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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?

#21

Post by fl7305 »

> 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 Germany to pay out a varying salary as profits fluctuates throughout the year since the German tax authorities will see that as an illegal dividend payment from your company.

From this perspective it can be easier to set up some kind of sole proprietorship. Easier accounting etc and can pay out profits easier. But you get the personal liability.

This is not hard advice, just some things to point out that it gets complicated fast. So I'd recommend spending a few hundred euros on getting advice from a tax professional to begin with.

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

#22

Post by campbellmorgan »

aerhardt wrote: post #16
Bluestein wrote: post #7

I professionally have been helping folks set up and maintain e-Residence and businesses, and all said here in the comments so far tracks: Estonia is absolutely unsurpassed qua administrative ease (this giving you a clear and lasting business advantage), the tax advantages are real, and the jurisdiction only gets better .- Banking and being scrupulous on your personal taxes at your place of personal residence are issu…

I've considered it as a Spanish resident, but don't you have to live six months there to be considered a fiscal resident? Are people regularly operating them from outside Estonia?

(Not a tax professional so don't take my word for it) But I think you're talking about individual fiscal residency. A company you create can technically not be resident where you live so long as you can demonstrate that the principal activities of the company do not take place where you live. So with Spain, if a decent percent of your customers are Spanish and you're the only member of the company, then Spain would have reasonable recourse to consider the company Spanish and require you to register it there and pay Spanish corporate taxes. However, if you have say, 6 employees all over the world, your customers are not substantially Spanish etc then they have a lot harder job proving that the fiscal residency of the company is Spanish. In any case, there is always an outside chance that they could investigate you which is enough of a pain on its own, so may not be worth it!

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

#23

Post by andai »

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 from what I recall they were quite expensive, and I think would have still required the travel.)

It was theoretically doable, but due to life circumstances I wasn't able to travel at the time, so it didn't work out.

Meanwhile a few days ago, finally worked up the courage, and registered a business in the UK via a formation agent.

It took 25 minutes and $150. (Business was registered within 2 business days.) From the comfort of sitting on mine own ass, on the other side of the sea. So... yeah xD I like this way a bit better so far.

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

#24

Post by andai »

shrink wrote: post #18

I've had companies in a few different jurisdictions, including a Delaware C Corp[1] and currently an OÜ through Estonia's e-residency program. Yes, it is fantastic and delivers on all of the promises. The only potential headache is that you must collect your e-residency card from an embassy which, depending on your location, might require travel to a nearby country. I used Xolo but there are lots of agents in the dir…

Did the actual business registration and bank thing require travel? I might be remembering wrong but I thought that was a requirement a few years ago.

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

#25

Post by pier25 »

I've been running a saas like this for the past couple of years.

I'm using Xolo which do the accounting and local representative. 99% of my bureaucracy is uploading pdf invoices to the Xolo system. Once a year I have to spend like one hour on the anual report. That's pretty much it.

Every 5 years you have to renew your digital id. It costs a little money and if you are in the EU there will be a pickup location not far away (I had to travel internationally).

I also have to deal with my personal taxes but that's another matter.

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

#26

Post by jFriedensreich »

dsnr wrote: post #2

Not 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…

"accounting and taxes are a thing everywhere. EU rules make accounting for companies quite complicated" >> this is the most wrong thing ever. You cannot compare the one click accounting in estonia with german kafkaesk absurdity designed to grind you down. How things are implemented are drastically different in countries even if both in the EU.

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

#27

Post by shrink »

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 Estonia.

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

#28

Post by registeredcorn »

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 true that my revenue is being generated in those other countries, but in my own life, I am enjoying the benefits and protections of being a Japanese citizen. Right?

It isn't so much that I would want to be taxed in: Portugal, Brazil, and Japan, but rather that, the nature of how I am choosing to operate my business kind of makes the issue my own burden to bare. If I continue to live in Japan for whatever reasons that may tie me there (family, friends, children in school, business isn't stable enough, other commitments, etc.) it seems like there is a kind of debt to pay back some of my earnings to the Japanese government because they have provided me an environment to build and maintain that business within their country even though the profit made is exclusively outside of Japan. That is to say, the government may not have seen the money directly, but they provided me a safe and stable environment in which I was able to run and operate that business; isn't that kind of the fundamental role of government? I.e., to protect the nation and its citizens, so they may do as they will.

Put another way, suppose the top 1,000 richest people in the world all opted to all move to a tiny nation with very low taxes, and continued to run their businesses remotely from that place without being required to contribute anything back to that nation through taxes. That seems wrong to me. It seems good that they would be asked to pay back into the place that they live and reside, regardless of where their revenue is gotten. They have a home, and that home is ultimately defended and it's property rights upheld by the government that recognizes it.

I'd be interested to hear how others see it. Like I said, I haven't really thought about this too much before, and may be missing something more fundamental and obvious.

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

#29

Post by emptyfile »

dsnr wrote: post #2

Not 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…

[dead]

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

#30

Post by jFriedensreich »

Can also confirm it is great. The community is also quite nice and helpful. Also worth noting, because that comes up all the time, is that Estonia has a digital data embassy in Luxemburg, so if god forbid, russia would take increase its aggression, there is a copy of everything that would keep running your business. The main issue germans have is you cannot really get rid of german accounting as long as generating the business value there while living there. Once getting used to how smooth things can be, I could not bear having to deal with the german bureaucracy in any other area of life.
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