There are good reasons to leave Germany and even the entire European Union. But sometimes you can't (yet) leave so quickly or don't want to turn your back on your home.
Every life situation is individual. Also, some businesses are local or relatively dependent on the European internal market. An Estonia E-Residency enables a company to be easily founded online in Estonia. And with this company you can get an European VAT ID.
It is good that there are clever solutions within the EU. Perhaps also interesting as a second company or piggy bank for the pension. But more details follow below...
As an EU member Estonia is a reputable jurisdiction with easy access to everything within the EU. From investments to business accounts to real estate. Everything is easy going with an EU company. Innovative financial service providers such as Holvi and Stripe also support Estonia.
Naturally, with an Estonian company a European VAT ID is easier to apply for than with an offshore company somewhere on a Caribbean island. This is particularly suitable for Amazon FBA or a coaching business and other business models that are not so easy to handle through a third party provider like Digistore24.
Unfortunately, all negative aspects of the EU(SSR) are added, such as the complex GDPR guidelines. So if you can avoid it somehow, you should rather resort to reputable countries outside of this bureaucracy moloch. We particularly recommend Canada, which is completely free of accounting and taxes.
The so-called Estonian "osaühing" (OÜ) is most comparable with the German GmbH or a British Private Limited Company.
Differently than the German brother, no 25,000 EUR minimum capital is required, but only 2,500 EUR. Yes, the share capital does not even have to be fully paid up if the capital on paper does not exceed EUR 25,000 and the founders are natural persons.
However, as soon as dividends are to be paid out, the 2,500 EUR must then be fully paid in. This is also the minimum capital with which the company is liable or cleverly managed - the only capital with which the company is liable.
At least one natural person must act as a director. However, the director does not have to be the shareholder.
The Estonian OÜ can be founded completely online with an e-residency. A visit to Estonia is not necessary. Your e-residency ID card can be picked up at various consulates worldwide.
With the E-Residency ID card you can use various government services in Estonia via the Internet. For example, you can legally establish a company or submit your tax return. But also banal things like a state library card are possible.
Estonia is an up-and-coming IT country. It can be assumed that more and more state and private services such as the opening of bank accounts can be carried out online with e-residency in the future.
However, e-residency should not be confused with a residence permit. For example, the ID card does not entitle the holder to work in the EU nor to reside in Estonia. Unfortunately, non-EU citizens cannot buy cheap access to the European Union here. However, it is an economic access to the European market.
We are happy to advise you and help you to get an e-residency. Just write us an e-mail. The ID card is already available for less than 200 Euro and remains valid for 5 years. After that it simply has to be extended for a lower fee.
You can have your salary paid out tax-free from an Estonian OÜ if you are not only the manager of the company, but also actually perform value-adding activities for the company.
However, if you still live in Germany or any other country with a residence-based taxation, this will be of little use to you. Because foreign income is then unfortunately taxed at home. However, if you live in a country with a territorial tax system such as Panama or Paraguay, your salary from Estonia is tax-free.
Real digital nomads who are de-registered at home and travel worldwide as perpetual travelers do not pay tax on their salary anyway.
In addition, there is a flat-rate travel allowance of 1,230 EUR per month anyway. More than enough for low-budget nomads in Southeast Asia, for example. A digital nomad can easily prove that he actually travels around for the company.
However, if you pay dividends from your Estonian company, a deferred corporate income tax of 14% for legal entities and 20% for natural persons is payable.
The practical thing about a deferred tax is that you really don't have to pay it until the distribution is made. If the money remains in the company, no taxes will be levied as long as it remains in the company.
Caution! The German Foreign Tax Act and the CFC rules of your country of residence also apply here. Here, too, the advantages can only be enjoyed if you are a permanent traveler on the road or resident in a territorial tax system.
Apart from that, the system of deferred corporate taxes is particularly useful for start-ups that are especially dependent on capital and want to reinvest all profits immediately back into the company.
Also the Estonian company is thus an ingenious investment vehicle or also greatly suitable as a piggy bank for the retirement planning. Because the revenue department does not reduce your investment profit, but only wants to participate at the end of your harvest. This is absolutely smart and surpasses many other tax systems that commit bud infractions. There is no withholding tax in Estonia.
As soon as you have an e-residency in Estonia, you can start an OÜ there. But also with e-residency an agency can be very useful. For example, the provider Xolo offers the necessary business address of the new company on the one hand and on the other hand also takes over annoying duties such as accounting and tax filing.
An Estonian OÜ is therefore a useful tool for obtaining simplified market access in the EU. Estonia is also very useful as a second company or as an investment or savings vehicle. However, if you can get out of the EU system completely, you should take advantage of that and start a Canada LLP.
What is your experience with company formation and the EU? What is stopping you from escaping Brussels completely? Make sure to include it in your comments!
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