How Can You Get Estonian E-Residency and Launch a Company?
Examples of tax benefits (crypto trading)
Hello there!
I wanted to make thing blog post about Estonia and its e-residency.
Maybe you have heard before that Estonia is famous for its e-residency. A lot of startup companies come over here to be part of tax benefits and certain regulatory frameworks.
For example, I have a Spanish friend who is a professional poker player and he doesn’t pay any taxes because he is living over here and the taxes are not applied to the gambling players over here. In some countries, there are significant taxes for it.
Estonia itself is quite a cool and innovative country, which is not that expensive and is also not very cheap, so it sits exactly in the middle. The population is 1.4 million and the people are mostly nice here.
The application for the e-residency costs 100€ and the response for the application will be received usually after 4–5 weeks. After that you will have to wait to receive for you e-residency card which will be send to you.
Then if you are interested you can digitally apply to launch your own company. The cost of the OÜ (private limited company) is 190€. The application form online takes about 1–2 hours and the next day you should already receive your company registration number and you can start doing business.
Now, let's bring an example and say that you start trading Bitcoin with your Estonian company. You will be depositing 10 000€ and after 1 year your portfolio is worth 100 000€. As you will be thinking it is good time to leave the market and you will exchange all your crypto to Euros/Dollars. Now you will withdraw this money to your Estonion company bank account. Till this far, you do not have to pay any taxes.
Here in Estonia, we have a corporate tax 20% and also 20% VAT fee. If your company's taxable turnover is below 40 000€ annually (crypto trading is not taxable), then you are not obligated to register for the VAT registration number. It is good to have VAT registration in some cases, as you can claim the VAT fee actually back, but if you are crypto trader then it is not neccessary.
As well, if your company is VAT registered then you will have to do the monthly bookkeeping , but as a cryptocurrency trader (without VAT reg), you will just have to do the annual report once a year.
Now you have this 100 000€ in your company bank account. So far, if you do not pay dividends ( which is 20%, there are rumors, that it could be 14% soon) for yourself or pay salary for your employees, you do not have to pay any taxes of that 90 000€ profit.
And this is actually a very good thing. In some countries, you have to pay high fees of taxes, just for the sake of doing business, but in this case, you do not have to pay any taxes. As long as you do not take money out of the company, you are not obligated to pay any taxes. Now you even might be considered to register for that VAT registration number, because then you could claim the VAT fee back. Now you could be searching for brand new real estate, so you could apply to get the 20% VAT fee back if you buy a nice apartment. As well, you can start any other business. You could work on many business niches at the same time with one company.
Please be aware that this content is made 21.12.2019 and the context of the laws could change. So please do your due diligence before taking this information granted.
I hope this has brought you some value. If you have any questions, let me know. Have a great day!
If you are interested to learn more about Cryptocurrencies and the technologies behind them, then we also have a Facebook group called “Bold Crypto Learners” where we share some information to help each other out and keep up with the biggest news of the market. It is still quite small and we try to keep it as clean as possible from nonsense.
Link for the group: https://www.facebook.com/groups/1843474925973175
Hmm, what is on these other platforms?
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