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Estonia is called the "European Silicon Valley". The Economist magazine named Estonia the record holder regarding the number of start-ups per citizen. Political conditions and a strong focus on technology development have created a unique start-up ecosystem.
Popular programs were developed here:
- Skype;
- Playtech;
- Transferwise;
- Taxify (Bolt), and others.
Why do most IT companies choose Estonia? Are there any alternative options? Let's talk about this in our review.
Easy registration
In digital development, many opportunities are open to the modern user. The overwhelming majority of state registration services in Estonia are provided electronically.
You can set up a company in Estonia from anywhere in the world. There is no need to come to the country in person. It is enough to obtain Estonian digital citizenship or issue a power of attorney for the relevant actions. Company registration is carried out on the public services portal.
Start-up capital
In the absence of minimum requirements for the amount of authorized capital, it is straightforward to register a company in Estonia. The authorized capital can be as little as EUR 1, attracting established and start-up businesses.
Flexible tax regime
The main advantage of choosing a country for business development is taxation. Estonia offers favorable conditions: there is no corporate income tax. According to the Income Tax Act, no corporate tax on the undistributed or reinvested part of Estonia's profits exists. Profits earned during business activities that were not distributed to the founders as dividends are not subject to income tax. For example, this may be income that the company has accumulated in its savings accounts or reinvested further in one form or another (purchase of equipment, software development, investments in securities or other financial instruments, and much more). All of this encourages the development of business activities for the long term.
Distributed profits are subject to a 20% tax rate, calculated as 20/80 of the net distributed profits.
The Estonian tax regime aims to support start-ups, but the Estonian tax authorities have practiced withdrawing the taxable base and thus not distributing dividends. Please note that if you have not distributed dividends for 2-3 years, the Estonian tax authorities will definitely pay attention to you.
