Why beneficial, who I recommend it, accountancy, renewal and more…
I became an Estonian e-resident and business owner in the summer of 2019. I thought, it is time to write my own experiences about being an Estonian E-resident and Estonian business owner.
Why I needed the Estonian E-residency?
My limited company in the UK was in contract with an international company based in Germany. As we have already moved out from the UK, I was in a search to find a way to establish a company in the EU – which I can manage remotely, cheap to maintain, and preferably where the company tax is low. The counting back started till Brexit and I needed a company based in the EU or I would have risked to lose my client! First, I did my research about having a company in Malta, then in Georgia, later about having one in Estonia. Forming a company in Malta and Georgia did not attract me because of the requirement to have some form of personal establishment in these countries.
So, I learned more about what the Estonians started to promote, the e-residency and having a company there. I read through all books and blogs about the e-residency until I was satisfied, I am in the know. In order to establish a company in Estonia, you must have first an e-residency, that allows you to open your company in the country. I still remember how excited I was when I started the application, At that time this e-residency was a new program, less than 5 years old (it is becoming 10 years old this year, on the 1st of December). I am proud I joined to this program in such an early stage.
Who do I recommend to have an E-residency and a company in Estonia?
I recommend it for anyone who wants to have a company in the EU, relatively easy and cheap. Maybe the best is for those, who have not got a tight relationship yet with Europe, because it is the most beneficial for residents outside of Europe – tax wise. Inside the EU there are many treaties and complications can arise if you live in an other EU country (for example double taxation after the company profit, the need of some form of registration the Estonian company in your home country etc). If you live in a country in the EU an Estonian company can be beneficial only if you want to manage your company remotely and cheap. You may not gain much tax benefit, the country where you are permanent resident may will enforce the registration of your Estonian company there too.
What was my experience during the first 5 years of being an Estonian e-resident?
I faced with no bureaucracies and with no issues at all. The annual tax return process was always smooth and a pleasant experience. As I mentioned, I used to own a company in the UK and the annual tax return was always a nightmare there. In the UK, my accountant charged 2x more and created 2x more problems than my Estonian accountant. In Estonia, my accountant knows what needs to be done and I never had to deal with miscalculations. I love the way I can digitally sign every document with my e-card. My Estonian company was approved and trusted by my German clients (for example Hays Germany) and I could have a Business to Business (B2B) contract with. Later, I combined my Estonian e-residency with a permanent residency outside the EU, so I could take all benefit this program comes with.
How much does it cost monthly to maintain the company in Estonia?
The monthly expense of maintaining your company (accountancy fees) is between 80 – 150 Euros, which generally includes some free consultation. You can manage the company from anywhere without the need of ever visiting the country, you can send your expenses online.
About taxation
If your business activity is outside of Estonia and you have no other establishments in the country, you pay 0% tax after the company’s profit in Estonia, which is a huge benefit! It is not mandatory to distribute dividends out, so you can avoid returning the dividend tax. If you decide to pay once a year a dividend, you must pay a flat 20% tax to Estonia. After the salary you pay yourself, you must pay tax only in your resident country.
Which bank account to use?
For simplicity, I use Wise from day 1 of the company formation. I have a Wise Personal and Business account. Because the founder of Wise is Estonian, they accept (without hesitation and extra questions) the company registration certificate and they open your business account for you. I heard two or three local banks may accept you as a customer but you must visit them in their local branch in Tallin. I have never had any problems with Wise and so easy to pay your salary from one account (business) to the other (personal), cheap too, usually free. You can read more about why I recommend Wise, under this Post.
Renewing the E-residency and the ID card
In every 5 years your Digital Card -linked to your Estonian E-residency- expires. Mine expired in June, 2024. The recommendation is to start the renewal process 2-3 months in advance, before the expiry date. You will receive a reminder e-mail as well. Before 2024, you needed to go through the same process of obtaining your new ID card like when you first applied for it. In 2024 the process was simplified and now there is an online form that guides you through the process. The application fee is EUR 120. My card expiry date was 20/06 and I started the application on the 12/04. Some example questions from the form: the main reason of applying for the new ID (obviously, because of expiry of document), what is your business activity plans, in which countries your business is operating, the details of your company, your accountant details, your company bank account details. Then you need your personal and contact details.
One of the most challenging part is when you must upload a recent passport photo with a strict requirement. Please follow the requirements here, step by step. My wife’s application was rejected because her glasses shadowed her eye. I used Adobe’s resizing tool to compress the image.
Next, you need to provide some social media accounts links (I provided my LinkedIn profile). My Wife used her TikTok account. You must share your most recent CV.
You need to share and list where you have personal bank accounts in the World and if you have any crypto currencies on any platforms.
As a last step, answer to general security questions like if you have ever been banned from a country. Choose your Pick-up location (a location of an Estonian Embassy) – I picked up mine in Budapest, Hungary.
Other guides for the application: https://eresident.politsei.ee/application-guidelines
The decision on my application was made within a week and in 3 weeks, my new ID-card arrived to my chosen pick-up location. You have 6 months to pick up your ID from the day it arrived to the Embassy. You must book an appointment to pick it up and on the day you must have your passport with you and fingerprints are collected during the pick-up. Recommended to bring your old ID-card with you, however in Budapest, they did not need it. After collecting my ID card, it was activated automatically within 24 hours. The old ID can be destroyed.
Learn more
Do your research about the Estonian e-residency if this is something that you think would be perfect for you. Ask people, who have done it (like me), that would save you a lot of time and effort, maybe even money. Schedule a 30 minute consultancy with me, or a longer one if you have more questions. https://hunthentic.com/contact-me/
During the consultation you can ask more specific questions about my experiences. I can recommend you a reliable accountant, a business insurance agency, mobile phone company and can give you tips in many topics. I can also help and guide you to complete your business insurance quote or if you stuck with the e-residency renewal form.
