As of today, the total costs are 315€.
The costs add up as follows:
- State fee for e-Residency: €100
- State fee for company registration in Estonia: €190
- State service fee for company online registration: €25
Why Costs Don’t Matter …
If you are able to lower you taxes (most people I work with in my course are) or can sell to a broader audience, then you’ve earned back the 315€ already.
The fact of the matter is, you need to look at it holistically and keep a long-term perspective in mind. If you want to keep more of the money you earn, you need to lower your taxes.
Estonia Corporate Tax
Let’s assume you’ve just started your online business in your home country. The global average in regards to corporate tax is 24%. Let’s also assume you make $20,000 in your first year of running that business.
- 24% corporate tax would be $4,800 in corporate tax.
- If all you do is lower your tax rate to 20%, you instantly save $800 annually.
… and that’s assuming you only make $20,000 per year. The more you earn, the higher your tax-savings will be.
Also keep in mind is that Estonia has a deferred corporate tax system. This means you don’t pay corporate tax as long as the money stays within the company.
This is great news for anyone running an online business because now you are able to use those funds to further grow your business or make investments (stocks, cryptos, etc.)
No Corporate Tax (It’s Possible)
A common criticism is that even though corporate tax isn’t triggered instantly, at some point you will distribute funds and then the Estonian corporate tax is due anyway.
For example, if you decide to transfer funds from the business bank account to your personal bank account.
That’s not necessarily the case.
Since you have full control over when the payout takes place and corporate tax is triggered, you can create a favorable environment.
You can decide …
- To run the funds through another company you own
- To set up tax residency in a country with no income tax
The possibilities are endless BECAUSE you can control when corporate tax is triggered. Time is your ally!
If you are thinking of starting your e-Residency company, I recommend you check out this in-depth article in which I share my personal experience.