e-Residency and Taxation in Estonia

It is designed primarily to simplify everyday life for freelancers, business owners, international partners, and other non-residents who are connected to Estonia. Having an e-Residency in Estonia gives you access to the European Union, making it possible to start a business, expand your business, invest, and study there.

This national initiative aims to improve Estonia’s digital infrastructure and business environment as a result of efforts from numerous government ministries and institutions. The most important advantage of being an e-Resident of Estonia is that they have access to all the electronic services available throughout the European Union, not just in Estonia’s business environment.

With e-Residency, residents can access a wide variety of online services in Estonia, including banks and government portals. Creating and running an online company, based in the EU, is the primary motivation for applying. The opportunity for entrepreneurs to run their businesses remotely is now available to entrepreneurs across the globe.

It therefore makes it possible for foreigners to set up a company in Estonia through the online application process. The e-Residency programme facilitates entry into and investment into the Estonian market for non-Estonian citizens.

Many entrepreneurs have become successful in their business development in Estonia with an e-Residency, joining nearly 80,000 entrepreneurs already.

When it comes to attracting foreign entrepreneurs, e-Residency is crucial. By attracting talents and minds from around the world to Estonia, e-Residency has become the first digital nation for the world’s citizens.

TAXATION

Resident taxed in Estonia only on income received in Estonia is a non-resident taxed in Estonia only on income received in Estonia. An Estonian resident who does not earn any income in Estonia. A resident’s income or residency is taxed in the state where he or she resides or receives income, not in Estonia. Despite Estonia’s e-residency, other foreign countries are still subject to taxation.

Tax reductions and concessions from Estonia’s double taxation treaties can be used by non-residents to avoid double taxation. A residence certificate must be issued by the Estonian Tax and Customs Department after approval by a foreign tax administrator.

Estonian commercial associations founded by Estonians are registered in Estonia as Estonian commercial associations. Profits earned by an Estonian-based commercial association through a permanent place of business in a foreign country are not subject to Estonia’s income tax.

It is important to note, however, that a foreign state is not automatically exempted from its tax obligations when an Estonian commercial association has its primary place of business in that foreign state.

Even though a business based in Estonia is not subject to taxes in Estonia, it may still be required to file tax returns there. This form is used to declare income and social taxes, as well as the payment of contributory pensions and unemployment insurances, which is due on the tenth of the month following the month the payment was due. In the same form, various annexes specify the company’s tax obligations as well as the payee’s tax obligations.

Business registers need to be updated once a year with the gross per business year. A report that a business association submits to the Business Register can be accessed electronically by the Tax and Customs Department.

You should not wait to start your business in a small Nordic country. Join thousands of entrepreneurs who are doing so already. Service can provide assistance with company registration and tax advice as well.