48 Comments

  1. Pingback: The Process of Becoming an Estonian e-Resident - Micropreneur Life

  2. Pablo September 26, 2017 at 8:48 am

    Hello Nacho, thanks a lot for sharing your experience. I would like to ask you something about health insurance. As you know, in Spain we have national health care system, but when you became a digital nomad, what do you do if you get ill? Do you have something like a international private health insurance?

    Thanks!!!

    Reply
    1. nacho September 26, 2017 at 9:25 am

      Hello there Pablo, thanks for asking! As you are from Spain, let me answer you in Spanish:

      Depende de donde residas. En nuestro caso, nosotros viajamos sobre todo por Europa. Entonces, si te haces residente de un país Européo (por ejemplo, vas a vivir allí 3 o 6 meses), tienes derecho a sanidad como si fueras local. Esto es igual en toda Europa y paises tipo Islandia o Suiza. En otras areas, depende de país a país. En algunos paises funciona como en Europa (te haces residente y tienes derecho a sanidad), mientras que en otros es mejor pillar un seguro privado. En Asia y Sudamérica estos seguros son muy baratos (en algunos casos pueden ser como 100 euros al año solamente).

      También tienes la opción de hacerte un seguro internacional. Hay actualmente muchísimas empresas orientadas a digital nomads que lo hacen. Personalmente nunca lo hemos necesitado.

      Reply
      1. Pablo September 26, 2017 at 9:49 am

        Muchísimas gracias Nacho!!! Y por favor sigue escribiendo sobre estos temas, creo que son muy interesantes para todos los que nos gustaría ser nómadas digitales

        Reply
      2. ferhat March 31, 2018 at 10:26 pm

        we don’t know Spanish, could you answer in Turkish?

        🙂

        It would be good if you answer in English, thanks.

        Reply
        1. nacho March 31, 2018 at 11:09 pm

          Of course, Ferhat. As my Turkish is quite rusty, let me answer you in English 😉

          It depends on your country of residence. In our case, we are traveling throughout Europe. Then, when you become a resident there (i.e: you go to Italy and become a resident there for 3-6 months), you get your residence ID card and get access to social security. That applies for Europe and related countries (Iceland, Switzerland…).

          In other areas, it greatly varies from country to country. Some countries work like Europe (you become resident and have access to healthcare), while in others it’s better to contract private health insurance. In Asia and South America private insurance is certainly affordable (way less than 100€/year).

          You can also hire an international health insurance plan. There are some companies offering that right now. We personally have never used that, but we have gone to private clinics in countries where it’s affordable (i.e: Latvia). Hope it helps!

          Reply
  3. Daniel September 29, 2017 at 4:08 am

    Thanks Ignacio for share all this info, All the decluttering project is indeed very impressive and very motivating.

    Spain is so similar to Chile in so many ways… its like we are living in 1980… so it is very cool that countries like Estonia (it is not germany or england) has this kind of options… they seems to understand the new world we are living now.

    by the way, I still can’t understand how you could sell the Pink Floyd’s vynil records…. no one in the world should never ever leave their pink floyd stuff

    gracias por compartir

    Reply
    1. nacho September 29, 2017 at 8:02 am

      Thank you Daniel, glad to know it helped! Estonia is definitely one step ahead of the game, and I hope others will follow soon.
      Yes, selling my stuff has been painful, especially some of my vinyls, like the Pink Floyd ones 🙁

      Still, now that I got rid of almost everything, I feel relieved. ¡Gracias a ti!

      Reply
  4. Pingback: Demystifying Digital Nomad Taxes - Micropreneur Life

  5. Pingback: VAT And Taxes for e-Residents Owning A Company in Estonia

  6. Robin November 13, 2017 at 11:28 am

    Hello,

    Thanks for sharing this wonderful experience.

    Did you travel to Estonia to open a bank account? How this process works?

    Is it possible to get a credit card instead of debit card, so that those payments counted as company expenses (I mean, without taxation) ?

    Reply
    1. nacho November 13, 2017 at 11:58 am

      Hi there Robin. Thanks for your comment.

      Yes, we traveled to Estonia by bus. We happened to be at Riga when we started the process, so it only took us a short 4h trip to Tallinn. LeapIn stuff makes sure to arrange the meeting and prepare everything, so you just have to go to the LHV office and meet the representatives. Once there, they ask you some questions about you and your business. Nothing complicated, just what you do and why you want an account.

      It’s possible to get a credit card, but only after two years of active business activity, so initially you have to settle down for a debit card. However, all justified payments done with your debit card count as business expenses, no need of credit card here.

      Reply
  7. Pingback: The Digital Banking Revolution And What It Means For Digital Nomads

  8. Daniel December 6, 2017 at 6:27 pm

    Hola Nacho,

    He leido tu post y también me hice e-Resident hace un mes.

    Better in english 😉 Maybe this can help somebody.

    A good option to start right now without visiting Estonia is Bunq or Revolut. You can open a business account for companies 🙂

    Hope it help somebody, it really made my day when I know it!

    Un abrazo!

    Reply
    1. nacho December 6, 2017 at 7:15 pm

      Hola Daniel!
      Congratulations for being an e-Resident!!! 🎉

      It’s funny that you mention it, because I published an article about Revolut, Monzo, and other alternatives just some days ago, here.

      I am super-happy with my Revolut card and currently doing all my banking using it and my Estonian LHV account. So if you have any question don’t hesitate to contact me, I’ll be glad to help! 🙂

      Un abrazo.

      Reply
  9. Stephen December 28, 2017 at 1:00 pm

    Hi and thanks for the great article, I am thinking about setting up an e-residency, and this helps clarify, but I did have one question: If I understand you correctly, you are saying that your total tax rate is 20%? To what country, Estonia? Is Estonia considered your “tax-residency” home, or is it Latvia or another country? This part confuses me and I would appreciate any clarification. Thanks!

    Reply
    1. nacho December 29, 2017 at 11:46 am

      Hello there Stephen, thanks for your message.

      My current residency is in Latvia, and my company is in Estonia. As you know, your company and you (as an individual) are two different concepts, so in my case, my company pay taxes in Estonia and I do in Latvia. If you become an e-Resident and open your company in Estonia, you will still be a resident of your home country (or wherever you are a resident right now), so it’s important to have those concepts clear.

      I have written an in-depth article on how e-Residents owning a company in Estonia pay taxes, including a salary example, and all the taxes and VAT considerations, you can find it here.

      Hope it helps! 🙂

      Reply
  10. Pingback: Why Quitting Your Corporate Job May The Best Decision Of Your Life

  11. Pingback: Impuestos de nómada digital. Autónomos y empresa en el extranjero

  12. Burak January 15, 2018 at 11:32 pm

    Thanks for the great writing. Really appreciated how clear you made the process for me to understand. Looking forward reading more about your experiences.

    Reply
    1. nacho January 16, 2018 at 5:50 am

      Thanks Burak! Glad to know it was helpful 🙂

      Reply
  13. Juan January 26, 2018 at 1:33 pm

    Hi Pablo, I am opening my company through the e residence program and I have just found out about Transferwise from reading your post. Is there any disadvantage in using Transferwise instead of a local bank account? Do you use it for your business?

    Reply
    1. nacho January 26, 2018 at 5:09 pm

      Hi there Juan, I’m actually Nacho 🙂

      Nice to know, always glad to meet a new fellow e-Resident and entrepreneur!

      Well, having a real bank account has many advantages in this case. To begin with, you will be covered by the European Banking Deposit guarantee. Also, having a real bank account associated to your company gives credibility to your business and gives you a better position if you plan on having a payment gateway for your services/products.

      That said, I am a big fan and supporter of not only TransferWise, but digital banking alternatives like Revolut. I wrote a post about that here.

      Hope it helps!

      Reply
  14. Robert February 11, 2018 at 12:35 pm

    Hi Nacho, I am studying in Spain and have been contracted to teach spanish. I am also a Supply Chain professional and would like to offer consulting services. After reading your post, I think it would behoove me to become an e-stonian to be able to invoice clients in Spain. Am I on the right course? Are there any pitfalls or do you have to collect taxes from your customers? Apparently we don’t have to open a bank account if we have Paypal and credit cards from the US?

    Thanks for your post.

    Reply
    1. nacho February 11, 2018 at 10:03 pm

      Hi there Robert. Of course, I think that’s a great idea.

      Well, when you issue invoices to your customers and earn money, that money goes to your Estonian bank account or equivalent. You don’t need to pay taxes until you assign yourself a salary or dividends. Have a look here for a more detailed explanation.

      You don’t need to open a bank account, although I would recommend you to do that. However, if you want to go bank-free, I can recommend you solutions like Transferwise that are way better than Paypal and have less fees, especially as your company will be in Europe, operating in euros.

      Reply
  15. Savva February 13, 2018 at 1:36 pm

    Hello Nacho,

    Thank you for this informative article. I am a resident of Estonia, but my company starts operating in Barcelona, Spain. Do you know how would this work with the local taxations, since it is a product that I am planning to sell there. Do I need to register a firm in Spain, or Estonian firm would work as well?

    Thanks In advance

    Reply
    1. nacho February 13, 2018 at 5:47 pm

      Hi there Savva,

      As your company is in Estonia, Europe, there should be no problem whatsoever in selling your products in Spain. You don’t need to register in Spain at all. Just issue invoices to your customers in Spain.

      I recommend you to get a VAT number if you don’t currently have one to avoid including VAT in your invoices to Spanish companies that have VAT number. It will greatly reduce the paperwork and complexity.

      Hope it helps!
      Best regards.

      Reply
  16. Pablo March 9, 2018 at 1:20 pm

    Hola Nacho,

    Me gustaría hacer lo mismo que has hecho e irme fuera, pero tengo dudas de como hacerlo,
    Una vez montada la empresa en Estonia, si estas en Latvia, ¿cobras con la empresa Estonia y pagas como autónomo en Latvia o tienes que hacer otra sociedad limitada en Latvia?. Estoy un poco confuso con el modo correcto de hacerlo.
    ¿Qué impuestos se pagan en el sitio donde estas? y ¿Cómo se hace?

    Muchas gracias por tu blog y tus aportaciones!!

    Reply
    1. nacho March 9, 2018 at 6:58 pm

      Hola Pablo. Gracias por tu comentario.

      No, generalmente si tienes tu empresa en Estonia, puedes sacar dinero mediante dividendos o asignándote un salario. En ese aspecto, eres un empleado de tu propia empresa. Entonces, a mitad de año, harás la declaración de impuestos que te corresponda por tus ganancias como cualquier asalariado.

      Parte de tu salario lo pagas en Estonia automáticamente, y parte de tu salario lo tendrás que declarar en tu país de residencia. Es como si empezaras a trabajar para Skype (empresa Estona), solo que tu fueras el CEO de Skype y te pagaras a ti mismo un salario.

      He escrito un post explicativo al respecto con un ejemplo real de salario aquí: https://micropreneur.life/eresident-taxes-vat/

      Reply
  17. mart April 17, 2018 at 5:35 pm

    It’s a credit to our government for coming up with a legal and technical framework that makes e-residency a thing, however, I feel obligated to make a distinction between a sizable level of abstraction provided by companies like LeapIN and the “inner workings” of our governmental processes. The slick onboarding that got you so excited is likely translated into precisely something like “telecommunications” at the end of it all. Nice read.

    Reply
    1. nacho April 17, 2018 at 6:03 pm

      Thanks Mart!
      In my humble opinion, you should give your government a lot more credit. Your country has created not only the infrastructure that you mention, but a whole business framework for digital nomads, blockchain governmental networks, and they are even considering implementing a cryptocurrency (the Estcoin).

      Probably you take most of these things for granted, and see them as “normal”. But I come from a country where the official websites from the government have invalid -insecure- self-signed certificates no browser trusts, a country where a politician recently affirmed that Twitter was a paid service, and where one of the most beloved singers said that “Internet should be forbidden, there’s too much freedom there”… That’s my country 🙂

      Reply
      1. mart April 17, 2018 at 9:33 pm

        I feel ya. As Patri Friedman said in his piece in Cato Unbound, government is just another industry, where countries offer services to citizens, but since there’s an enormous barrier to entry and high switching costs, this results in a horribly uncompetitive industry, so it is no surprise that existing firms (governments such as yours) tend to exploit customers instead of innovating to attract them. So props to Estonian Government I guess, but most importantly to people like yourself who are “voting with their feet” by making these important jurisdictional choices and thereby increasing competitive pressure on their governments to be more efficient.

        Reply
        1. nacho April 17, 2018 at 11:09 pm

          Agreed 100%. Thanks again Mart.

          Reply
  18. Gisela Garcia Alvarez April 29, 2018 at 11:18 am

    Hi Nacho,

    I am currently cluster manager of the Galician Health Cluster and working on our relations with Estonia in order to manage to get some of our companies out there. I felt in love with Estonia after one of my events involving this beautiful baltic country. I happened to fall into your blog on my desperate search of information of any Galician (or Spanish) companies there.

    Besides brave freelances like you, do you feel the Spanish community entering Estonia to set up companies and develop together? Is the reduction of administration burden still the main reason to go there?

    Where in Spain did you have your company previously?

    Reply
    1. nacho April 29, 2018 at 5:53 pm

      Hello there Gisela, thanks for commenting.

      I would say the hassle-free aspect of managing a company in Estonia is probably the main appeal for any Spanish entrepreneur, freelancer or company. In Estonia, you can do everything online and, most importantly, the system is completely transparent. Conversely, the Spanish business system seems to be designed to confuse people. You never know if you are “doing the right thing”.

      Apart from that, there are some obvious monetary advantages, but they are secondary in my humble opinion.

      Reply
  19. Alessio May 30, 2018 at 12:17 am

    Hi Nacho,
    thanks for the great post!
    I am a web-developer living in London and I have my Ltd here.
    For a number of reasons my wife and myself just decided to relocate to Mallorca in a couple of months and I was wondering what would be the best way to manage my business when I’ll become a Spanish resident.
    I’ll be working for european / american companies from remote.
    Would it be advisable to keep my Ltd or would it be wiser/easier to close it down and found a new company, maybe in Estonia?

    thanks for your help
    Alessio

    Reply
    1. nacho May 30, 2018 at 11:12 am

      Hello there Alessio, thanks to you for your comment.

      I guess it all depends on your future plans, i.e: if you plan on staying there, getting back to the UK or even travel regularly.

      If you plan on working remotely, and foresee future trips, I would definitely go for an Estonian company, as it will give you peace of mind as you change your residence (and tax residence) to operate globally.

      If you are going to stay in Spain, supposing your services are purely digital and you don’t need permanent facilities or an office, I will also consider Estonia, because being a freelancer (autónomo) in Spain or open a company there is simply a nightmare, as I explain in this post.

      If being in Marbella is something temporary, and you plan on getting back to the UK soon, you may consider keeping your Ltd. company, however, even in that case, you could consider Estonia as a way of keeping a spot in the European market.

      Anyway, if you need help with the Spanish part of the equation (invoicing and taxes there, how to declare them, etc)… send me a message and I could be able to help you further.

      Reply
      1. Alessio May 31, 2018 at 1:21 am

        Thanks Nacho,
        there’s something I didn’t get though… my understanding is that if I move to Mallorca and stay there for more than 183 days/year I become a Spanish resident and I have to pay taxes in Spain. Is that correct?
        Now, if I open a company in Estonia my salary will be tax free in Estonia but it will attract taxes in Spain. and the dividends will get taxed both in Estonia and in Spain.
        I am sure I got it wrong, it can’t be this way 🙂

        Reply
        1. nacho May 31, 2018 at 10:29 am

          Hello Alessio,

          Yes, you are right, if you spend 183 or more days in Spain, you’ll become a tax resident there. However, in order to make the change effective, and avoid problems with the British or Spanish administrations, I will recommend you to fill a form in the UK to stop being a tax resident there or declare that your tax residency is in Spain. Conversely, you will need to fill a similar form in Spain when applying for residency there (to get access to public health, etc).

          If you open a company in Estonia, your salary won’t be tax free there. A small part of your salary (the Board Member salary) will pay taxes in Estonia, and the rest (the Employee salary) will pay taxes in Spain. I wrote a detailed blog post about it here: https://micropreneur.life/eresident-taxes-vat/

          Unfortunately, Spain is one of those countries that apply personal taxes on already-taxed corporate dividends, so yes, you will have to pay taxes twice. I recommend you to stick to salaries. If in doubt, don’t hesitate to contact me! 🙂

          Reply
          1. Alessio June 15, 2018 at 12:12 pm

            Hi Nacho,
            thanks for the above.
            I just received an offer to work as a fully remote and permanent employee for a British company.
            This company doesn’t have a branch in Spain so when I told them that I am planning to move to Mallorca they said that unfortunately they are not able to employ me if I became a Spanish resident, and they are only keen to offer permanent positions.
            Is there any advice you can give me to avoid such an unfortunate situation?
            I am happy to move this conversation to a private channel and pay for your advice.

            regards
            A.

          2. nacho June 15, 2018 at 1:05 pm

            Hello there Alessio,

            Well, I don’t really see a problem there, what I see is a big opportunity.

            Actually, that’s one of the situations where a company in Estonia can be your best advantage. With a company in Estonia, you can ask the company to hire your company on a permanent contract for consulting services, or even sign a private contract with you so that you invoice the company while working on a permanent basis for them.

            Of course, without knowing the situation in depth, I may be missing something important. If you want to go through a consulting session so I can give you the best advice, I’m happy to talk!

          3. Alessio June 17, 2018 at 1:19 pm

            Hello Nacho,
            I tried contacting you through the “consulting” section of this web site.
            Just wondering if you received it 😉

            A.

          4. nacho June 17, 2018 at 2:49 pm

            Hello there Alessio, just answered back, looking forward to speaking to you 🙂

  20. Dalia June 26, 2018 at 11:13 am

    Hola Nacho:
    Gracias por toda la información me está siendo de gran ayuda, tengo un par de dudas y ojála me puedas aclarar un poco lo giguiente:
    Para abrir la empresa hay que depositar un mínimo de capital social?
    He leido en otros blogs unos 2500 €, pero no lo dejan claro ya que parece ser que exite la posibilidad de no hacer ese deposito.
    Nosotros somos varios socios y por la información que leo solo recomiendan abrir sociedades unipersonales, si abrimos cada uno nuestra empresa de manera independiente tendriamos que pagar impuestos por mover el dinero entre las disintas empresas al estar registradas en Estonia verdad?
    Sobre el tema de los salarios tendriamos seguridad social en Estonia al pagar parte de los impuestos por ese concepto?
    Muchas gracias!

    Reply
    1. nacho June 27, 2018 at 9:56 am

      Hola Dalia, gracias por tu comentario.
      No es necesario depositar el capital social. En ese caso la única problemática es que no podrás repartir dividendos hasta que no lo hayas hecho. Al no ser no residentes no tendríais seguridad social en Estonia, aunque se pague una pequeña tasa social, me temo. En el tema de los varios socios podría ayudaros. Si me escribes un email puedo darte más información (en la sección “About me” tienes el formulario de contacto ;).

      Reply
  21. Benedetto July 19, 2018 at 3:43 pm

    Nacho, I Believe what you are doing doens’t work. I tell you why:
    Maybe you didn’t know about the CFC rules:
    http://www.m-i-tax.de/content/Wichtige_Links/Alumni_Netzwerk/documents/cfcrules_000.pdf
    The problem is that if you are resident somewhere( let’s say Italy), that country will consider EVEN your society in Estonia as Italian. Because the administrator is resident in Italy. You have to be resident somewhere, this is why your trick doesn’t work at all.
    In order to work you should be somehow no-resident anywhere so no country can claim that the Estonian company is local to them and thus taxable by them.

    Tihs is clairified to avoid any possible doubt in the official website:
    https://e-resident.gov.ee/faqs/taxation/#example-cases-of-taxation

    If I create a one-person company in Estonia and use it to invoice my clients in the UK for consultancy and I stay tax resident in the UK, wouldn’t UK claim corporate tax from my Estonian company because of the Controlled foreign corporation rules?
    Yes, they may make that claim because of the presence in UK. Estonian tax residency may be disputed in this case.

    A company incorporated in Estonia can be claimed as tax resident of the country of residency of the single shareholder (because of CFC rules or just because of “management and control”). This would require to fill tax return in both Estonia and the country of residency. What are the benefits in incorporating in Estonia as a single shareholder/director because of the point above?
    If your aim to avoid paying taxes in the country in which your company generates value, incorporating in Estonia will not explicitly be beneficial for you. E-Residency allows easy company incorporation and ease of management, which are both useful regardless of tax residency.

    Hope you will answer and explain to your readers that the e-residence is completely useless. Even if you sponsor it. Hope you will not delete the question and instead you could answer so anybody can read. Thank you. We are all in the same boat.

    Reply
    1. nacho July 19, 2018 at 4:01 pm

      Hello there Benedetto,

      With due respect, I believe you are quite confused about CFC rules. CFC rules are there to prevent citizens open offshore companies in tax heavens. That doesn’t affect Estonia, which has, in fact, CFC rules itself to prevent its citizens from opening businesses in tax heavens :).

      Estonia is not Panama, Gibraltar or Seychelles. It’s a respectable country. Their corporate tax is 25% + 33% social tax. And the goal here has nothing to do with “avoiding taxes”. We are talking about freedom, no hassle, no red tape, and borderless management.

      In your home country, the law specifies that a country is subject to CFC rules if (quoting):

      Nominal tax rate lower than 50% of the Italian tax rate

      In Italy, if I’m not wrong, corporate tax is 27.9% (24% plus 3.9% municipal). So for Estonia to be the target of Italian CFC rules, it’s corporate tax would need to be less than 14%.

      Of course you can have a company in Estonia as a European citizen from another country. That’s one of the advantages of being in Europe! What you need to make sure is that Italy -in your example- cannot claim that your permanent establishment is in Italy, of course. As far as I know, many e-Residents are residents in their countries and happily conducting businesses. I wrote about that here, if you want to have a look: https://micropreneur.life/will-my-estonian-company-have-to-pay-taxes-in-my-home-country/

      So your statement of “the e-residence is completely useless” is a bit ridiculous for me, and so many other e-Residents successfully conducting their businesses abroad. It may not be the best option for everybody, obviously, concretely for you. In that case, I would recommend you to stay in Italy and open a business there. You need to do what’s best for you 🙂

      Reply
  22. Simon September 15, 2018 at 2:40 pm

    Hello Nacho,

    Very helpful your article. I want to ask you if someone has another company in EU and makes a company also in Estonia, instead then of sharing dividends, is ok to make invoices between those 2 companies and get the dividend this way right?

    Also is any problem if both companies owned by the same person and exchange services?

    Thank you for your time.

    Reply

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