This blog post is in no shape, or form tax advice. Always consult your tax attorney and check what makes the most sense for your personal situation. Different countries, cities and systems may have different rules. This blog post explores why it worked for me. I have worked with professionals to ensure the legality of the entire process.

A couple of weeks ago, I have posted this picture:

Saying that, I have finally done it! I got my Estonian e-residency! And it obviously sparked some confusion, such as:

What? you’re in Estonia?
What’s e-residency?
Why Estonia?
Oh! Congrats, but weren’t you in Australia?
What is this even?!

And once I said it’s for my business - it sparked even more questions!

So in this blog post I will explain why I have set up my company in Estonia, what an e-residency is and how you can do it for yourself to save massively on your tax.

And no, setting up a company in Estonia is not illegal, Also no, setting it up in a different country than your citizenship or residency is not illegal.
And! Even as a freelancer or YouTuber - this may get you way ahead… Let me explain…

What is an e-residency?

The best place to start is from the beginning, so… what on earth is e-residency?

E-Residency of Estonia is a program launched by Estonia on 1 December 2014. The program allows non-Estonians access to Estonian services such as company formation, banking, payment processing, and taxation. The program gives the e-resident a smart card that they can use to sign documents. This does not mean that you are a resident of Estonia nor that you can stay there without a valid visa. This, my dear ladies and gentlemen, means that you can have a fully remote company which can solve any issues and important matters ONLINE.

Can you imagine? No visits to any government office. EVER.

Offshoring

If you have never heard of the term offshoring - I come to aid.

Long story short OFFSHORING means setting up your company’s HQ somewhere that makes sense tax-wise. For example - did you know that Google is an Irish company? Look it up.

And such a process is not illegal nor reserved for big corporations. You can do it as well as a small business owner or a freelancer.

I have switched countries… a couple of times now (6 at the time of writing this blog post), and I can assure you that opening and closing your companies in each country over and over again is a dreadful and annoying process. This is one of the reasons why I have decided to open and keep my business in Estonia. Everything can be done online, from wherever I am on the planet earth, and the processes are streamlined and easy to follow.

Why Estonia?

Estonia is this really nice country in the north-east of Europe. (look at the pic)

Upon starting their e-residency and paperless companies program, they have opened themselves to digital nomads and freelancers from around the world. And even if you google Estonia’s usual tax rate, it’s nothing special at 20%. BUT! And here’s the cool stuff coming.

Estonia has no corporate income tax*. Meaning that if you keep your money in the company account (and spend it on gear, business travel, subscriptions, tax attorneys or salaries… - I’ll go back to this one), you will pay 0% tax for this money. And as a freelancer or youtuber you can write off a lot of stuff.

This, along with the absolute online system, is making Estonia one of the hottest places to set up your company.

*This means a 0% tax rate for the company re-invested or left in the company. This does not include dividends taxed at 15%

Salaries

I have mentioned salaries in the company spending, and yes, your own salary is considered a salary. You will just need to literally make a contract with yourself.

Now… Here is when things may get more or less suitable for you. If you are a digital nomad with no tax residency - you’re in luck. This means 0% income tax. So not only your company pays 0% tax - but you also pay 0% income tax. This is only reserved for the digital nomads though, so for the people who do not spend more than 182,5 days in one country (oddly specific).*

Now if you are a tax resident in any country (so… you live there), you probably deal with tax brackets. Having a company and paying yourself a salary may still be highly beneficial for you for a couple of reasons:

You still can buy gear, business travel etc., for your company and use this 0% tax and other benefits coming from your company.
You can literally decide which tax bracket you will be in because you can make a variable salary for yourself while keeping the remaining funds in your company account or invest this money as a company.**

You see what I did there?

*This may require you to register as a digital nomad. Check with your tax attorney and government rules.

** Be sure to talk to a tax attorney beforehand about this. Different countries may have different rules. Check tax treaties with Estonia as well.

Ok, so… How do I make this happen?

To get an e-residency in Estonia, all you have to do is to go to the Estonian Government website.

And fill a form. This will take you about 45 minutes. Upon sending your application, you will also have to pay a fixed fee of 120 EUR. And pick one of the Estonian embassies from which you will be able to pick up your residency card. Keep in mind that this process may take a couple of weeks, so be sure you will not leave the country before it comes. The card is stored in the embassy for around 6 months if you are not sure when you’ll be able to come there.

Upon your acceptance, e-residency pickup and happy dance, you can set up an Estonian company.

Now how does Estonia make it profitable for them? Well… there are a couple of things you’ll need to do. (And going to Estonia ain’t one of them)

You will need a company that will help you with all the PAPERS and give you a “trusted address”. Because you need an address. I am personally using COMPANIO and I have managed to get you a 50EUR off with the use of my link if you decide to work with them as well. Companio is an online tax attorney and bookkeeping service that is extremely helpful (like I may be chatting with my own attorney often as I am generally confused and always want to be sure that what I do is LEGAL). They do all of your bookkeeping, tax and company-related stuff and allow you to focus on what’s important - making business. Companio costs 79EUR for up to 20 invoices per month. Which is not much, really. There are also other companies, and I urge you to do your research. I decided on them due to my digital nomad/YouTuber/digital products themes, and we work great together.
GET 50EUR OFF COMPANIO (Company set-up costs)
Once you pick up an accounting company that is suitable for you - you can leave them to set up your business. This will require you to decide on what you want to do, give it a name etc.
The accounting company will do it all for you, and all you have to do is to use your e-residency card to sign a couple of documents, which are all in ENGLISH.
Do your thing.

Sounds easy? It actually is. And the accountants in companio are just great with all the questions and answers. I may be biased, though, because I use them.

Are there any cons?

Nothing is ever perfect. And this solution for your business may also not be. Unfortunately, this company structure does not allow you to get a business lease for a car or to buy offices. Why? It is considered a “permanent establishment”, and since e-residency and companies are for location-independent solutions - this is one of the things that may not work for you.

It doesn’t matter if you make any money in the month - you’ll need to pay 0-20 invoices fee per month to your accounting company of choice, and due to the requirements of the companies - you have to have one to have a virtual office address (which is also the address you are using for your invoices).

is may not be the most perfect of solutions for people, who do have an office and a permanent establishment. Although as a YouTuber or freelancer - you’re fine.

Are there any other options?

Estonia is not the only country that opens up for digital nomads and freelancers with some great deals and solutions. But this is the solution that worked best for me. If you want me to make a dedicated video/blog about any other country that is allowing you to do things like that - let me know in the comments.

I am also having a dedicated masterclass that will help you in deciding what you actually want to do, what you can monetize and how to do it, so basically - how to build your #DreamLife, and it’s currently on valentines day sale! With the code CONTENTLOVE you will get 30% off the original price! So check it out and click this link to learn more about it!

Don’t forget to let me know your thoughts in the comments! Stay awesome fam! Bye!

Why have I set up a business in Estonia!?