Based on the foundations of the local efficient and flexible e-state, Estonia offers a transnational digital identity to anyone in the world interested in administering a location-independent business online. This local establishment has a virtual residence within the EU and thus provides the business access to the European single market. e-Residency is the first and crucial step to getting access to the infrastructure in Estonia, however, it does not provide citizenship or a personal residence permit.
The membership of the European Union provides residents of a country access to the borderless single market. Trading companies who need to diminish their burdens to sell their products or services in other member states benefit from an establishment in an EU member state. Estonia is such a member state. Therefore, setting up a company in Estonia enables a flexible, sophisticated and digital environment, whilst providing access to transact without restrictions with customers in the EU.
A company established in Estonia can open a bank account in Estonia with one of the major banks with extensive knowledge of the e-residency program. The scope and nature of this e-residency program allows location independent entrepreneurs and non-EU citizens to incorporate in Estonia. As a result, bank account opening is not limited to Estonia or even the EU. An international (or offshore) bank account is possible as well.
The personal ID of the e-resident opens access to the state e-services portal, including e-tax. Estonian resident companies are subject to income tax only in respect to distributed profits (actual and deemed), including the corporate profits distributed in the tax period. Asset transfers between subsidiaries and their holding companies are considered a taxable distribution. Dividends may be subject to additional withholding tax but tax treaties and European Directives may provide for reduction or exemption.
The mere incorporation of a company under Estonia law is usually not sufficient to be regarded as resident of this country by authorities in the home county of the ultimate beneficial owner (UBO). Creation of the necessary substance in the country of incorporation (and/or avoidance of a too high level of activities conducted on behalf of the company in the UBO’s home country of residence), such as appointment of local directors (and even hiring of staff and rent of office space) may be advisable, the exact level depending on the circumstances.
Companies with foreign management have, alongside an overlap in traditional needs, also specific and tailored desires. These often include services such as administration, accounting, secretarial services and directors services. To ensure efficiency and trigger business growth, Legal Floris LLC and Equation CS provide such services for our clients and take company formation to the next level, where needed.