My conclusion about the Estonian E-Residency program is that it is essentially useless, unless you want to become an Estonian tax resident by physically relocating to Estonia.
And there is a good reason why you would like to do that[1]:
> For the ninth year in a row, Estonia has the best tax code in the OECD.
For instance, if you live in Estonia, you can use an Estonian limited liability company to manage all your investments without paying any taxes at all, as long as you don't withdraw any money from it.
Why not get Dubai Golden Visa for 5-10 years instead, get 0% taxes and the ability to live wherever you want (Dubai doesn't enforce residency duration limits to Golden Visa holders)?
It might be a good choice for a digital nomad with a short-term horizon, but if you want to stay somewhere else for more than 183 days per year, you will be considered a tax resident in that country, making your Dubai Golden Visa worthless.
My entire point was, that the Estonian E-Residency is only worth it, if you are willing to relocate to Estonia. If you want to spend more than 183 days per year in some other country, then the Estonian E-Residency is not the right choice.
This website is hilarious! Thanks for sharing! I thought the place where I live is expensive, used the website to compare with Tallinn and found place where I live is actually cheaper in most areas :)
If you are not a Software Developer then its pretty much impossible to buy a home. Prices are cheaper out side of the city but then you will be dealing with long commute times or would have to work from home.
Many countries in Europe, including Estonia, are in the small peak of real estate bubble. Inflation is very high and people have been hurrying to invest money they have. Real estate is obvious choice for many.
Estonia can be considered a Nordic country. Many people from Finland have moved to Tallinn for lower taxes and lower prices, because it's just two hours by ferry away from Helsinki.
Current income, inflation and taxation levels in the EU can be considered immoral as well. Moreover, Estonia has issues with human rights (unless you assume Russian-speaking people are subhumans).
> unless you assume Russian-speaking people are subhumans
what ?
> Current income, inflation and taxation levels in the EU can be considered immoral as well
There is no free lunch, that's how we get infrastructure, healthcare, social benefits, &c.
If you think Estonia is as fucked up as the UAE we can stop discussing now, you're either completely delusional or acting in bad faith, feel free to go live there, if all you care about is money I'm sure it feels like Heaven
Read about how 1/3 to 1/2 of population is treated in Baltic countries, then get back to preaching about how moral/democratic they are. How can people born there living there for decades end up without a citizenship? Dubai improved a lot in recent years but the stench of being built on slave labor will be there. So was UK/France/Belgium/Spain/Portugal. Show me a single moral country, I'll move there in an instant.
1/3 to 1/2 is a tremendous exaggeration. In Latvia it is ~11%, in Estonia, close to 5%, and in Lithuania, next to non existent.
The predominantly ethnic Russian who were living in the SSR of Latvia or Estonia, but were not Latvian citizens before 1940, and who have not learned the language and acquired citizenship after '91 have rights, but cannot vote or hold some political offices. Same with any other foreigner. They can learn the national language and apply for citizenship. Choosing not to doesn't mean they are treated poorly or unfairly.
The classic "every country did at least one bad thing sometimes in the past so stoning homosexuals to death in 2022 isn't that bad", Alright :|
If you absolutely love money and have no moral at least say it, even Soros did it: "I am basically there to make money. I cannot and do not look at the social consequences of what I do."
I don't understand what you mean by "ability to live wherever you want". Taxes are pretty much always based on residency, it doesn't matter whether you hold a Dubai Golden visa if you live outside of Dubai.
For some reason software engineers often think they can work remotely and live wherever they want. I lived in Japan for a long time and english-speaking forums about Japan are full of people asking how to move to Japan and keep a US job, or matter-of-factly stating "I have a spouse visa and get paid to my US account so I don't have pay taxes in Japan" which is of course completely wrong.
From a US point of view maybe but it’s complicated in Japan. For starters you are not allowed to work remotely on a tourist visa waiver and work done remotely I Japan is not “foreign sourced income”, at least not for a normal situation. There’s conditions which may trigger tax residency, and finally regardless of your status, work done in Japan can cause liabilities for the US company.
Also the posts I mentioned are almost universally “I assume or have assumed that I can just buy a house and work remotely from Japan”, but there a few that are looking for loopholes to be a digital nomad.
You are most likely correct - those who want to own a property/live there forever are out of luck and likely bend local laws. It's always best to talk to your tax advisor wrt these issues to avoid any troubles later (I did to mine before I traveled around the world working remotely).
If you make sure you aren't living in a single country for over 180 days, you can still utilize Dubai taxation. For example, you spend 179 days in your home country in the spring/summer, then travel a bit for a few months, then park in Dubai for winter. With regular Dubai visa, you'd need to spend 8 months there. Dubai's CoL is comparable to Germany. If you earn $200+k/year remotely, you can buy a house in your home country in a few years and move back. 0% tax means you get $200k, with monthly living expenses around $2000 including health insurance and rent, keeping $176k (adjust when married with kids etc.).
Maybe if you are in a country with super low taxes for IT folks like Romania, Poland, Croatia etc. But that won't work in Germany, Benelux, France, Spain, Italy, Scandinavia where taxes can be 40-60% at that income level.
What I meant is that a Dubai visa is not necessary to execute this scheme. In general, if you spend less than 180 days in a country, you are not taxed in that country (irregardless of whether you have a Dubai visa or not). Country of citizenship is mostly irrelevant for tax purposes, unless you are American. There's not usually a law that requires citizens to be paying taxes somewhere (else, I could see how the Dubai Golden visa could help).
I think you'd need at least one country to give you a taxation statement for a given year or you risk your home country will extract those taxes from you later. I can ask my tax person about it.
I get you don't really understand well how these things work. I suggest you don't give advice in this area. Some people will find themselves in trouble because of it.
IIRC, most countries with income tax tax by where income is earned (that is, where the work is done) by default, not residency, though many have tax treaties with each other that assign income earned by residents of a foreign country in the other treaty partner back to the country of residence.
Tax domicile laws are often in effect only after 180-something days in most developed countries. For example, imagine you are moving after 270 days from e.g. Croatia with 12% tax rate to Germany with 42% tax rate. The 90 days you are making money in Germany can be still taxed in Croatia.
So not paying taxes like everybody else which pay for public services you use is morally defensible as long as you don't pay those taxes to a democratic nation as opposed to a dictatorship?
This, I have to imagine, would come down to soft power. To my knowledge, it’s /very/ rarely free to move wealth across borders. So if a country were to strongly incentivize investment a certain way all of a sudden, it would be ideal if the political leanings were aligned with yours. Perhaps that might mean investing/holding your wealth in a country where there are likely to be further breaks for renewables. Who knows.
This isn’t a super thought-through response. Would be curious to see if people have ideas to add.
Instead of avoiding taxes and coming up with silly hacks - one should pay his fair share in his own country and try to build community and wealth around himself and his close ones.
Energy/wealth spent to avoid taxes in way where you move from country to country or do some weird stuff could be spent probably on building a small business or two.
I agree there are bad places to live and people have to run away from these or move because they don't earn enough in their place so they move out for more opportunity, but if it goes down to "I just want to keep more money for myself" is just not right and not moral at all.
Imagine being a 20-year old in Germany and Netherlands and finding the cheapest house you can own goes for 500k. Your salary peaks at 80k after 10 years of work, half of it goes to taxes and 1/3 of that is lost on rent you are forced to pay. Your only option is a 30+ year mortgage that will send you to a rat race with no options to leave, especially when you get married. Or you spend 5 years in Dubai, working remotely for 100k+, return back home and buy a property. Then you work only as much as you need. What would be your choice?
Sure, but what you are describing is not the same as becoming a tax resident of country solely for tax gains, I think that is morally wrong. I do believe in open borders and flows of labor, if specific part of the the world raise wages to attract skilled labour, I think that's great, more choice for us all! I personally would still want to live in the Netherlands earning a third of the disposable income compared to Dubai for various reason, including moral as well as standard of livings reasons but I completely understand somebody else might make a different choice.
AFAIK all Baltic states have a minority with limited rights, so they are far from true democracy. It's irrelevant what they think of that minority/what is their history with that minority, they simply can't claim to be fully democratic.
I dont hail from Estonia, but if you disqualify it as a democracy... pretty much all other european nations and the USA will have to be disqualified too and for the same reasons.
Its quality of life index is way higher then the USA as well, though that doesn't really say anything about its democracy.
Athens didn't have universal suffrage, and they invented democracy (and were in many ways far more democratic than anything we have today). They had some pretty radical measures for mixing up who actually got to hold office, such as sortition, and misbehaving officials risked ostracicsm by public vote.
I think this is something that is severely overlooked in contemporary democracy. It's a very small clique indeed that stands any realistic chance of holding office in most western democracies. Ultimately doesn't really matter who gets to vote if the candidates are all the same.
A quick question - how can a person born in a Baltic state and living there their whole life end up without citizenship? How is that democratic? Don't you see any problem there? That doesn't happen even between Romanians and Hungarians that are often at each other's throat for similar historical reasons.
> A quick question - how can a person born in a Baltic state and living there their whole life end up without citizenship?
The people in question are ethnic Russians who CHOOSE to not get a citizenship. They choose this, beccause people in Baltics without citizenship have the right to travel both within the EU and in Russia without a visa. Just to make it extra clear, let me draw you a table of a citizenship matrix in Estonia:
Estonian citizen - can travel within EU, needs visa for Russia
Russian citizen - needs visa for EU, can travel within Russia
No citizenship - can travel within EU, can travel within Russia
They can convert themselves to a Russian citizen at any time. They don't do it, because they don't want to actually live in Russia. They just want to be able to go there regularly for family and friends.
In the 1990s Estonian citizenship was given to any resident who asked for it, zero requirements. The people who remain stateless today rejected the proposal. Nowadays its more difficult to get Estonian citizenship, but still within reach for plenty of these people. They just don't want to do it, again, because they have friends and family in Russia - and Estonian citizens can't freely travel to Russia.
They can still vote for local elections and work. So there isn't really a strong incentive to care.
The best incentive for getting an actual citizenship is for those who want to travel beyond EU & Russia, because the global world doesn't give these stateless people special rights.
> A quick question - how can a person born in a Baltic state and living there their whole life end up without citizenship?
It should only be possible, if that person was born in Soviet Union (that is, before 1990), and doesn't speak the official language of the country he / she is living in.
I understand you are used to it, but it's really bad optics from the outside. How can there be people in their 30s without a citizenship? Estonian is a Finno-Ugric language which means it's extremely difficult to learn due to a completely alien structure of the language (compared to almost all European languages). Even Finland allows both Finnish and Swedish as official languages and doesn't discriminate Finnish Swedes that they don't speak Finnish. So you have some sort of "Eastern-European" flavor of democracy that allows a portion of population be marginalized based on their language.
> How can there be people in their 30s without a citizenship?
Because they've chosen not to pursue citizenship. There's a simplified path that anyone in this situation can utilize. I don't see how giving them the choice and allowing them to live and work in the country indefinitely even if they choose no is in any way "un-democratic".
And if you're suggesting that 30 years is not enough time to learn the absolute basics of a language, that is just utterly ridiculous. Not nearly as ridiculous as comparing this to the slave labor that built Dubai though.
Look, Baltic states have my sympathy for what you managed to achieve in 30 years. I understand you needed a few years to establish yourselves as independent nations, assert/reclaim your national character and show it to your big bad neighbor. However, 10-15 years would be sufficient for that. Having that same problem for 30 years is just bad and you can try to explain it away as much as you want.
> Having that same problem for 30 years is just bad and you can try to explain it away as much as you want.
I think as an outsider you are completely missing the point: if Estonians ever wanted to give the Estonian citizenship to the residents who are unwilling to learn the official language of the country, they would have already done that.
Because by giving somebody a citizenship, you give them the right to vote. And who would the Russian speakers vote for, if they don't speak any Estonian? Pro-Russian parties and politicians.
So your solution is to basically have them as "untouchable caste" that is supposed to pay taxes but can't vote, despite being born there and living there all their lives. Ideally if they just disappeared. And you don't see any issue with that. You are basically confirming all my arguments so far.
> I understand you are used to it, but it's really bad optics from the outside. How can there be people in their 30s without a citizenship?
Technically, Estonia is not the successor state of the USSR, Russia is. If a person was born in the USSR, and only speaks the official language of the successor state of the USSR, then that person should probably be a Russian citizen, not Estonian.
"Technically, Slovakia is not the successor state of Czechoslovakia, Czechia is. If a person was born in Czechoslovakia, and only speaks the official language of the successor state of Czechoslovakia, then that person should probably be a Czech citizen, not Slovak."
> Most varieties of Czech and Slovak are mutually intelligible, forming a dialect continuum (spanning the intermediate Moravian dialects) rather than being two clearly distinct languages.
> AFAIK all Baltic states have a minority with limited rights, so they are far from true democracy.
Limited rights in the sense of not being able to vote for the parliament, sure. However that isn't unusual at all. In fact, I don't know of any counter example. Do you have an example of a country where non-citizens can vote for the highest form of government?
As for local elections, in Estonia both Russian citizens and ethnic Russians without any citizenship are allowed to vote. That is extremely democractic.
Fees were like $3k last time I checked, likely higher when using some external agency. Still peanuts compared to savings from 0% taxes (assuming high income in EU).
> For instance, if you live in Estonia, you can use an Estonian limited liability company to manage all your investments without paying any taxes at all, as long as you don't withdraw any money from it.
This caused me read up on Estonia on Wikipedia, and this struck me:
“ Estonia has pursued the development of the e-government, with 99 percent of the public services being available on the web 24 hours a day.[198] In 2005 Estonia became the first country in the world to introduce nationwide binding Internet voting in local elections of 2005.[199] In 2019 parliamentary elections 44% of the total votes were cast over the internet.”
The Estonian ID-Card[1] that allows all of this is also pretty neat. Basically it is usually* a smart card that has your x502 government signed certificates stored on it.
And because its a normal x502 certificate you can use Mutual TLS to authenticate every ID-Card holder / Estonian citizen by just adding those 3 lines to your nginx server config block[2]
Due to the ease of integration, the same ID-Card is also used to implement login for a lot of online websites and is also used as an Loyalty card in stores. It is also possible to use the ID-Card for SSH login[3] because it's just a standard smart card.
* There is also an Mobile-ID that stores the x502 cert on you phone SIM card and a Smart-ID iPhone/Android app that require custom API-s and paying for the access.
It's making life easier until the day comes that the card is taken from you and abused (or it is politely suggested you insert it on the requestor's behalf at gun point).
Sorry to break the carefully chiseled communication of the Estonian government, but e-services in Estonia aren't so great. Source: I leave here.
The Estonian e-id is a good idea, but very badly implemented, and quite creepy:
- You need to install some government software on your computer to use basic services. They ask you to install a browser extension. huh...
- The software UI is really crap. You get error messages in Russian, you have 3 apps for different purposes. You need to dump your cookies before using the e-id online, and it's nowhere said. Using e-id is usually a real pain, as it doesn't work out of the box most of the time.
- It's not needed most of the time. Why do I need to find my e-id, the adapter, my code, just to check my internet provider account? A simple mail/password would have been fine.
- If you're on your phone, you can use a "mobil-id" and use it like this, and pay using your id. Ok, but then, well...there's a disturbing centralization of data. A friend got a tax inspection because his supermarket card was linked to his e-id and he was seemingly spending more than what he was getting paid for his job. Are you OK with the government spying on your spending?
- Estonia has almost no public services. Healthcare is a joke here - you need to wait often more than 3 months to see a specialist, even in Tallinn. Kindergartens are very difficult to access without bribing the administration (you don't need an e-id for this). There's a very opaque "elite school" system, which is geared around gatekeeping the good schools for the elite, while the rest of the population gets sub-par education. So yeah, being able to book a doctor online is interesting only if there are doctors available.
Also, in the rest of the economy, one is forced to admit that web services are really underdeveloped - most shops don't have an online presence. Estonia's very good at PR, but most foreigners there (and some of the local population that lived abroad) will tell you it's mainly bs.
It's open source and on github. Check out any of the ~50 repos https://github.com/orgs/open-eid/repositories --- not sure why this would be less trusted than any other open source software.
> The software UI is really crap.
I won't argue about the subjective taste of design, but at least the UI is Qt and not Electron.
> You get error messages in Russian
When you have it configured in English? Maybe. I can say that when configured to Estonian I've never seen any other language.
> You need to dump your cookies
Never heard of anyone having to do this. Sounds like a website specific issue anyway.
> Why do I need [my e-id] just to check my internet provider account?
Because you can sign binding legal agreements without leaving your home. It's convenient.
> A friend got a tax inspection because his supermarket card was linked to his e-id and he was seemingly spending more than what he was getting paid for his job.
This sounds like some grade A conspiracy. There is no government agency whose job is to collect supermarket purchase data. Are you claiming there is some sort of shadow organization hidden somewhere that goes through this data? I would bet that the tax inspection happened for other reasons and this conspiracy theory is made up.
> Estonia has almost no public services
Is this hyperbole? Do you have an example of a public service that is missing?
> Healthcare is a joke here - you need to wait often more than 3 months to see a specialist, even in Tallinn.
Not if your case has a medical reason to be prioritized. You can also always pay and go to a private clinic.
> Kindergartens are very difficult to access without bribing the administration
I'll assume you mean getting your kid into one by access. Some districts do indeed have long waiting lists. However if you register as soon as your kid is born the problem goes away. The problem usually surfaces when young parents are unaware of the registration waiting list and then later expect to be immediately admitted. That is only possible with 3+ year olds. The waiting lists are real for younger ones.
The part about bribing is laughably false. Kindergarten administration doesn't have digital authorization to reorder the database, which is ran by different organizations. I guess maybe some kindergarten could take your kid "extra on the side" unofficially, but that's more like a special favor. There is no way to influence the actual registration list.
> There's a very opaque "elite school" system
Elite schools are like that in every country. Do you think an elite school would remain elite if it had general admission?
> most shops don't have an online presence
Are you talking about mom & pop stores? Because the biggest stores like Selver, Prisma, Rimi, Coop, Stockmann not only have an online presence but even do delivery. I think only Maxima doesn't do delivery, but still has an online listing of items.
--
To summarize, you listed so many things that to me feel clearly false that its rather weird. You're either one of the unluckiest people in Estonia or have an axe to grind. Either way I hope you'll do better in the future, because me and everyone else I know has a much happier life in Estonia than what you described. Cheers!
> It's open source and on github. Check out any of the ~50 repos https://github.com/orgs/open-eid/repositories --- not sure why this would be less trusted than any other open source software.
Would you install North Korea's open-source software on your computer?
The general security of the system has been compromised quite a few times already: https://news.err.ee/1608294000/ak-ria-unlikely-to-be-fined-o...
Also, there was a case of a massive data leak following the loss of a hard drive in public transportation by a public servant. Maybe having all records online and collected (including citizen's DNA) isn't such a good idea?
> Never heard of anyone having to do this. Sounds like a website specific issue anyway.
My wife has the problem on her windows computer, I have it on a Mac, we found the issue on a forum, so yes it's clearly common.
> Because you can sign binding legal agreements without leaving your home. It's convenient.
I wonder how people can sign such legal agreements elsewhere in the world.
> This sounds like some grade A conspiracy.
That's what the tax agent told my friend. Given that you can use your e-id for payment and customer card, it doesn't sound so complex to understand, many other countries do the same.
> Is this hyperbole? Do you have an example of a public service that is missing?
Public services are way way too underfunded. Having an appointment with a doctor takes way too much time (months if you don't pay). Getting stuff like orthodonthy outside Tallinn is very complex. If you go to the public hospital at night, the urgency services are left to the bare minimum (I experienced this). All expats that had health problems here (including stuff like "birthing") have horror stories to tell - medecine is delivered like in the soviet times. It's no wonder Estonia has a sky-high rate of preventable diseases and mortality: https://www.euro.who.int/__data/assets/pdf_file/0003/419457/...
Tallinn's administration is a joke. They don't do urban planning, so zones like Kalamaja get overbuilt, with almost no shops, roads get crowded (or just free-for-all parking spaces with 0 enforcement), they don't plan for schools, and so on. Mismanagement is the norm, and don't get me started on the electric scooter anarchic situation - walking in the street is as stressful as it gets.
Can we talk about the fact that snow and ice isn't removed from the sidewalk, causing several injuries each year?
> I'll assume you mean getting your kid into one by access. Some districts do indeed have long waiting lists. However if you register as soon as your kid is born the problem goes away. The problem usually surfaces when young parents are unaware of the registration waiting list and then later expect to be immediately admitted. That is only possible with 3+ year olds. The waiting lists are real for younger ones.
Please don't bullshit on this one. Yes, you can get a spot in a kindergarten 45 minutes-away from where you leave, or get an allocation (which won't be enough) to put your kid into a private one. However, if you want to be in one near your home, no luck - unless you bribe. I know, many, many people who did it, so think what you want.
Also, "However if you register as soon as your kid is born the problem goes away." - We did it, our kid was 500 places away in the waiting list the day after he was born. So, no, it doesn't go away, because you don't have enough room for all kids. Simple as this.
> Elite schools are like that in every country. Do you think an elite school would remain elite if it had general admission?
Again, typical lie I hear here. The entrance exam is done at 6 years old, but school isn't compulsory before, so it relies on the parent's education and knowledge on how to game it. The exam is quite opaque, as it's not standardized, it's recommended to attend a "prep school" before (the private ones whith the elite school teachers being the best, hehe), and schools are only in Tallinn.
If you can game easily the system by having insider's info, it's not "elite" any more I'm afraid.
> Are you talking about mom & pop stores? Because the biggest stores like Selver, Prisma, Rimi, Coop, Stockmann not only have an online presence but even do delivery. I think only Maxima doesn't do delivery, but still has an online listing of items.
Yeah, given that Estonia has very very few shops in general, I'm talking about the medium-to-smaller ones. Just to recall, Estonia's narrative is that it's a very advanced IT country - in really, it's really not that.
Sorry to break the carefully-chiseled narrative, but I really think Estonia should recognize that a lot of things are wrong, to solve them and have a new start. Maybe Estonians would have a much nicer society, youngsters would stop to leave and mental health problems would decrease a bit.
I find it extremely concerning that they mix e-government and electronic voting. The former is obviously a good idea, while the latter is an existential threat to democracy. Estonian citizens can now no longer audit the validity of their elections in the way that paper ballots have allowed.
Attacking an electronic voting system requires changing a few integers. Surely this is much easier than stuffing ballot boxes all over the country. In functioning democracies, the polls have observers from multiple parties which makes ballot stuffing infeasible.
> Stuffing ballot boxes is much easier than an attack on an electronic voting system.
If you have free and independent observers it most definitely is not. If you don't have them it doesn't matter (with an electronic system you would have had exactly the same results both in Ukraine and Korea just at a much lower cost..). You'd need much resources and political power to compromise a normal election. With internet voting you'd need just a few people in the right spot (i.e. developing/maintaining the system) and some security vulnerability/backdoor to do it.
Also it's virtually impossible to guarantee both security and anonymity with internet voting.
In all/most democratic countries anyone can observe the counting of paper ballots and the process itself is relatively simple and easy to understand for almost anyone (even if not very efficiency).
With internet voting we lose that. There is no way for most people to audit the system. Even if it's supposedly open source and transparent it's tricky to guarantee that the actual system is not tampered with and has no backdoors.
> Election integrity is more about the people running the election
True. But but fraud involving paper ballots is both difficult to execute at a large scale and hard to hide from other which is a huge deterrence.
Estonia already has experience with faked election results with paper voting, due to Russian occupation. So that argument doesn't work as well in Estonia.
Yes the electronic system can have flaws, but the old system didn't prevent the issues either. So might as well go with convenience.
It's a typical case of a problem that we really think could be fixed by technology, but you're only adding or changing technology layers and the end result doesn't change, because it's not a technological problem, but a human one.
People can be confident in paper votes because they can understand how to audit the result, and who does it.
The best e-voting software in the world can provide that level of trust only to some engineers who know the code, and only if they can audit all the systems where the software is deployed.
It's like passwords, it can't work if part of the population has no clue why it's needed or how it works. It's even worse with blockchain, because you can't put everything on the blockchain, it needs to interact with the real world, and that's where you can cheat the system (like stealing the keys of people in retirement homes because they don't know what they are for - sure it happens with paper but it's harder to do and easier to catch them in the act).
That's their whole disaster recovery plan and why they're so aggressive about digitization. If Russia overruns the physical country, the nation (it's state and it's people) can continue operating.
Read more about Estonia. They have so many good things going for it when it comes to their government. When communism died worldwide in 1989, estonia was left with nothing and had to figure it out from scratch. They chose computers and obviously this was a smart move. Due to this, they don't have hundreds of years of bureaucratic creep and big government problems.
I very much love what estonia is doing, they have 1 obvious problem. They have a crazy neighbour.
The e-id system has horrible UI. Also, their enterprise website hasn't been updated since the 2000', and any expat there can tell you that most services are done as if you still were in the USSR. 0 care for quality, nor customer service.
Considering criticism as "anti-Estonia propaganda" is something very Estonian. I guess that when people criticize North Korea, it's just propaganda? No? How about facing the facts?
- The E-id has a lot of tech debt.
- Estonia is very far from being a "high tech country". Bus stops don't tell you the expected wait time, very few businesses are online, it's often complex to interact with the ones that are if you don't use a local bank, as apparently it's too hard to use Stripe. My internet provider doesn't support recurring payments and I can't pay with a credit card.
- Estonian data collection is creepy. For instance, they collected around 10% of the country's inhabitants' dna to make "medecine of the future". In a country where you have to wait > 1 month to get an appointment for a general doctor and where you pay 20% VAT on pharmaceuticals, right.
- Corruption is widespread in some layers of the society. Bribing public servant for school/kindergarten is common (I know many people who did it...). Tallinn's chronic mismanagement is probably due to the fact that town hall officials go work to the companies that deal with the city - Bolt being one of the first that comes to mind. Also, the massive money laundering scheme that got Danske Bank caught was known by every bank in the country, and all took part to it. The country being so small, it's very very easy to corrupt the right people, and it's quite cheap.
- Can we talk about the fact that several government and city officials drive Bolt cabs to make ends meet?
- Estonian tax system is crazy regressive. 20% vat on food! 20% flat income tax! Wtf is wrong with you guys?
Instead of doing ads like this article, the government should maybe work on reducing the sky high preventable disease rates, mental issues in the population, find actual solution for the estonian language problem (as not telling people, "lol just learn Estonian by yourself dude"), stop reducing the spending in education, fund Estonian culture, which is now either a thing for tourists or an source of extractable public funding for the affluent Estonians.
By the way, take care of your monuments - I've seen so many old manors (Mois) falling in ruins, it's a real shame. Maybe that's a better long term investment that another german SUV bought on leasing.
I've never entirely been sure what the benefit of this is. If I'm a resident of Spain (citizen of the USA) is there a benefit for me to get an E-residency through Estonia instead of starting my business here in Spain instead (or in the USA)?
There might be a tax benefit (for the business, income tax would still be paid where you live)
But as far as I understand the main value proposition might be for non-EU citizens to be able to open a business in the EU remotely with access to the EU market, banking system etc
I’d be very careful about the business taxes - it used to be a common model that Germans would form a UK ltd to do mostly business in germany - and they were generally liable for corporate taxes in germany. (1) So depending on your local tax laws and where you perform work/where your customers are located, you might still be liable for taxes.
Indeed. Many EU countries expect to pay the corporate tax levels of where you live, not where your company is registered. Like say you have a company tax rate in your country of residence of 40%, but you open a company in a country where you'll pay just 5%, then your country of residence will expect you to pay the difference to the local 40%, minus the 5% tax you paid in the country where your company is registered so you save nothing in the end while also making life more difficult for you in attorneys and accountants fees.
I knew people doing this without reporting their foreign company income to their local tax authorities, but if they catch you you're looking at severe fines and possibly jail time. I knew a British guy living in Sweden making money from his UK company without fully paying Swedish taxes on his gain from the UK. He later got slapped with a equivalent ~80k Euros fine by the Swedish tax authorities. Turns out, governments don't like you cheating your tax dues.
Legally avoiding taxes in the EU is pretty difficult for the average person without completely relocating to a tax heaven.
So be careful and hire dedicated tax attorneys with experience in international/EU tax laws before you think you're clever and dream of dodging taxes like you're Amazon all on your own.
It’s not “where you live” but where the company operates. I happen to (indirectly) co-own a UK ltd. It does business in the UK and has UK resident employees. It pays taxes in the UK only. But if that Ltd. would operate in Germany from a German office and have German resident employees, it would likely be classified as German tax subject.
It depends how you extract the company profits (as salary? as dividends? do you reinvest them? etc.), and where you move them after you've taken them out.
If you live in Germany but operate a UK company and all those profits never leave the UK, then you'll pay no German tax on those gains. But if you were to take those profits from the UK to use in Germany, then the German gov will want a sizable piece of your foreign gains.
> If you live in Germany but operate a UK company and all those profits never leave the UK, then you'll pay no German tax on those gains.
From my limited understanding this is wrong and you should consult a tax advisor before attempting do set this up.
“Ort der Geschäftsleitung” (smth. like “location where business decisions are made”) seems do be a recurring topic when it comes to taxation of foreign companies in Germany. They might argue you are “unbeschränkt steuerpflichtig” in Germany. (You owe taxes just like if your company was registered there.)
Yup, that’s what I took from discussing this with our tax accountants. The reason our UK ltd is taxed in the UK is that it does it’s business in the UK and our German business is served from the German GmbH which owns the UK ltd.
I was considering to incorporate in UK (not for tax reasons but for transparency of their laws compared with the place where I live). My accountant told me that recently there had been laws introduced making it basically impossible to become significant shareholder unless you relocate. I have not confirmed this myself as I'm yet to review regulations.
We have formed our Ltd in the UK pretty much exactly one year ago and it wasn’t a problem for us - however, the Ltd is a subsidiary of our German company, so I’m not a direct shareholder. This may or may not change things.
This is a tricky subject, and I’m certainly not expert on this, but my understanding is that where a company is resident depends on where its central management and control are based. So if you are the sole director of a UK registered company but reside in the Netherlands, your company is tax resident in the latter. However, if your board are majority in the UK, hold meetings there, etc. your company is resident there, even if you reside in the Netherlands. Then, if you don’t pay income tax on your foreign income in the latter (the 30% expat deal), you effectively pay no personal income tax on whatever you earn through the UK company.
It's funny that these measures only catch small businesses. Big corporations can register all over the place and divert profits where tax is the lowest and don't be bothered by these laws.
It's very easy for companies. Netherlands and Luxembourg are tax havens inside the EU, and of course Ireland tailors her laws specifically to "sell" tax evasion products.
For companies yes, but not for individuals. As an individual, your gains are taxed by your country of residence.
Paying taxes in the Netherlands, doesn't absolve you from also being taxed in your home country, if that's where your profits from the Netherlands will end up eventually.
Not necessarily. If you are rich, then there are many ways to get around that. For instance having another company in a tax haven charging licensing fees to your company in Netherlands or whenever and then loaning money to the individual, which in many countries still is tax free. Of course you don't have to repay the loan or pay just the small interest.
These taxes are designed to keep working class being working class and ensure they'll never jump the class ladder.
It really depends on your initial country. You can get double taxation or the taxation in Estonia may be not that favorable. Corporate taxes in Poland are lighter for instance.
IANAL but I've looked into this (I'm a Swiss citizen living in Germany) before starting my business. The upside is all digital and less bureaucracy. But then it gets complicated and unclear tax-wise. Furthermore, if you're doing business mainly in your country anyways, other businesses might find it weird that it's not a German legal entity.
So, for me the uncertainity and tax complications were at the end not worth the upsides of less bureacracy to register an Estonian legal entity.
The biggest question to first answer is, "Who and where are your customers?"
If the customer(s) of your business are in Spain, then you would almost certainly find it least complicated to setup a business in Spain. As a legal resident of Spain, you are already required to pay taxes there.
From what I've seen, the tax rates quickly surpass those of the US; so you'll pay all your taxes to Spain and owe the US nothing (although of course you still have to file).
However... if your customers or clients are US based, then you could setup an LLC in a favorable state like Wyoming (you can search on this topic of course; and my serious search resulted in Wyoming seeming to be best). Then your US clients will not face any perceived or real obstacles in doing business with you; and your tax work should be easier (getting qualified help).
This is a complex question. What type of business is it? Are you intending on living in Spain long-term? I'm not sure that having e-residency would be beneficial, but you have many options wrt the set-up of a business (depending on the type of business) and setting up a Spanish SL may not be the best choice for you. (I have a Spanish SL but also for many years had a UK based Ltd as a Spanish resident, which I got rid of after the Brexit vote).
Also, Spain has a wealth tax outside of Madrid, which may or may not apply based on your financial situation, but it’s significant if it applies to you (1-2.5% of net worth annually).
I believe the principal target market is outside of the EU. So for example; Indians that are looking to start a business that sells to the EU. That is what I believe Estonia is seeking to capture with such offers (they've been offering this for quite some time now).
If you work for your e-company remotely as an e-resident from another EU country, you still need to get a trade license and VAT number to write invoices to your e-company and file income tax. If we leave liability aspects aside for a moment, you could then as well use your trade license and run the business as sole proprietor, which seems to be the much leaner setup.
With eresidency you can file the monthly vat reports in estonia online which basically means you don’t need to pay vat in eu after getting this residency. Vat is over 20% in most countries. I.e once you are eresident gas in gas station and electricity are 20% cheaper. For example you can export software development services to a USA customer which is vat free. That’s how you get money into your company account. Then you can spend that money on gas Or hotels.
> I.e once you are eresident gas in gas station and electricity are 20% cheaper.
This isn't different from just being in the country you're in, companies usually don't pay vat on resources they use. And it only applies if you're using your car for business purposes only, otherwise it's 20% cheaper because you're committing tax fraud.
Anything other than a 9-5 I guess? At some point if you run a business you may need to start taking laws and taxes seriously, but not everyone will get to that point. It's similar to the idea of paying a young server at a restaurant in cash to avoid taxes, except it's more common and less risky.
Is this as involved as it was a few years ago? I remember looking into this in 2017/2018 and the process of starting the business was relatively easy, but it was difficult to get a bank account.
No changes here. They are still heavily promoting this e-residency thing, but opening a bank account for your newly established Estonian company is still not possible remotely. You will need to travel to Estonia if you need a bank account in a “real” physical bank (not the fintech one). If you are not an EU citizen - you have even more problems. It’s a good chance to receive a refusal from both fintech and physical banks.
You can file Estonian vat reports which is a lot simpler than any other eu country. Completely doable without an accountant fully digital with costpocket.ee
I used to file VAT quarterly through the HMRC website when I had a small consulting business in the U.K. (back when that was still in the EU). It really wasn’t very complex.
I did use an accountant for filing my company’s annual accounts and taxes, though when I was a sole trader I just used the HMRC tax website to file. Far simpler than any of the options I’ve tried in the US, even as a regular employee (which you usually don’t have to file anything for in the U.K.)
I think it's not related to (Estonia's) E-residency program, but requirements by the EU to physically verify non-EU citizen bank account owners.
Similarly, (non-eu) expats who moved to Estonia with a D-visa but have not received their residency permits yet cannot get a bank account until they receive so.
Nowadays you can setup a Wise account (formerly TransferWise), as your bank account for an Estonian company. Got my company setup in Estonia last year.
And that's exactly what they have, specifically they have a unique form of corporate taxation that means that only dividends are taxed at the end of the FY.
Does this mean if I am resident of a country that has higher income taxes than Estonia and register a freelancing contractor business there, I will have to pay taxes on Estonia only?
No, it definitely does not mean that. This e-residency thing cyclically pops up to generate attention, but it's unmitigatedly and unconditionally a bad idea unless you're a lawyer who is extremely well-versed in what they're doing and who is probably doing some dirt somehow.
Most jurisdictions in most areas of the law have very successfully ensured that you can't evade their laws by just doing some paperwork to get some flag of convenience.
Estonian e-residency amounts to a piece of paperwork by which you voluntarily put yourself under Estonian jurisdiction for certain things.
However, the difficult piece is never putting yourself under a jurisdiction that you like. The difficult piece is getting yourself out of a jurisdiction that you don't like but that your business happens to be connected to somehow through real-life circumstances.
If you don't manage the latter, all you've done is to create unnecessary complication. Even if Estonian e-residency is super thin in admin overhead, it just amount to admin overhead you wouldn't otherwise have had at all, plus complicating the admin overhead you are facing in your home jurisdiction.
I am not a tax consultant. Maybe you can leave more profit to the company and have all your spending be reimbursed by your company, in return paying yourself less, hence paying lower local income tax?
I have a limited company in Ireland. I am the only employee. I pay myself a wage from that company.
One thought I had was that I could live modestly, pay myself a fraction of what the company takes in, let my company take advantage of Ireland's famously low corporate tax rates and invest accordingly, and then cash out, perhaps after moving somewhere without 52% taxes on all income over (70-90k depending on spouse, kids, etc.)
Alas, I am not the first person to think of this. The Close Company Surcharge effectively means I have to pay out on a given timeline and as such incur an income tax liability.
> after moving somewhere without 52% taxes on all income over
Does Ireland not have some form of expatriation tax? In Germany, this doesn't work, because they'll tax you "as if" you've sold your company at the time of emigration.
Perhaps! Honestly I didn't research it too much after discovering the close company surchage. I also considered it even if I stayed in Ireland; have the company sock away €200k a year for 5 years and then pay myself €35k for life at Ireland's low income tax rates (taxes here are among the most progressive in the EU - low earners are taxed very little, or none at all, while people only a bit above the median income are taxed very heavily). Alas, it was not to be.
And tax authorities may wonder whether setting up a foreign company was for tax reasons only, and decide that you still owe taxes on everything and that you are a tax dodger.
So talk to a specialized tax accountant who know their stuff (and that won't be cheap).
E-residency is a scam, you basically have to pay taxes 'duties' without any major benefits 'rights' and protection as the citizens of that country have.
There is an open company registry, it’s possible to see the companies a person owns in Estonia, and how much revenue those companies have generated in the past quarter through rik.ee. Doesn’t require registration to search.
In any case you have to declare revenue and ownership, or commit tax fraud.
Consider that in some countries (eg Italy) running a foreign legal entity but being based in the country means that said legal entity must pay taxes in the country.
So I have frankly never understood what eResidency is for, as you will still have all liabilities for the country you are in.
It is not entirely true that everything can be done online. The e-residency kit is physical and needs to be picked up, which depending on your location could be cumbersome. A major problem may be the various cross border tax regulations.
The US is a pretty big counter example. It's two major cities on the Atlantic and Pacific coasts. That's a round-trip flight at least for people in most of the country.
Oh, sorry. I read your post originally as in-country meaning not cumbersome, as opposed to potentially cumbersome but less so than having to go to Estonia in person. Yes, New York and San Francisco are domestic for US folks obviously.
Worked remotely from Estonia for a few weeks, it was excellent. Would have stayed a lot longer if circumstances had allowed it. I was in a small town in the east (Tartu). Overall I found it very clean, safe, and well organized. Train system was amazing, food was great, and not super expensive. Culture was a lot more friendly than I anticipated. Definitely recommend, easily one of my favorite countries.
That said, their Digital Nomad visa application was entirely digital, and didn't have clear options for someone who didn't need a visa to enter the country/enter without invitation. As a Canadian passport holder, somehow this made it more difficult to fill out and understand. I ended up with a lot of null fields when I filled it out. Would have had to stop at the local police office to finalize it, given the issues I had.
I moved to Estonia 6 years ago and living here ever since. I also helped many friends and expats to move here or get an e-residency, AMA.
As for the experience, downs:
- Cold+wind.. Not as cold as Reykjavik or as windy as Helsinki, but when these get together in Estonia, it's the worst.
- I definetely miss socializing, especially when compared to countries like Spain or UK. Less interaction makes a less pleasant day and even less pleasant hospital experience.
- As Estonian's doesn't socialize or talk much, it's much harder to learn the language by practicing-living here
- Many brands or services not here. Estonia is usually one of the last countries in EU to receive some brands or services. Ie Apple products, official Apple store, HBO+.
- Also not many options for global companies to work
- Travel options are limited. Flights are longer, more expensive and less frequent.
- Maybe few other things that I cannot remember atm
Everything else is either good, great or amazing, but mainly:
- Digital mindset and almost non-existent bureaucracy. Both gov and private e-services very fast, transparent, digital, accessible. So far, I've done many I've applied for a bank account, multiple university applications and admissions, residency permit and driving licenses renewals, employment and rental contracts etc.
- Nature and silence, even in the middle of the city.
- Trust in the government, police and legal system
Expensive (25% inflation), people aren't nice here - it's not about foreigners, it's the Estonian society. People just don't really like to hang together, or make friends. If you're a bit different, you'll get "the stare".
The country is divided between Russians and Estonians, and foreigners. Estonian politics revolve around picking on Russians. It's sometimes a bit comical: Estonian schools don't have enough teachers for Estonian speakers, because of lack of planning and funding, and now they want to ban russophone schools. Russophones are forced to "learn the language" (one of the most complex in the world) while being soft-excluded from the society. Anyway, Estonians don't really enjoy speaking with less-than-fluent Estonian speakers and will switch to english or try to make humiliating corrections, so picking the language is quite hard here.
People won't hold the door if you have a kid in the arms, doctors won't be nice to you, there's absolutely no culture of service. You have systematically to send emails, calls, in-person visits to get things done, or get paid. It's not me being nice, every local will tell you the same thing we he stops pumping the "Estonia is nordic" meme (it's not, it's a post soviet society with 0 public services).
Advice: don't go to Estonia. It's no wonder one fifth of the population already left.
There is nothing about banning Russian language schools. It's about shifting state funding from Russian language to Estonian language. Privately funded Russian schools can keep operating. It's also not out of the blue, this has been talked about for over 30 years now. The latest developments are also still just more talk, no actual action has happened.
As for the culture of coldness, that is true. That also means though that if someone is nice to you, it's genuine. I personally much prefer this truthfulness to the USA style of fake niceness.
The State currently fund the vast majority of schools, among which many are russian-speaking. Forcing those schools to switch to Estonian, without having enough teachers to do it, is going to create a lot of problems. The solution found was to degrade the teacher's level, by authorizing anyone with a university diploma to teach.
Yup. The remote worker visa application was simple enough (I'm self employed). I live in a nice apartment in Tartu for 800 euros, 40 for internet, 30-100 for utilities, 70ish for health insurance. I've got a gym, store and pizza place within a few blocks. Most people speak some English. Estonians definitely look grumpy (no offense), but generally lighten up when they realize they're dealing with a clueless American.
My main complaint is that the remote worker visa gives you the right to stay in Estonia...and nothing else. You don't get an Estonian ID which is necessary for all sorts of things like setting up internet, getting a local phone number, or getting books from the library, and you can't get a bank account to pay your rent. LHV, Coop and SEB all claimed I could open an account with just my passport and lease agreement, but denied my application (after paying several hundred in application fees). The e-resident card is basically useless.
The tax situation is unclear. You become a tax resident when you stay over 183 days. But all US citizens are tax residents of the USA, so the USA-Estonian tax treaty kicks in with its tie breaker rules. Because I have a house in the USA, it means I would be treated only as a tax resident of the USA, so I would only pay taxes there...I think? But I can't imagine why Estonia would offer this visa program if they weren't getting something out of it.
Thanks. I wouldn't have guessed you'd have a tough time with basic things like setting up internet or getting books from the library. Seems concerning.
Yep, moved to Tallinn from England for work 6 months ago. Being a software engineer classes you as a “top specialist” so getting a visa and residence permit was very straightforward.
It really is a beautiful country. And today is the first day of snow :)
I'm from Estonia, live in Estonia, if you have any questions, can answer. Maybe a different view than from someone who has move here from a foreign country ofc.
That's a hard question. What are some things that you like and dislike about living in your country? That's hard to answer in a general sense even if you lived all over the world. Move 1,10,100 km and the answers keep changing. I like we have rain to grow things and jobs are near by. I am sad because I can't go to the beach or mountains for dinner. I am sad I can't build 8 foot concrete walls around my yard and happy I don't have to. I am both happy and sad I can speak the local language. I am happy the police are more friend then foe.
I heard Estonia still requires local sponsors and a significant portion of the company needs to be owned by a citizen, is that true? or was that just rumors?
Definitely not true. Would cut down on a lot of scams, but alas. The e-residency is popular among various online scammers, because it gives them access to the EU banking system.
An electronic pied-à-terre, if you will. This will not get you an actual residence permit, tax residency (for you as a person), a Schengen visa, or any of that pesky physical stuff.
I do. I live in Romania, and the bureaucracy level here is almost Kafkaesque. With digital services there's no paper pushing, the financial regulation in Estonia has been very stable, whereas in my home country it changes drastically almost every election cycle.
Mind you, I still have to deal with my state's institutions for reporting taxes (and what have you), but at least I don't have to manage a company here. It can involve a lot of running around and being present, whereas with an Estonian company I could move at any point to another EU country without having to think of ever having to come back and deal with company related stuff (sure, I could officially delegate someone to do that on my behalf, but those are just complications for complications sake).
"Do you tell applicants to Estonia’s E Residency program that if their country has CFC laws (most do), they’re risking getting double taxed and fined in their home countries for being the majority owner in a foreign corporation?"
i normally love levels io but this is a bit misleading and overly negative, this applies only for countries with cfc laws but no double taxation treaties, and this is often communicated as far as i remember the onboarding experience.
No resident will ever be drafted / asked to serve in the army of their residency. It would make no sense.
This e-resident is mostly a way for Estonia to lower the barrier in creating a company in Estonia (and therefor having access to the E.U common market). This is a clever move because it attract start-up and smaller companies (who tend to be more afraid of paperwork) in Estonia rather than another E.U country, which means they will pay taxes to Estonia instead of Germany, France, ...
That's only possible if you have national defence obligation, i.e. you completed the compulsory draft or have applied so otherwise. In both cases you need to have citizenship, basic education, of good health, not in jail, no criminal proceedings and a few other minor things. See §81 of the Military Service Act [0].
And there is a good reason why you would like to do that[1]:
> For the ninth year in a row, Estonia has the best tax code in the OECD.
For instance, if you live in Estonia, you can use an Estonian limited liability company to manage all your investments without paying any taxes at all, as long as you don't withdraw any money from it.
[1] https://taxfoundation.org/publications/international-tax-com...