embassy, or in the police offices of Tallinn in Estonia.

If you live in Europe, most probably your country has an Estonian embassy. If not, you probably need to check what’s the closest embassy where you can collect your pack. Please, don’t forget to make an appointment via phone with the embassy before visiting them.

Here you have a list of the lists of embassies of Estonia around the world.

All nationalities. The e-Residency program is open to citizens of the whole world, no matter where they live. However, if you are not an European resident, you may have trouble opening a bank account for your company in the future. In that case, you may opt for solutions such as Paypal or Transferwise, or even visiting Estonia to open a LHV or Swedbank account.

The e-Residency program has been designed for entrepreneurs, startups and digital nomads offering location independent digital services. That means that if you are not tied to a specific location, and you can offer your services with just the help of your laptop and an internet connection -ok, perhaps some coffee too :)- then a company in Estonia is the perfect solution for you.

If your business needs some kind of office or facilities, you trade with physical goods, sell, buy or trade physical products, a company in Estonia may not be the best alternative for you.

Similarly, if the activity of your company is performed 100% in a specific country (say you, as the only owner are a tax resident in Germany, living there long term), then depending on the legislation of your country, it may decide that your company has a permanent establishment in your country. In that scenario, your company may have to pay its taxes there in that country, effectively becoming a tax resident in your country.

On the contrary, if you are an international startup, with members distributed around the planet, if you are a digital nomad, or a location independent entrepreneur, blogger or freelancer, the e-Residency program has been thought for you.

Requisites for having a company in
Estonia: practical examples of business

Here we discuss what kind of business are a better match for the e-Residency program and opening a company in Estonia, and those who are not.

The e-Residency program is open to any citizen of the world, regardless of their nationality or place of residence.

The main requisite to open a company in Estonia with us is that your business is completely digital. If you are the only shareholder and member of the board, you should also make sure your country cannot claim that the permanent establishment of your company is outside of Estonia due to your activity or the activity of any of your employees.

If you are a digital nomad, or a location independent entrepreneur or startup, the e-Residency program is for you.

We work with companies that have multiple members, but they need to be individuals. We don’t incorporate companies with other companies as shareholders or members of the board.

Yes. Estonia is not a tax haven. On the contrary, Estonia is a reputable country of the European Union.

Also, its corporate tax (25%) and its social tax (33%) are similar to most other European countries, like Germany, France or Italy. Hence, it’s not the target of CFC rules, conversely, Estonia has CFC rules to avoid its citizens from establishing companies in tax havens.

If you are looking for a place to avoid tax, Estonia is not the place for you. If, on the other hand, you want to enjoy the benefits of the unique Estonian system, the lack of red tape, and the ability to launch and run your business completely online, achieving location independence, Estonia is the perfect place for you.

The e-Residency program has been especially designed for digital nomads. Why? To begin with, due to the commitment of Estonia to build a digital nation allowing its inhabitants to achieve geographical independence by founding and running a company completely online. Secondly, to avoid clashes between Estonia and the business systems of other countries -especially in Europe- that are still tied to the concept of geographical location.

So what happens if you are a tax resident of another country, say, Germany, living there permanently, and you don’t intend on changing that situation? Well, being the only member of your company, as 100% of your activity is performed in Germany, the German tax office may consider that you have a permanent establishment in the country, and that the effective place of operation of your company is Germany. If that situation occurs, there will be a negotiation

This doesn’t necessarily affect all countries, but especially if you live in Europe, probably you should check the double taxation treaties between your country and Estonia if being a digital nomad is not in your near future.

If you want to know more about how this applies to your specific situation, you can also request a consulting session with us.

This is a very frequent question. Generally speaking, your business has to be 100% online, i.e: it should offer only digital products and services, and not have a permanent establishment in any other country. If you have a restaurant, yoga school or repair shop in mind, Estonia is not the best alternative for your business.

Do you travel through Europe offering your online marketing services to your customers? Estonia is the perfect place for you.

For more information, you can request a consulting session with us to discuss your situation.

Generally speaking, if you have an online shop selling physical goods, you are not eligible for an Estonian company, unless your shop does not sells the product physically to the customer, but instead act as a drop-shipping online e-commerce. If your online shop buys and stores the goods, has a warehouse outside of Estonia or sends the products directly to the customers, Estonia is not a good solution for you.

A valid example would be a drop-shipping online e-Commerce. In this scenario, your business acts as an intermediary, facilitating the purchase, but it’s the provider or supplier who sends the product directly to the customers, paying you a fee for the sell.

If your business is tied to local facilities such as a restaurant, repair shop, yoga school center or concrete factory, a company in Estonia is most probably not a viable solution for you.

That’s because your country of residence (or where you have your facilities) may consider that your company has a permanent establishment in the country and, consequently, needs to pay taxes there.

Your business activity is perfectly valid as long as your services are completely online. That means that your activity should not be tied to physical premises or facilities, and no other country can claim that you have a permanent establishment outside of Estonia.

If you offer advice about medical stuff, sexual health, gambling, or any other potentially sensitive area, you may be specially careful when opening your bank account, as some providers will refuse opening a bank account for your business. In that case, request a consulting session with us so we can inform you better.

Drop-shipping, in most of its variants, is a valid business activity as long as your company acts merely as a facilitator of the transaction between the provider and the customer, and it’s the provider who sends the product to the customer.

That implies that you should not have local premises or offices outside of Estonia, manage stock, import, export or send the product to the customer directly. In this scenario, the ideal situation is that your earnings come from fees on every sale.

You also need to consider that, even if you don’t send the product yourself, if your business is a drop-shipping e-Commerce or Amazon’s FBA provider, you need to get a VAT number on every country where your business has customers if your sales (earnings) exceed certain amount per year.

Obtaining these VAT numbers, and the VAT reports on all these countries, are not part of our services, but we can help you get in touch with local accountants to help you.

If you are a digital nomad, and you are not tax resident in any country (meaning, you don’t spend more than 183 days a year in the same country), the e-Residency program has been especially designed for you.

That’s due to multiple reasons. For starters, your company in Estonia allows your business to travel with you, without worrying about where you are going to live next, or which country you are in. You will be able to run your business completely online, securely through the use of your e-Residency ID-card. Also, you’ll be free of red tape, bureaucracy, and the necessity of visiting governmental offices, banks or any other institution.

Last, but not least, digital nomads have many important benefits and reductions, tax-wise. If you are not tax resident in any given country, you won’t have to pay any personal taxes on your earnings from your company. Additionally, your business trips and related accommodations, conferences, etc, as long as they are justifiable expenses, are tax-free too. Taxation, in Estonia, only happens when you distribute dividends or salaries.

The e-Residency program empowers international, global startups, especially those whose members are distributed around the globe, or that need to expand globally without geographical limitations.

In fact, as members of the digital nation, you will be able to sign legally-binding documents with your e-Residency ID. This includes company agreements, hiring employees or taking strategic decisions, in a completely distributed, online way. Wherever you are, you will be able to seamlessly manage your company as if you were in the same room.

The Estonian startup ecosystem is one of the most dynamic and active ones in the world, and Estonia has more unicorns per habitant -startups with a valuation of more than 1.000 million €- than any other European country. Additionally, if your startup is disrupting the blockchain or cryptocurrency area, you may find interesting that Estonia has a friendly administration that issues specific licenses for this activity.

VAT and taxes of a Estonian company

Here we discuss how you can invoice your customers, and how VAT and taxes work in Estonia.

When you have a company -in Estonia or elsewhere- you need to differentiate between you (as a person) and your company. Both are separate entities. Your company pay taxes in Estonia.

In Estonia, you only pay taxes when there’s distribution of benefits by means of salaries or dividends. Your company does not pay any taxes for all the money that’s earned or reinvested in the company.

If you are tax resident in some country, you will pay personal taxes in that country for the salaries, dividends, or any other income you collect, regardless of its origin.

No, but you can still be a professional in any other country. Generally speaking, you can be an employee of your company. In this scenario, you assign yourself salaries from your company. This is the perfect solution for digital nomads that are non-tax resident in any specific country. Another solution is distributing dividends. This is done on a yearly basis.

To know more about salaries and dividends, please have a look here.

If you are a professional or freelancer in any other country, however, it’s also possible to invoice your company in Estonia for real services you perform for that company.

Your company will invoice your customers with its name, address and registration number. If/when you have VAT number, that VAT number can be added to the invoice to benefit from the 0% VAT in your invoices to other European companies with VAT number.

Your customers will receive their invoice, bank account details, and pay for your services and products as usual. You can find out more in this article.

The salaries you assign yourself as employee of your company are considered income earned from a foreign company. Usually, you do two different tasks for your company:

First, you are supposed to be the board member and director of your company. Hence, you have some administrative duties. They are supposed to take just a small fraction of your overall working time on your company. Thus, a small part of your salary is called the Board Member Salary, and covers this work. Traditionally, it’s around 20-30% of your overall salary.

Next, the majority of your time will be devoted to the professional tasks you do on your business, like web design or online marketing. These tasks take most of your working time. Your Employee Salary covers them, and it’s usually around 70-80% of your overall salary.

The Board Member Salary is taxed in Estonia, while the Employee salary is taxed in the country where you are a tax resident (if any).

No. Estonia has double taxation treaties with all European countries, and many more outside Europe, in order to avoid precisely that. Those treaties clearly specify the country where you will need to pay taxes depending on certain circumstances.

Generally speaking, however, your company will pay taxes in Estonia and you will pay taxes in your country of residence, unless determined otherwise.

Please have a look here for more information.

Your company needs a VAT number if any of these conditions apply:

  • Your business offers services that require human intervention -such as web development, design, consultancy, or marketing online- to European customers and your company makes more than 40k euros per year.
  • Your business sells digital services or products (software or digital content) to European B2C customers (individuals) from the first sale.
  • Your business sells digital services or products (software or digital content) to European B2B customers (companies) and your company makes more than 40k euros per year.

Unless you are tax resident in Estonia, your work is considered to be performed in a foreign country. Thus, you are not contributing to your pension or social security. Our recommendation is getting a good retirement plan and private insurance.

You have two main options:

You can be an employee of your own Estonian company. In that case, you will assign a monthly salary or dividends (or both). This is the best option for digital nomads.

It’s not mandatory to have a salary or distribute dividends, and you don’t need to pay the same salary every month either. You can pay yourself 1k euros in salaries one month and 2k the next one, and then nothing the following month.

Dividends, on the contrary, are usually distributed only at the beginning of one fiscal year, on the benefits of the previous one. This is also recommended for digital nomads. Indeed, if you are not a tax resident anywhere, you won’t pay personal taxes for the dividends you receive, only your company.

Another option is keep on being a freelancer or professional in other country. In this scenario, you will invoice your company in Estonia for the work you perform for it.

We have written an article where we explain in detail how to invoice your customers and issue your invoices for your Estonian company. You will find also information on the data that should be included in your invoices, and some samples of invoices, ready to be filled and sent to your customers.

Yes, you can. Estonia is one of the most friendly countries in the world with companies and startups working on cryptocurrencies and the blockchain. Indeed, they have specific licenses for that business activity.

However, you need to take into account some important considerations. To begin with, opening a bank account for a cryptocurrency company (or any company that has virtual assets, tokens or any form of cryptocurrency) is a lot more complex. Estonian banks are not keen on these kind of companies. We are specialized in opening bank accounts for crypto-companies.

Secondly, the accountancy and bookkeeping for these companies is also very complex, and requires of an accountant that’s a specialist on it. That’s the reason why the price for our monthly accountancy pack is different for crypto-companies.

Last, but not least, your crypto-company needs to be fully constituted and ready in time. If you want to make things right, and make sure your company adheres to the most absolute legality, you need follow the right steps to constitute your company, get your bank account, and obtain your licenses before starting your activity. If you have an ICO planned, before setting deadlines, it’s better to contact us to make sure you’ll have everything ready when the ICO is announced.

We recommend you to have a look at the costs for crypto-companies in our pricing page.

Yes. However, it’s important to consult us so we can give you an estimation of cost and time for the license. It’s essential that, before starting your activity, your company has obtained the required licenses. Let us help you through the whole process of opening your company in Estonia, from the registry to the bank account and the licenses.

For more information, request a consulting session with us.

Any expense that’s related to the activity of your business, and doesn’t constitute a permanent establishment in any other country is eligible for being considered a justifiable business expense. Some examples include:

  • Web hosting, domains, web services that your company uses for management or bookkeeping.
  • Administrative tools, task management, CRMs, office software, accountancy, etc.
  • Web tools and software subscriptions, such as Sketch, the Apple developer program or Coursera for your employees.
  • Office consumables
  • Public transport to visit customers or for work purposes
  • Business trips, including the flights, transportation via services such as Uber or Taxify, accommodation via services such as AirBnB, or traveling to Estonia to open your bank account.
  • Payment gateways
  • Business lunches, but only those of your customers, not your own.

Some examples of NON justifiable expenses include:

  • Gas for your trips in your country. It’s ok to declare gas costs from country A to country B, as long as there’s a customer or business event in country B, but not gas inside your own country. Public transport is always justifiable for business purposes, not for personal use.
  • Holidays and vacation trips. Be careful if you “visit a customer” from the 24th to the 31st of December.
  • Permanent premises or offices in any other country. That’s in order to avoid that this country considers that you or your company has a permanent establishment there.
  • Clothing
  • Entertainment stuff

Our Products And Services

Learn more about our products for registering your company and monthly accountancy.

Our ‘Company Registration’ Pack includes:

  • company registration
  • Virtual office, including person of contact + physical address for your Estonian company
  • applying for VIES/VAT number
  • registering you as an Employee (member of the board or controller body) of your company to receive salaries
  • bank account opening support, including selecting the better bank alternatives for your business
  • free consultation and support for becoming e-Resident
  • Interactive support via videoconference, Skype or appear in for urgent matters

Our ‘Monthly Accountancy’ Pack includes:

  • monthly accountancy and bookkeeping
  • monthly VAT and TSD tax reports
  • annual activity report
  • payrolls, salaries and dividends management
  • free consultation about VAT, taxes and invoicing
  • Interactive support via videoconference, Skype or appear in for urgent matters

The cost for registering a company is detailed in our pricing page, “Company Registration” Pack section.

This price includes:

  • company registration
  • Virtual office, including person of contact + physical address for your Estonian company
  • applying for VIES/VAT number
  • registering you as an Employee (member of the board or controller body) of your company to receive salaries
  • bank account opening support, including selecting the better bank alternatives for your business
  • free consultation and support for becoming e-Resident
  • Interactive support via videoconference, Skype or appear in for urgent matters

Cryptocurrency companies (those who are going to trade, pay or receive cryptocurrency, launch an ICO or create a virtual token) have special conditions. The cost for them is specified in the ‘Crypto-Company Registration’ Plan of our pricing page.

This price includes the same services described for standard companies with one exception. While the pack includes free consultation for opening the bank account, in order to do it the company needs to hand over a series of documents notarized, translated by a sworn translator and with an apostille on them. The price for these services can be found in our pricing page.

Additionally, cryptocurrency companies need one or more licenses to perform their activity. The cost for any of these licenses (crypto-trading or crypto-wallet) can be found on  our pricing section.

Our ‘Monthly Accountancy’ Pack includes:

  • monthly accountancy and bookkeeping
  • monthly VAT and TSD tax reports
  • annual activity report
  • payrolls, salaries and dividends management
  • free consultation about VAT, taxes and invoicing
  • Interactive support via videoconference, Skype or appear in for urgent matters

Basically, all you need to operate comfortably with your company in Estonia. We take care of everything so you just need to focus on growing your business. The monthly fee depends on your invoice volume. Visit our pricing section to know more about the different plans.

For cryptocurrency startups and companies, the accountancy is a lot more complex, and needs to be performed by a specialist. Thus, the monthly cost for these companies is always 99€ per hour + VAT. Usually, a “standard” accountancy for a normal invoice volume takes around 4-5 hours a month.

In order to register your company as part of our ‘Company Registration’ Pack, getting the VAT/VIES number and managing your accountancy as part of our ‘Monthly Accountancy’ Pack, we need to collect some data from you. This data needs to be true, valid and current.

Also, you need to grant us a Power of Attorney (online, using your e-Residency card) to apply for your VAT/VIES number and assign an accountancy for your company. In this post, we explain how to do that in detail in this blog post.

In order to provide you with the services contained in our ‘Monthly Accountancy’ Pack, you must give us all the bank statements, purchase and sales invoices from the current month up to the 5th day of the following month. For example, in order to be able to declare your taxes and VAT reports for October, we need you to give us your invoices and bank statements up to the 5th of December. Preferably, you should upload it to the dashboard as soon as you have them.

Some banks and fintech solutions allow you to grant us read-only permission to access your accounts. This way, we can do the bookkeeping and accountancy without you needing to upload the bank statements manually.

Not a problem! Just remember to give us all the information about the shareholders and members of the board.

The cost of our ‘Monthly Accountancy’ Pack is the same regardless of the number of members -shareholders or board members- of your company. However, as a requisite, all members of the company have to be individuals, not other companies, and need to have been granted the e-Residency.

In “Your Company in Estonia”, we can help you get your crypto trading and crypto wallet licenses. In order to do that, we need some more information about the members of the company than what’s required for standard companies. This includes:

  • criminal record of all members, not older than three months
  • personal data about the members (including full name, email, phone number, and address)
  • Curriculum Vitae of all members of the company

Additionally, you will need a series of documents about your startup or company such as the KYC policy (Know Your Customer) or your AML document (Anti-Money Laundering). The process of obtaining the licenses usually takes around 4-8 weeks, and it’s subject to the approval of the FIU (Financial Investigation Unit) of the Estonian police. Ultimately, the success of the application depends on the transparency of the company and its members.

We are not a bank, but as part of our ‘Company Registration’ Pack, we offer free consultancy on the best alternatives to open the bank account for your company. We work closely with many fintech solutions such as Holvi and Transferwise. In the majority of cases, you will be able to open a bank account without even visiting Estonia.

However, the decision is ultimately in the hands of the banks, and depends on lots of different factors, including your company’s activities. We cannot guarantee a concrete bank will open a bank account for your business, but we can help tilt the balance in your favor.

Important note: in the case of crypto-companies, opening a bank account is a lot more complex, and most Estonian traditional banks and fintech solutions are not willing to work with your company. We have some agreements with banks outside of Estonia that are friendlier to companies like yours. Nevertheless, in that case, it’s necessary to prepare a some documents, notarized, translated by a sworn translator and with apostille. We have the required know-how on how to do this, but it has an extra cost. Please, check our pricing webpage.

Technical questions. e-Secure dashboard.

Here you will find answers to questions regarding the monthly accountancy and how to use our e-Secure dashboard.