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).
