If you are an avid reader of Forbes, Business Insider, or any other business news outlet, you’ve probably read about the digital transformation of businesses. In this new digital era, almost any industry is fair game for disruption from new entrants and technologies. Thanks to advances in cloud computing, mobile internet, and AI technical adoption – it’s never been a better time to launch your own business. Among other countries, Estonia has become a hotspot for startups thanks to its e-Residency program and tech-friendly culture. This article helps you understand if starting a business in Estonia is right for you and If so, we’ll guide you through the process step by step. Let’s get started!
How to Start a Business in Estonia
Starting a business in Estonia is simple, and you don’t need to be physically present in Estonia to do so. In fact, you can start a business in Estonia from just about anywhere in the world. You don’t need significant capital to start a business thanks to Estonia’s e-Residency program. Anyone can apply for an e-Residency and receive a digital ID that allows them to open a bank account and conduct business in the European Economic Area (EEA) remotely. You can also hire employees, buy real estate, and pay taxes from anywhere in the world.
Things to Know Before Starting a Business in Estonia
Before you start a business in Estonia, it’s important to keep a few things in mind. As an e-resident, you have to abide by the laws and regulations of Estonia. This means you have to pay taxes, live up to the government’s labor laws, provide healthcare coverage, and follow other guidelines. – Taxation in Estonia – Estonia has a moderate corporate tax rate of 22% that is one of the lowest in the European Union. Your business will be liable for corporate taxes, and if you are running the business as a sole proprietor, then personal taxes. – Healthcare – As an e-resident, you have to provide healthcare coverage for your employees. You can do this by buying health insurance or by hiring people who are eligible for the government’s health coverage program. – Hiring and firing employees – If you want to hire employees in Estonia, you must abide by the Labor Code. You must make sure that you are offering the minimum wage, offer a written employment contract, and cover all the costs of employment. You cannot fire employees without a valid reason and you must offer a severance package. Your employees are eligible for unemployment benefits if they are terminated without a valid reason.
Benefits of Starting a Business in Estonia
There are many benefits to starting your business in Estonia. Let’s take a look at a few of them. – Estonia is a member of the European Union – If you are looking to export your business, having a company registered in Estonia gives you access to the European Union as well as Switzerland and Norway. This gives you access to a market of over 500 million consumers. Establishing your business in Estonia also allows you to hire people from a very diverse talent pool. – You don’t have to physically be in Estonia – As we mentioned previously, you can conduct business remotely as an e-resident. This means that you don’t have to physically be in Estonia to do business. You can hire employees, manage relationships with partners, and more from anywhere. – Low business taxes – Estonia has a low corporate tax rate of 22%, and you also don’t have to pay any capital gains tax if your company is generating a profit. Businesses also don’t have to pay any dividend withholding tax.
Steps to Start a Business in Estonia
You can start a business in Estonia by registering a company or a sole proprietorship. Let’s take a look at how each of these work. – Register a company – To register a company, you need to hire an attorney and fill out the articles of association. You also have to publish your company’s details in the official commercial register. This process is usually done electronically, and it usually takes no more than a few days. You are charged a one-time fee to register a company. – Sole proprietorship – If you don’t want to get into the legal hassle of forming a company, you can register a sole proprietorship. You have to fill out a standard form, and then you are done. There are no taxes or annual fees associated with a sole proprietorship.
Opening your own business in Estonia can be a great way to give yourself more flexibility. You can work remotely and hire employees from anywhere in the world. Estonia has also become a hotspot for entrepreneurs thanks to its low corporate tax rate of 22% and easy business registration process. If you have been thinking about starting your own business, now is the time. Estonia is the easiest place in the world to start a business, and it’s a great way to take the next step in your career.