Can anyone provide any insight on why E-Residency would be good for businesses? How about startups in particular?
Also how about sole proprietors contractors/consultants based in another EU country?
Estonia's E-Residency Program Is Growing Faster Than Predicted
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Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#32It's worth noting that you can get similar benefits from Singapore. Singapore doesn't have a cute "E-residency" program, but a foreigner can just pay a local agent and have a corporation opened. Corporate taxes are a clean 17% (lower for small businesses and startups), no dividend taxes, etc. http://www.guidemesingapore.com/incorporation/company/singap... http://www.guidemesingapore.com/taxation/corporate-tax/singa..…
I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed. There are lots of ways to reeive money hence lots of different taxes. It seems reasonable. If one form of income were not taxed then things would end up getting skewed in that direction.
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#33Set up my startup in Estonia, or Singapore .. anyone with experience either way got hints/tips/advice?
Depends a bit where you live, plan to live and where you pay tax.
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#34It's worth noting that you can get similar benefits from Singapore. Singapore doesn't have a cute "E-residency" program, but a foreigner can just pay a local agent and have a corporation opened. Corporate taxes are a clean 17% (lower for small businesses and startups), no dividend taxes, etc. http://www.guidemesingapore.com/incorporation/company/singap... http://www.guidemesingapore.com/taxation/corporate-tax/singa..…
I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed. There are lots of ways to reeive money hence lots of different taxes. It seems reasonable. If one form of income were not taxed then things would end up getting skewed in that direction.
>I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed.
This is not true. While many countries do not do this, dividend payments are not tax deductible in the US. In fact, they are double-taxed (at both the corporate and individual level) which is one of the reasons/arguments for individual taxes on dividends being taxed lower than income tax rates.
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#35It's worth noting that you can get similar benefits from Singapore. Singapore doesn't have a cute "E-residency" program, but a foreigner can just pay a local agent and have a corporation opened. Corporate taxes are a clean 17% (lower for small businesses and startups), no dividend taxes, etc. http://www.guidemesingapore.com/incorporation/company/singap... http://www.guidemesingapore.com/taxation/corporate-tax/singa..…
I don't believe corporations in the U.S. pay taxes on dividends they disburse. Generally the principle in the U.S. is that whenever you receive money you get taxed. There are lots of ways to reeive money hence lots of different taxes. It seems reasonable. If one form of income were not taxed then things would end up getting skewed in that direction.
No, shareholders pay taxes on dividends. It's a more or less meaningless distinction - as a shareholder your business profits are taxed on the way in and again on the way out.
If one form of income were not taxed then things would end up getting skewed in that direction.
This is wrong. The problem is that different paths of money get taxed in different ways. If you buy stock, then sell it back during a stock buyback, you get taxed at one rate. If you receive dividends, you get a different rate. If instead of buying stock you loaned money, you'd be taxed at a third rate.
Plus, to minimize taxes, people now need to minimize the # of times money moves rather than making the most productive investment.
An additional cost of these various taxes result in the bizarre situation that you get more consumption if you consume today rather than in the future: http://www.themoneyillusion.com/?p=28842
Singapore (and Estonia) are doing it right, and the US is doing it wrong. The most economically efficient tax (besides properly calibrated pigouvian taxes) is a single tax on consumption by humans and the next best is a single tax on income by humans.
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#36Very interesting stats on applicants, and use cases for e-residency provided here https://app.cyfe.com/dashboards/195223/5587fe4e5203610228371...
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#37Earlier quoted context omitted.
Right now yes, to open a bank account in Estonia you need to visit a local bank physically (although then it is very easy). Part of the money laundering regulations common in Estonia. Luckily this law will change in spring.
Why is this considered hard? A date flexible return flight from Toronto is $935 ($725 USD). Compared to what a developer can make in really any Western country, I don't really see what the issue is.
In the Nomad Forum where Estonia is currently giving an AMA, they mentioned that many of the applicants are coming from India & Malaysia, where the cost of a flight would be a much bigger deal.
https://nomadforum.io/t/i-m-kaspar-director-of-estonia-s-e-r...
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#38The problem is that in order to operate as a startup, as the whole point of the e-residency is, it's not that easy. Getting a bank account as of end of September is quite hard, border line of impossible. Without a bank account, no startup can be setup properly. Other than that - very good idea and probably the execution will be even better in the near future.
Try opening a bank account in the UK, if you think it's hard in Estonia. Unlike Estonia, you CAN NOT just come to the UK from a foreign country and open a bank account. Even if you've lived here for a while, it's still an unbelievably ridiculous, frustrating and wasteful process. Let's start with having to call the bank weeks or months in advance for an appointment, like everything else in the UK. Even though your ap…
Been there, done that.
It took me almost two months to open a bank account once I was there and even then I was considered lucky given the requirements at that time.
But it is not that easy in Estonia either, second hand experience from a friend - he went there to setup a startup to be used later, but no luck.
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#39Earlier quoted context omitted.
Compared to what a developer can make in really any Western country. In my Western European country, we make less than $20k/y on average, so that is kind of high (~ 2 months' rent) for developers on the lower end of the scale. I'm not arguing against you, just pointing out that salaries for devs are very variable even in the Western countries.
What country are you in?
Portugal.
Re: Estonia's E-Residency Program Is Growing Faster Than Predicted
#40The problem is that in order to operate as a startup, as the whole point of the e-residency is, it's not that easy. Getting a bank account as of end of September is quite hard, border line of impossible. Without a bank account, no startup can be setup properly. Other than that - very good idea and probably the execution will be even better in the near future.
Right now yes, to open a bank account in Estonia you need to visit a local bank physically (although then it is very easy). Part of the money laundering regulations common in Estonia. Luckily this law will change in spring.
Not myself, but a very good friend tried that. He submitted all the paperwork electronically and went to Estonia for a week to open a bank account.
From the 3 banks that are supporting E-residency they all denied to open the account. One of the managers he talked with explained that the bank do not open accounts without physical address in Estonia.
Probably that will change, but that's experience from end of September this year.
Not to mention the disappointment for the whole process, which is not as advertised, although he did a very nice trip to the country itself and was worth it (his words).