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Ask HN: Anyone doing business using Estonian e-residency?

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Re: Ask HN: Anyone doing business using Estonian e-residency?

#61

Post by kukabynd »

jdietrich wrote: post #21

Opening a UK limited company is at least as straightforward. Registering takes a couple of hours, it can be done entirely online and the fee is £12 ($15). You don't need to be a UK resident. You do need a registered office in the UK, but a company formation agent will provide one for about £20 ($26) per year. All your tax returns can be filed entirely online and HMRC provide a very helpful tax advice service. It real…

It’s also worth mentioning a UK LLP, which is a pass-through entity similar to what US LLC is to single non-residents. Quite viable.

Re: Ask HN: Anyone doing business using Estonian e-residency?

#63

Post by gumby »

rockinghigh wrote: post #39
gumby wrote: post #22

I set up a company and bank account a couple of months ago. It was very easy. We are in development so don't have any customers yet, so I can't tell you how taxes etc will be but I can tell you the process of dealing with the .ee government so far is paradise compared to the US process.

Did you need a local address and phone number?

No, you can use a registered agent same as you do in the US when you incorporate in Delaware. You can open a bank account too, though many banks apparently won't participate because of some bank scandals in a nearby baltic country. I happened to be near Estonia and so opened one in person. The scandal problem happened more recently so I am not sure how easy that is right now.

The e-residency card comes with a chip reader that plugs into your computer and does a handshake with the bank. There are a bunch of companies who authenticate via the e-e-residency card: https://e-resident.gov.ee/run-a-company/

Re: Ask HN: Anyone doing business using Estonian e-residency?

#64

Post by gumby »

Inquisitiveone wrote: post #49
gumby wrote: post #22

I set up a company and bank account a couple of months ago. It was very easy. We are in development so don't have any customers yet, so I can't tell you how taxes etc will be but I can tell you the process of dealing with the .ee government so far is paradise compared to the US process.

Would you say it might work for a consulting and IT services business? did you experience any hidden costs, thanks

If you live in the EU it's not clear what benefit there might be, and if you're a consultant there might be even less.

This doesn't save any taxes, and isn't a strategy to do so. The costs themselves are't that great: a few hundred Euro.

The reasons we did were the following:

- Ease of doing business with clients and vendors in other EU countries: we have an EU bank account in Euros, can generate all the right VAT paperwork etc. Not huge, but for some businesses critical. We also have a US subsidiary in Delaware and a couple of state registrations because that is how you employ people in the US. Ditto for a third country where one of the founders is moving.

- VCs are increasingly comfortable with overseas-registered countries, at least ones not in tax havens. Ten years ago this would have been seen as weird. I've always previously incorporated in Delaware where I've never set foot so this isn't a big deal.

- Our lawyer (!!!) in SV suggested we officially HQ the company overseas (I already had an e-residency so we used Estonia). He said as the founding team was all foreigners (though some in the Valley for decades), it was a good hedge against unforeseen changes in the federal government's attitude towards foreigners. TTTT I would have considered it wide-eyed raving except this lawyer has been working at a big law firm in the valley, for 30 years. But what the hell, it's so easy to do these days why not.

Not everything you need is in English but tbh I don't interact with Estonia any more than I interact with Delaware and this has never been a problem.

Re: Ask HN: Anyone doing business using Estonian e-residency?

#65

Post by taxguy »

dbanisimov wrote: post #20

I am an e-resident and I used it to establish a business entity for my startup. It works really well for my particular use case. I am a Canadian resident, my co-founder is an Estonian resident (physical). Both of these may change in the future and the intended market for our startup is global. Estonia was chosen as a common ground with a minimal overhead - it's easy and costs almost nothing. Using government services…

Corporate taxation is generally based on where the management and control of the business is, not where it is incorporated, although the incorporation jurisdiction is considered. If you had incorporated the Estonian company by yourself without a partner and had been running it from Canada, the Estonian company will be considered a Canadian company for tax purposes and required for file a T2 corporate income tax return.

If you are still a Canadian resident, do remember to file T1134. If you own 50/50 in the business, you can perhaps argue that this is a foreign affiliate only, and not a controlled foreign affiliate.

Re: Ask HN: Anyone doing business using Estonian e-residency?

#66

Post by taxguy »

sparkling wrote: post #43
demarq wrote: post #14

Double taxation seems to be the main pain point looking at the comments. It will help to google and see if your country has a tax treaty with estonia.

Just "having" a treaty is not enough. Germany has a treaty with Estonia, but it doesn't protect you. The Estonian company WILL become a german tax resident if the company is being managed by a German citizen living in Germany 99% of the time.

This is correct, and this applies to many OECD countries. There's generally little reason to set up a company overseas if you live in an OECD or EU country; foreign affiliate tax rules will get you.

Re: Ask HN: Anyone doing business using Estonian e-residency?

#67

Post by taxguy »

cmews wrote: post #47
sparkling wrote: post #42

Earlier quoted context omitted.

How do you avoid that the company becomes a dutch tax resident if you manage it from the Netherlands most of the time?

There are limitations like I cannot rent an office for longer than six months and my company is registered in Estonia with an Estonian address (I use leapin.eu which takes care of the accounting part). I get your point and when you are selling physical products I cannot see how that would be possible. However if you are doing location independent work like coding or designing it is almost effortless to not become a t…

In the Netherlands, a corporation is a resident for tax purposes if the management and control of that company is in the Netherlands, regardless of where that corporation is set up. There is no reference to address or office location. I'd be wary of casually dismissing Dutch tax residency of an "online" company--it is not as trivial as most think it is.

Re: Ask HN: Anyone doing business using Estonian e-residency?

#68

Post by throw130 »

sparkling wrote: post #6

After looking into it for a while, i decided not to do it. Context: I live in Germany for roughly 2/3 of the year, rest is traveling. Not sure where you are located, but if you spend the majority of your time in a other EU country (e.g. Germany) you will have a very hard time explaining to the local tax authorities that the company entity is not effectively being managed from Germany. And when you fail to explain thi…

Is it ok to operate an Estonian company from Germany though?

Not for tax reasons (assuming you would pay the same tax for either a German or Estonian company as others said in the thread) but for bureaucracy reasons. Skipping the whole German procedure.

Re: Ask HN: Anyone doing business using Estonian e-residency?

#69

Post by Inquisitiveone »

gumby wrote: post #64
Inquisitiveone wrote: post #49

Earlier quoted context omitted.

Would you say it might work for a consulting and IT services business? did you experience any hidden costs, thanks

If you live in the EU it's not clear what benefit there might be, and if you're a consultant there might be even less. This doesn't save any taxes, and isn't a strategy to do so. The costs themselves are't that great: a few hundred Euro. The reasons we did were the following: - Ease of doing business with clients and vendors in other EU countries: we have an EU bank account in Euros, can generate all the right VAT pa…

This would be more of a family business, nothing special really, would you recomend a place where to get the right info, if you were in touch with any of those companies, dont want to trouble you with the info :) thanks

Re: Ask HN: Anyone doing business using Estonian e-residency?

#70

Post by mattmanser »

kukabynd wrote: post #61
jdietrich wrote: post #21

Opening a UK limited company is at least as straightforward. Registering takes a couple of hours, it can be done entirely online and the fee is £12 ($15). You don't need to be a UK resident. You do need a registered office in the UK, but a company formation agent will provide one for about £20 ($26) per year. All your tax returns can be filed entirely online and HMRC provide a very helpful tax advice service. It real…

It’s also worth mentioning a UK LLP, which is a pass-through entity similar to what US LLC is to single non-residents. Quite viable.

Why? An LLP is supposed to be for lawyer partnerships, dental practices, etc. and has all sorts of limitations a ltd company doesn't.

You can't sell equity in an LLP being a big, obvious, one, so basically you can't raise money.

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