Episode 023 – You Can Build a Business in Estonia | Micropreneur

Episode 023 – You Can Build a Business in Estonia | Micropreneur

Bienvenidos! Today we interview Ignacio the digital nomad! He explains the pros and cons of building a business in Estonia, how to get started and how he travels and works at the same time 💻

What we talk about:

  • Why build a business in Estonia
  • How to get started
  • Salaries and taxes
  • Why it’s maybe not for non digital nomads
  • His future plans

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Why Estonia?

Estonia is a great place to build your online business, simply because the government understands what digital nomads need. Put simply, everything is done online and it’s super easy to manage accounts, employees and taxes.

Ignacio explains that once Estonia gained independence from the USSR (exactly 100 years ago!), they wanted to get rid of the their Soviet past as much as possible, and so turned to the digital world. From there very cool businesses such as TransferWise and Skype were born.

 

How do I get started?

Ignacio walks us through the process and tells us you first need to get started with the e-residency program, which allows access to administration. It takes 3-4 weeks and 100€ and then bam, you can open a business. They don’t even expect you to go to Estonia.

The other unique thing about Estonia is the tax system; same as any other European country, corporate tax is at 21%. However, you’re only taxed when you distribute salaries or dividends – if you reinvest the money back into your business then no tax, which is pretty great for startups, freelancers, and of course digital nomads.

This is very different to Spain (where Ignacio is from), where you have to pay 340€+taxes every month if you are self employed, no matter how much you’re making. 😡

But does that mean if you’re resident in another country you have to pay double tax? Sadly, yep. More on this below ⬇️

 

Nice, so what are the cons?

First of all, you will have to pay double tax. This is not an issue for Ignacio since he is a digital nomad and is constantly living in different places. But if you are resident in one country and your business is in Estonia, then you do. In addition, Ignacio explains that if you’re constantly doing business in say, Spain, but your company is based in Estonia, the authorities might consider your business Spanish, and therefore require you to move back. Not too great for non digital nomads then.

Another disadvantage is if you want most of your expenses to go through your business, you might need things like an Estonian phone number, laptop, etc.

However, if you are travelling around the world and don’t want to constantly worry about taxes and paperwork, Estonia is for you. As Ignacio said, in 2 minutes he could pay taxes from his phone. Not bad.

 

Ignacio’s life as a digital nomad

Ignacio manages 3 business, all based in Estonia of course. He tells us being able to manage them all online has changed his life, and that everything is so much easier and automated. Starting in Estonia also meant he had very small upfront costs.

He also tells us he is working towards FI, however he feels he’s not in so much of a rush since he already gets to work when he wants, where he wants and what he wants. Pretty sweet.

We also quickly cover his thoughts on the current startup bubble and crypto (because why not). Listen in to hear more!

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2 thoughts on “Episode 023 – You Can Build a Business in Estonia | Micropreneur

  1. Another interesting episode with valuable lessons.

    I have heard pieces of information about the pros of Estonia but was never introduced to all the benefits of having a company over there. It is very appealing to fire up a company over there and start the trial & error phase. As Ignatio said, many businesses fail at first and you should be aware of that and build this into your plan. This seems to me that with such an option you can try out things legally with a relatively low amount to risk at all. I honestly think that many smart folks don’t dive into entrepreneurship because of the fear of losing that initial investment and the setup costs (and time).

    A practical question: “you’re only taxed when you distribute salaries or dividends”
    Only paying salary for full-time hires count as salary?
    What if you hire freelancers for contracted work every now and then?
    Can this paid out as business expense without paying taxes?

    Thanks in advance for the answers!

    Happy Holidays to all of you and keep being awesome and bringing us the best info 😉

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