Estonia is a small but dynamic country with a thriving startup scene, making it an attractive destination for expats looking to start their own businesses or work as self-employed individuals. In this article, we will explore how self-employment works for expats in Estonia, how to register as self-employed, the possibility of working as a digital nomad, how to start a company, and whether there are any incentives or programs to encourage expats to become self-employed or set up a company in Estonia.
How Self-Employment Works for Expats in Estonia
Self-employment is a common option for expats in Estonia, and there are no specific requirements or restrictions on foreign nationals registering as self-employed. Self-employed individuals in Estonia are required to register with the Estonian Tax and Customs Board and pay social tax on their income. They are also required to register for VAT if their annual turnover exceeds a certain threshold.
Step-by-Step Guide on How to Register as Self-Employed in Estonia
The process of registering as self-employed in Estonia is relatively simple and can be done online. Here is a step-by-step guide:
Choose your legal structure: Before registering as self-employed, you need to decide on your legal structure. The most common option for self-employed individuals in Estonia is sole proprietorship (FIE).
Obtain an Estonian ID: All self-employed individuals in Estonia are required to have an Estonian ID. If you are an expat, you can apply for an Estonian ID at your local Estonian embassy or consulate.
Register with the Estonian Tax and Customs Board: All self-employed individuals are required to register with the Estonian Tax and Customs Board. You can do this online through their website.
Register for social tax and VAT: Once registered, self-employed individuals are required to register for social tax and VAT if their annual turnover exceeds a certain threshold. You can do this online through the Estonian Tax and Customs Board website.
Submit a business plan: As part of the registration process, you may be required to submit a business plan outlining your business activities.
Can You Work as a Digital Nomad in Estonia?
Yes, it is possible to work as a digital nomad in Estonia. The country has a strong digital infrastructure, with high-speed internet widely available, making it an ideal location for remote workers. Additionally, Estonia offers a digital nomad visa, which allows remote workers to stay in the country for up to a year.
How to Start a Company in Estonia
Starting a company in Estonia is relatively straightforward, and the country has a reputation for being a friendly environment for entrepreneurs. There are several legal structures you can choose from, including a limited liability company (OÜ), a public limited company (AS), or a partnership.
Step-by-Step Guide on How to Set Up a Company in Estonia
Here is a step-by-step guide on how to set up a company in Estonia:
Choose your legal structure: As mentioned, you will need to decide on your legal structure before setting up your company. This will depend on various factors, such as the number of shareholders, liability, and taxation.
Obtain an Estonian ID: All company founders are required to have an Estonian ID. If you are an expat, you can apply for an Estonian ID at your local Estonian embassy or consulate.
Register with the Estonian Commercial Register: All companies in Estonia are required to register with the Estonian Commercial Register. You can do this online through the Commercial Register website.
Obtain a Tax Identification Number (TIN): All companies are required to have a Tax Identification Number (TIN). You can obtain a TIN by registering with the Estonian Tax and Customs Board.
Open a bank account: Once you have obtained your TIN, you will need to open a bank account for your company. This will be used to deposit and withdraw funds related to your business.
Register for social tax and VAT: All companies in Estonia are required to register for social tax and VAT if their annual turnover exceeds a certain threshold. You can do this online through the Estonian Tax and Customs Board website.
Obtain any necessary permits and licenses: Depending on your business, you may need to obtain additional permits or licenses. This will vary depending on the type of business you are starting and the location.
Incentives or Programs to Encourage Expats to Become Self-Employed or Set Up a Company in Estonia
Estonia has several programs and incentives designed to encourage entrepreneurship and foreign investment in the country. Here are some of the most notable:
e-Residency: Estonia offers an e-Residency program, which allows individuals to start and manage a company remotely from anywhere in the world. The program offers access to Estonia’s digital infrastructure and business environment, making it an attractive option for digital nomads and entrepreneurs.
Start-up Visa: Estonia also offers a start-up visa, which allows entrepreneurs to stay in the country for up to a year while they develop their business idea. The program offers support and mentorship to help entrepreneurs get their business off the ground.
Investment opportunities: Estonia is known for its thriving start-up scene, with many opportunities for investment in the country’s innovative companies. The government also offers various incentives and funding programs for foreign investors.
Taxes: Estonia has a favorable tax environment for businesses and entrepreneurs. The country has a flat income tax rate of 20%, and companies are not required to pay corporate income tax on reinvested profits.
In conclusion, Estonia offers a favorable environment for self-employment and business start-ups, with a simple registration process and a range of incentives and programs to support entrepreneurs and foreign investors. Whether you are looking to work as a self-employed individual or start your own company, Estonia is an attractive destination with a thriving start-up scene and a reputation for innovation and entrepreneurship.