One of Estonia's first "e-residents" explains what it means • Hacker News Board

Re: One of Estonia's first "e-residents" explains what it means

#111

Post by tome » Wed, Apr 04, 2018, 7:44 AM UTC

ffreire wrote: post #22

stonogo wrote: post #17

Earlier quoted context omitted.

"Merit" is not a quantifiable characteristic. All your plan would do is give the power to the people who define "merit." It's like you're advocating for correctpersonocracy. Put another way, literally every government that has ever existed would call itself a meritocracy. The actual word 'meritocracy' comes from a book that warned about the dangers of creating easily-gamed draconian systems that needlessly exclude pe…

And by book you are referring to "The Rise of Meritocracy"? https://en.wikipedia.org/wiki/Meritocracy#Etymology

Undoubtedly

Re: One of Estonia's first "e-residents" explains what it means

#112

Post by Strom » Wed, Apr 04, 2018, 7:49 AM UTC

flipp3r wrote: post #96

craftyguy wrote: post #41

Earlier quoted context omitted.

How so? It explicitly says[0] that is not possible.. 0. https://apply.gov.ee/

e-Residency doesn't but you could set up a company in Estonia and I've read that basically all b2b transactions would be untaxed, and simply holding money inside the business would be untaxed (from my interpretation of their website) which would allow you to have a basically tax-free business in the EU which could then forward the cash to some offshore entity in any way you'd like.

Sure, that's possible. A pretty similar scheme is possible in pretty much every other EU country as well. In Estonia you can take your sweet time with transferring the money offshore, in other EU countries you have to do it yearly so it looks like you have no profits on the yearly report.

Re: One of Estonia's first "e-residents" explains what it means

#113

Post by martkaru » Wed, Apr 04, 2018, 7:54 AM UTC

fcolas wrote: post #106

martkaru wrote: post #85

Earlier quoted context omitted.

1. There is EveryPay https://every-pay.com/ . You need to open an account in the LHV bank first before receiving payments. (disclaimer: me and our dev team built their tech platform) 2. All the EU data laws apply. 3. I guess it depends on how you specify it in your contracts, you could do the disputes/arbitration wherever you want. There is an overview of dispute options here: https://www.eesti.ee/en/entrepreneur/leg…

LHV is for the merchant account, it's needed for EveryPay. Their price structure is not fully pay as you go: - there're no setup fees; but - there's a fixed monthly fee—a so called terminal fee of 20EUR; and - then there're the transaction fees—about 2.2% which is much less (!) competitive than Stripe's fees in the EU—1.4%. Although I like what I've seen so far, as an app-developer, the fixed monthly fee wasn't accep…

True, but EveryPay has 1 day settlement, instead of Stripe's 7 day settlement in the EU area, if that matters.

Re: One of Estonia's first "e-residents" explains what it means

#114

Post by SyneRyder » Wed, Apr 04, 2018, 8:03 AM UTC

nstj wrote: post #105

SyneRyder wrote: post #97

Earlier quoted context omitted.

I did find a German news article from 2016 saying that Angela Merkel is an Estonian e-resident - presented to her by the Prime Minister of Estonia. So it seems plausible, but that it's something presented to them as a symbolic PR stunt. "On Thursday, Prime Minister Roivas will present Merkel with an e-residency card - allowing the chancellor to become a digital resident and try out Estonia's digital solutions firstha…

But she didn’t “sign up” for residency, they “presented” it to her which is a whole different scenario.

I don't think it's a different scenario. Even the Estonian press says Shinzo Abe was presented with his e-residency, rather than him applying:

https://news.err.ee/115597/japanese-prime-minister-becomes-e...

"Abe's e-residency card was presented to him by Taavi Kotka, the Deputy Secretary General at Estonia's Ministry of Economic Affairs, currently on a visit to Japan.

Kotka told ERR that e-residency was Estonia's gift to Abe, which he accepted."

Re: One of Estonia's first "e-residents" explains what it means

#115

Post by pavlov » Wed, Apr 04, 2018, 8:04 AM UTC

edwin01 wrote: post #99

thinkloop wrote: post #78

Earlier quoted context omitted.

Thanks for touching on some of the things I was expecting to read in the article. > you need to have half of your capital available always What does this mean, in a bank account?

Yes. If your balance at the end of the year isn't half of your starting capital, you need to tell estonian government officials how you are planning to recover from this horrible failure. I didn't know this on my first year and we just made a small investment at the end of the year that made the balance to drop at horrific 40% level which triggered alarms in the government. If you fail to satisfy them with your plan,…

I realize it’s annoying, but the requirement to register “lost” share capital is a common one in Europe.

Think of it as a warning flag to potential lenders. The default assumption in society is that limited liability corporations have enough assets that it’s safe to sell them something on credit, i.e. invoicing rather than cash. Forcing companies to register the fact that their equity is negative provides an easy way for vendors to look up this warning flag.

I’m not directly familiar with Estonian law, but I’ve run a couple of Finnish companies. If the law is similar, it’s not that the government registry would be actively filing for bankruptcy if you have negative equity, but it does create potential liability for board members if the company goes bankrupt and the board failed to register negative equity when the information was available to them.

Re: One of Estonia's first "e-residents" explains what it means

#116

Post by edwin01 » Wed, Apr 04, 2018, 8:14 AM UTC

Strom wrote: post #108

csdreamer7 wrote: post #95

Earlier quoted context omitted.

Great comment. That capital requirement sounds like a way to give the local banks capital from rich foreigners to make loans and get tax revenue. I know India restricts how much Indians can spend abroad and Mexico has complained about capital flight.

Not sure if there are additional requirements for e-residents, but for the standard end of the year accounting requirements you don't need to have cash. There's a general net worth requirement, which can pretty easily be filled with company owned equipment like a laptop and smartphone.

"If the net assets are less than half of the share capital or less than the minimum capital requirement of EUR2,500 regarding private limited liability companies and EUR250,000 regarding public limited liability companies, the shareholders must decide on:

(1) The implementation of measures as a result of which the net assets would form at least half of the share capital and minimum capital requirement Or (2) Dissolution, merger, division, transformation of the company Or (3) Submission of a bankruptcy petition"

http://www.ey.com/Publication/vwLUAssets/Doing_business_in_E...

Put in 100000€ and you will need to have 50000€, not 2500€. You will need quite many laptops and phones for 50k€ ;)

Re: One of Estonia's first "e-residents" explains what it means

#117

Post by edwin01 » Wed, Apr 04, 2018, 8:18 AM UTC

pavlov wrote: post #115

edwin01 wrote: post #99

Earlier quoted context omitted.

Yes. If your balance at the end of the year isn't half of your starting capital, you need to tell estonian government officials how you are planning to recover from this horrible failure. I didn't know this on my first year and we just made a small investment at the end of the year that made the balance to drop at horrific 40% level which triggered alarms in the government. If you fail to satisfy them with your plan,…

I realize it’s annoying, but the requirement to register “lost” share capital is a common one in Europe. Think of it as a warning flag to potential lenders. The default assumption in society is that limited liability corporations have enough assets that it’s safe to sell them something on credit, i.e. invoicing rather than cash. Forcing companies to register the fact that their equity is negative provides an easy way…

This is a good point. However for me the annoyance is not about reporting the decrease, it's the fact that if capital drops below 50%, government is now in control whether they exercise that control or not. I would understand something like 10% but 50% is just ridiculous to me.

Re: One of Estonia's first "e-residents" explains what it means

#118

Post by edwin01 » Wed, Apr 04, 2018, 8:23 AM UTC

juskrey wrote: post #104

edwin01 wrote: post #70

I incorporated in Estonia few years ago because of what their promo materials say. It’s a total shitshow unfortunately and while it’s true that you can do everything online, it’s not what you think. All user interfaces are straight from the 90s, only the most basic forms are in english and they want to know everything about your business while setting ridiculous limits. For example, you need to have half of your capi…

Just having a legal address for your legal entity now costs EUR 300-500 a year for e-Resident, depending on whom you ask. They have added ridiculous "official local contact person" requirement this year, and consulting firms have immediately jumped on the bandwagon with additional 100-300 EUR row in the price list. My bank account I have opened by traveling to Estonia, in Swedbank, was closed "due to inactivity" afte…

I can also chime in that avoid Swedbank like plague. I tried them first but after submitting them with 6 months of personal bank statements and getting back an offer for CC with 300€ credit limit I went straigth to LHV which has been fantastic. Let's just say that CC limit wasn't 300€... I'm considering using LHV for other projects as well because they have APIs, everything works and they even work with cryptocurrency companies for what it's worth.

Re: One of Estonia's first "e-residents" explains what it means

#119

Post by cmadan » Wed, Apr 04, 2018, 8:26 AM UTC

rihegher wrote: post #89

thinkloop wrote: post #83

Earlier quoted context omitted.

> take payment in Euro as a consultant Isn't it relatively easy to open a Euro denominated account in most countries?

For an individual it is, not so much for a company

I don't know about other countries but in India it is fairly simple to open one for a company (they are called FCNR accounts). I don't see any government having issues with foreign income making its way to local businesses.

Re: One of Estonia's first "e-residents" explains what it means

#120

Post by fcolas » Wed, Apr 04, 2018, 8:39 AM UTC

I'm within the 1st year of e-residency + incorporation.

Here're a few of my experiences.

1. Setup is not as straightforward as they claim, but it's still quite easy. It compares well to what I've seen in France (LegalStart, CCIs, etc.) and the USA (Clerky/C-corp, Delaware, etc.). Actually there's no (printed) paper work because all is digitally signed with your e-residency card—only that is a big plus.

2. Running the company is similar to a C-corp but it's 10x easier than an SAS in France—where you've to register for, know about, and manage nearly 10 different tax agenda. It's also 2x to 5x cheaper to run than in USA and France.

3. However, it's true that banks are lagging a little behind but to their defence they face AML/KYC requirements, and e-residency is a lot of randomness for them—needless to say (?) that banks are risk averse.

For comparison, note that Clerky was launched in 2013 to streamline the legal paperwork for C-corps when e-residency started in 2014. And see how long it took before Stripe partners with Silicon Valley Bank (SVB) for its Alpha program.

- So I feel like banks do a good job although there's room for improvement.

4. Internationalisation of some institution's websites has bugs—basically your preference for english is reset to Estonian once in a while, but most of it is translated in English (and Russian and Finish?).

5. Some institution's websites are old looking but it's not worst than in Delaware or in France. So far, institution's websites are quite clear. For comparison: when paperwork in e-Estonia is done with digital signing, in 2017 I still had to (surface) mail or fax documents to France's and Delaware's institutions, sometimes with credit card number written in clear, or with a check enclosed—this is prehistory.

6. For the legal setup and accounting, I use LeapIN. So far they're very professional, their website has an extensive Q&A and knowledge-based section—that I read. Their pricing segments are clear. And they seem to have a growth mindset—reach out for more advice on how to onboard and their price.

7. Money-wise I was unaware of the 50% social capital requirement left on your account at the end of the fiscal year (note that it also exists in France and, by inference, probably in some other European countries)—maybe they could communicate more on that, it's not nice to figure that out later.

- Still, so far I feel I've got value for my money and I can pull out if needed—no commitment which isn't the case of many B2B SaaS solutions with long term contracts (if we compare).