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Ask HN: Founders of estonian e-businesses – is it worth it?
71–80 of 141 posts
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#72> 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…
> Could you elaborate? How is this illegal if you declare taxes?
Dividends are treated differently from the salary by tax laws.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#73Why aren’t European people starting businesses in the US as pass through entities? It doesn’t make sense to me why Europeans don’t use registered agents or foreign corporation state registrations to do business as US entities in order to get up and running quickly. Europeans complain about the difficulty starting a business can just start a business as a US entity, you’re just using the US system as the financial lay…
Adding a layer does not simplify. It adds complexity.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#74Not answering your question directly but accounting and taxes are a thing everywhere. EU rules make accounting for companies quite complicated. Focus on your business, open the smallest and simplest entity you can to validate your product before spending time and money optimizing or scaling things. That being said, I’m familiar with GmbHs in Germany and I would advise against going this route unless funding is availa…
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Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#75What about EU Inc? Is there any timeline?
Vague. Early 2027 perhaps with a lot of luck, for a regime that will at best solve a very limited subset of issues.
I'm not holding my breath.
For some perspective, look at how something with a much smaller scope is being "revolutionised". I'm speaking of intra-EU dividend taxation, as regulated in EU directive 2025/50 ("FASTER"). A slightly less complicated dividend double taxation regime between EU member states. Applies to dividends on shares in public companies only. If the shares in question have not been traded within 5 days from the ex-dividend date. If the gross dividend is below 100k€. If the member state is not very small. From 2030. Using EU standardised forms. In some cases, resulting in direct reduction of the double taxation at source. In other cases, refund of excess double dividend tax within 60 days.
The clean solution would be to tax dividends in the tax residency member state of the receiving individual only. That would require a rather large leap of trust from very financialised EU member states like .ie, .lu or .nl. Perhaps possible with a long transition period and compensations. Only there's also bad faith state actors like .hu randomly torpedoing EU legislation to extract concessions. This discourages other member states from even trying to implement the clean solution.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#76Earlier quoted context omitted.
Have you never heard of fringe benefits tax?
Have you read my post? Let say I am a junior SWE in EU. I incorporate in Estonia and issue my employer with an invoice from said company. That company pays for my house, my car, my dental service and whatnot, and what's left I take as a employee salary. I pay local tax for that salary, but that's only a fraction of what I've billed my employer.
That's just tax fraud though.
There's also the CFC rule, which means that within the EU, if you control a foreign corporation, your country of tax residence can tax undistributed profits.
Often tax offices don't bother and you might not get caught, but 'not getting caught' is not the same as it being legit.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#77You said you are from Germany but not where you are now. If you are still in Germany, forget it. Just because you incorporate outside of Germany does not exempt your from any taxes (and its beauraucracies) in Germany. That is, even with an estonian corporation, you will owe german corporate taxes (plural - one goes to the state one to the county - a.k.a. Körperschaftsteuer and Gewerbesteuer). That implies you will ha…
Exactly. I'm German and simulated the constellation some year's ago. Verdict was, if you are inside the EU it won't pay out. The Estonian model is for people trying to participate in the EU market from outside.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#78You said you are from Germany but not where you are now. If you are still in Germany, forget it. Just because you incorporate outside of Germany does not exempt your from any taxes (and its beauraucracies) in Germany. That is, even with an estonian corporation, you will owe german corporate taxes (plural - one goes to the state one to the county - a.k.a. Körperschaftsteuer and Gewerbesteuer). That implies you will ha…
It is about where the actual "effective management" is considered to be located: If you live in Germany permanently, the tax office can decided to tax you as if you were a Germany company - and yes, most of the times they do it.
If you travel regularly and have an office in Estonia and you make the effective management decisions there, you are obliged to Estonian tax system only.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#79You said you are from Germany but not where you are now. If you are still in Germany, forget it. Just because you incorporate outside of Germany does not exempt your from any taxes (and its beauraucracies) in Germany. That is, even with an estonian corporation, you will owe german corporate taxes (plural - one goes to the state one to the county - a.k.a. Körperschaftsteuer and Gewerbesteuer). That implies you will ha…
You're not wrong, but you're missing the best part. Estonian company does not pay taxes (*). As long as the money stays within the company he's golden. The company can pay for his car, his apartment/office, etc. It is only when he decides to withdraw the money the problem occurs. What you're saying applies to most EU countries. Here where I live you have to reside for majority of the year in given residency to pay ta…
> You can easily create a reality in which you reside there for majority of time.
Cautios when dealing with German tax officers: They are checking the 183-day-limit very very strictly, includin invoices/bank statements if required, hotel bookings etc. They even apply intelligence colleagues if in doubt for big fishes.
Re: Ask HN: Founders of estonian e-businesses – is it worth it?
#80You're going to make life much harder for yourself, not easier, because you'll still need German legal advice but now you need an expensive multi-national lawyer/firm. Anyone cheaper will refuse to touch it.
Germany cares about where the management of your company actually happens, not just where the entity is incorporated. So you're not going to avoid German bureaucracy, it's going to be worse not better.