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Ask HN: Founders of estonian e-businesses – is it worth it?

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Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#31

Post by mono442 »

fl7305 wrote: post #21

> As somebody from Germany, establishing a company is a bit tedious and bureaucratic. I'm fairly sure the German tax authority will claim that you have a local German branch office since you live and work there. That might be OK tax wise? But I'd recommend starting with the tax situation in Germany. Having limited liability through some kind of corporation can be nice. But on the other hand, it becomes harder in Germ…

In some countries, it's common to register a sole proprietorship in addition to a limited liability company and bill the company from the sole proprietorship to avoid double taxation. However, I suppose this would not be allowed in Germany.

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#32

Post by rahimnathwani »

andai wrote: post #23

My 2 cents In 2023 tried to register a business in Estonia. I had to first get the e-residency. This worked, (took 6 weeks I believe), but then I had to travel to another country (which had an Estonian embassy) to collect it. Then I would have had to travel to Estonia itself to register the actual business and bank account (something like that -- it was a while ago). (There are "done for you" business services, but f…

I'm curious why you used a formation agent to register your UK company instead of doing it directly on the government's web site.

https://www.gov.uk/limited-company-formation/register-your-c...

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#34

Post by mono442 »

registeredcorn wrote: post #28
tpetry wrote: post #19

Oh there will be a lot of issues in the future because Germany says thst your company is in Germany because you work from there. So you have to do taxes in Estonia and in Germany. And prepare for a lot of tax issues if you dont have a good tax advisor.

>Germany says that your company is in Germany because you work from there. Forgive my ignorance, I have never really thought about this before and I may be missing something very obvious here. Isn't that kind of true , though? For instance, if I am a citizen of Japan, live there, and run my remote business from there, but the business that I run exclusively makes money from people in Portugal and Brazil, it would be…

but you still pay your personal income tax in the country that you live in

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#35

Post by codethief »

fl7305 wrote: post #21

> As somebody from Germany, establishing a company is a bit tedious and bureaucratic. I'm fairly sure the German tax authority will claim that you have a local German branch office since you live and work there. That might be OK tax wise? But I'd recommend starting with the tax situation in Germany. Having limited liability through some kind of corporation can be nice. But on the other hand, it becomes harder in Germ…

> I'm fairly sure the German tax authority will claim that you have a local German branch office since you live and work there. That might be OK tax wise?

If you work from home, your office at home usually does not qualify as a company office unless you make it one. In particular, that alone would not force you to pay Gewerbesteuer to the city, which is the tax specifically addressing local presence.

However, you're touching upon a very important point: If you live in Germany and your Estonian company pays you a salary (as opposed to dividends), you will be a proper employee and your company will also have to pay social security for you, and this might complicate matters significantly. In fact, this will likely (in the German tax authorities' eyes) establish that your Estonian company partially operates in Germany (which is a much broader thing than having an actual physical branch office). This then brings you back to square 1 – your company having to file taxes in Germany, too. Someone below linked https://eidel.io/posts/estonias-e-residency-is-awesome-and-s... which seems to confirm this.

> German tax authorities will see that as an illegal dividend payment from your company.

Could you elaborate? How is this illegal if you declare taxes?

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#36

Post by andai »

rahimnathwani wrote: post #32
andai wrote: post #23

My 2 cents In 2023 tried to register a business in Estonia. I had to first get the e-residency. This worked, (took 6 weeks I believe), but then I had to travel to another country (which had an Estonian embassy) to collect it. Then I would have had to travel to Estonia itself to register the actual business and bank account (something like that -- it was a while ago). (There are "done for you" business services, but f…

I'm curious why you used a formation agent to register your UK company instead of doing it directly on the government's web site. https://www.gov.uk/limited-company-formation/register-your-c...

I realized I had been putting it off for years due to hating paperwork, then realized the whole point of a business is that you can pay people to do stuff you don't like. So for me, the first order of business was to outsource the formation itself :)

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#38

Post by varispeed »

andai wrote: post #36
rahimnathwani wrote: post #32

Earlier quoted context omitted.

I'm curious why you used a formation agent to register your UK company instead of doing it directly on the government's web site. https://www.gov.uk/limited-company-formation/register-your-c...

I realized I had been putting it off for years due to hating paperwork, then realized the whole point of a business is that you can pay people to do stuff you don't like. So for me, the first order of business was to outsource the formation itself :)

Whole point of a business is making a profit my guy! :-)

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#39

Post by rahimnathwani »

andai wrote: post #36
rahimnathwani wrote: post #32

Earlier quoted context omitted.

I'm curious why you used a formation agent to register your UK company instead of doing it directly on the government's web site. https://www.gov.uk/limited-company-formation/register-your-c...

I realized I had been putting it off for years due to hating paperwork, then realized the whole point of a business is that you can pay people to do stuff you don't like. So for me, the first order of business was to outsource the formation itself :)

I get it for things that are a hassle. But the process to register a business in the UK is really straightforward. I haven't used the process for many years now, but the last time I did I was impressed at how they'd made it as simple as possible whilst collecting all the necessary information.

I can't imagine how a formation agent would make the process any simpler or easier for you.

Re: Ask HN: Founders of estonian e-businesses – is it worth it?

#40

Post by hirako2000 »

shrink wrote: post #27
andai wrote: post #23

My 2 cents In 2023 tried to register a business in Estonia. I had to first get the e-residency. This worked, (took 6 weeks I believe), but then I had to travel to another country (which had an Estonian embassy) to collect it. Then I would have had to travel to Estonia itself to register the actual business and bank account (something like that -- it was a while ago). (There are "done for you" business services, but f…

I can't speak to how things were in 2023 but today you do not need to visit Estonia. Registering a company in the U.K. is very easy but the tax treatment is less favourable compared to Estonia. The U.K. leaving the European Union is also disadvantageous (although the full consequence of that is yet to be seen). All company filings in the U.K. are public, much more information about your company is public compared to…

Creating a company is the easy part in the UK. Need to do HMRC and house of company reports. And now his Majesty revenue and custom requires purchasing "approved" tax software and submit expenses adhering to new regulations. And to verify your identity

and if you like access the online service you've got to wait 2 to 3 weeks for them to send a code in a physical post letter (no other way). And part of those services are mysteriously unaccessible from an IP outside the UK.

And it costs double to dissolve the entity than it did to create it. VAT is 20%, put someone on Payee: employee pays 20% to 45% (over 50k per year starts to fall into the high tax rate) + 9% insurance and as a company you also pay roughly 30% on top for taxes and insurance. Of course there is corporate tax on any profit. If with all of those taxes you somehow manage to be profitable.

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