Open a company in Estonia (EU)
with VAT for only
Are you a company or something?
An independent contractor?
Is it a private one?
Open a company in Estonia.
The main advantages of a company in Estonia are:
I’m sure you’ve heard about the fact that Estonia was the first country in the world to set up digital residency to attract brains from all over the globe and encourage the opening of new digital businesses. e-residency allows you to acquire, in certain respects, the same rights as a resident: start a business in Estonia, submit applications and applications for certificates to the public administration, pay taxes, etc.
Estonia ranks first in Europe, among the countries with the highest number of active startups. In short, e-residency in Estonia has been a major reform.
Here are some data that demonstrate the success of the initiative:
Opening a business in Estonia allows you to benefit from one of the most favourable tax regimes in the world:
However, when profit is received as a dividend, a tax of 20% is levied during the tax period in which the distribution took place.
This feature of the Estonian tax system is especially beneficial for new companies, which are about to launch a new brand and increase it. Similarly, those who have started a new business in Estonia, with the strategy of exploiting an economic scale, also benefit.
This is the case, for example, of a company that sells Chinese imported products on Amazon.com. The company in question, at least in the initial phase, will have all the interest to beat the competitors on the price and, in order to implement such strategy, it needs to have the lowest possible level of taxation, reinvesting the corporate profits.
The standard VAT rate applicable to business activities in Estonia is 20%..
There is a reduced rate of 9%, which applies to the sale of hotel services, books and pharmaceuticals.
It should be remembered that Estonia is part of the European Union, therefore, all goods and services sold to other Community companies located outside the country are not taxable for VAT purposes.
In Estonia, there is the possibility of opening a company in Estonia without registering it for VAT purposes, with total exemption from value added tax also on sales in Estonia. However, this advantage is granted only to those providing for the opening of an Estonian company, with an annual turnover not exceeding Euro 40,000..
Among other things, opening a company in Estonia with a turnover not exceeding the above mentioned threshold allows for huge simplifications in accounting and tax matters. It is like opening an individual company in Italy (with an annual turnover not exceeding € 65,000) or a small ltd in England (with an annual turnover not exceeding £ 85,000).
La differenza sostanziale con il regime forfettario in Italia però consiste:
We have said that an Estonian company is subject to income tax at a rate of 20% only if the profit achieved by the company is distributed in the form of a "dividend".
Distribution means: the physical transfer of capital from the company account of the Estonian company to the members' personal accounts.
So, all remaining profits at the company are tax-free.
This exemption covers both types of income (commercial income, for example) and liabilities (such as dividends, interest, royalties) as well as gains from the sale of all types of assets, including shares, securities and real estate.
Specifically, Estonia applies a 20% substitute tax only on profits distributed as dividends, share repurchases, capital reductions, liquidation proceeds or expected profit distributions. Income taxes at the rate of 20% are charged on the gross dividends.