Blog post provided by 1Office
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Where is Estonia? What is e-Residency? How can I benefit from all this?
Let’s start from the beginning. Estonia is a small country in the Eastern Europe and a member of the European Union since 2004. What makes Estonia so special compared to its neighbours? It is a well-known fact that Estonia is a digital state. It means that Estonia has invested a lot in the IT infrastructure. The Estonians even joke that having a good internet connection is our human right. And in practice it is so — most of the households have an internet connection. The coverage is all through the land and one can access internet over 4G even when strolling in a forest.
But this is only one side of it — the most important aspect of being a digital state is related to the e-services provided by the Estonian government. For more than 20 years, Estonia has built up a wide range of e-services. Anything related to bureaucratic procedures can be done remotely and online thanks to the e-services network. Imagine that you can vote or do a personal tax declaration online only in a matter of minutes from your home. Can it be done in your country and how much time would you spend on it? Can you access your medical records online? Can you apply for a new driving license online? All this is a reality in Estonia and what Estonians are so used to for many years now. The key is the Estonian identity card and a digital signature related to it — these enable a person to access the e-services.
The next logical step was to allow non-residents to use the same Estonian e-services. Hence in 2014 the e-Residency was born. The e-Residency is a digital status or a doorway to the hassle-free and less bureaucratic life. In this fast and exciting times, there really is no point to follow bureaucratic processes that are not making any sense and that are wasting our time. Going digital has drastically minimized the paperwork the companies have to do in Estonia, and it saves tons of time and money.
And coming to the benefits anyone can have: the Estonian government has come up with a perfect solution where anyone from anywhere in the world can set up a global business with an Estonian company (OÜ — a limited liability company) with minimum hassle. You only need an internet connection and the e-residency card. You can be a Portuguese living in Bali and providing IT-services to clients who are residing in Europe. Or you can be an Indian using an Estonian company to sell products over Amazon marketplaces. The possibilities and opportunities are endless.
Another huge advantage of Estonia is a bit peculiar but very favourable tax system*. When elsewhere in the world the company usually has to pay a corporate income tax from the earned revenue, then in Estonia the revenue is not taxed, but the profit is. It is a crucial game changer for businesses in early stages. Imagine that the company is not paying any taxes unless it distributes a profit — that is possible with an Estonian company. In short, your Estonian company can focus on its core business and does not have to worry about tax payments nor has a tax burden right from the beginning. You can actually be the one who decides when the corporate income tax is being paid — there is no rule on when the company needs to distribute profit. It means you can accumulate the revenue and profit over the years to come.
From all the above we can conclude that Estonians and Estonian systems are very efficient while saving so much time and money. That is the main reason why having an Estonian company is beneficial for the location-independent and any kind of entrepreneurs.
So, how can you benefit from this unique solution?
Here, e-Residency service providers like 1Office come into play. 1Office helps you to apply for the e-Residency card, to establish an Estonian company, to comply with needed requirements and assists with everyday accounting and annual reporting. Basically, you get all the support needed from one place, so you can focus fully on your core business and its growth. Therefore, 1Office is a one-stop shop which makes business simple for you.
The best part, they have built an excellent option to support you with the whole process flow. As a first step, 1Office will help you to apply for the e-Residency card. After the card has been picked up, 1Office registers your Estonian company. Then you are ready to set up a fintech or a bank account for your company. And it is as easy as that!
As the e-Residency card arrival can take 3–6 weeks, then while you wait for the card you can concentrate on your business idea and plan. Consider the following aspects:
- Have you done your research and know about all aspects of doing business with an Estonian company and its taxation in Estonia and in another country? Make sure you are aware of the possible implications and risks involved.
- Figure out company’s owner and management structure. Who will be the founder and board member? Is it only you or are you including other people? In the latter case, are they already e-Residents?
- Choose a name for the company. It cannot be already registered or too similar to an existing company name. Also, if the word is protected by a trademark, then in most cases it cannot be used without the permission of the trademark owner.
- Choose a field of activity based on your business.
- Where do you plan to open a bank or a business account? With a traditional bank in Estonia (requires having a business in Estonia) or in another country or with a fintech provider like TransferWise, Payoneer, etc.?
When you need assistance in deciding over these points, then you can always rely on the help of 1Office support.
After you have collected the e-Residency card form the pick-up location, your Estonian company will be registered within 1–2 working days. When you have the company and business account then you are all set to start your business activities.
If you are wondering how to make it work in your case, then check it out from here.
* Taxes are case sensitive. We recommend seeking professional advice and use tax advisors’ help, because the company has to be aware of a permanent establishment and a tax residency that it can have in other countries. Turn to 1Office with your tax questions.