Estonia, a small European Union member with just a 1.3 million population, has become one of Europe's powerhouse destinations for entrepreneurs & investors. Especially fitting for blockchain and cryptocurrency companies. Estonian is famous for being an innovative crypto-friendly jurisdiction, because of that many companies are choosing Estonia when it comes to acquiring a cryptocurrency exchange license.
There are many contributing factors, starting with its strategic location that unlocks doors of possibilities to entire Europe, ease of doing business, talented workforce, above all, Estonian tax competitiveness.
Whether you plan to apply for an Estonian cryptocurrency exchange license or set up a corporate firm, the favorable government policies on taxes are the biggest USP.
Read on to know about Estonian tax competitiveness; we'll discuss the perks in detail.
The Tax Foundation's 2019 report on the International Tax Competitiveness Index ranked Estonia no.1 in tax competitiveness, for a sixth consecutive year. The report further resolved that Estonia's strength lies in its corporate income tax system. There are zero
The income tax rate is 20% for private entrepreneurs and corporations, but there is no capital tax. And, companies can even reinvest their profits tax-free to expand their business. Thus, growing businesses whose profits are soaring with each passing fiscal year don't have to worry about the increasing tax liabilities. The taxes are implied only when the earnings are distributed among the shareholders.
However, if the profit distributed to the shareholders is originating from a permanent establishment in any other nation (or from a subsidiary), then the profit distribution is exempted from taxes. In addition to that, there is a withholding tax in Estonia on dividends paid to individuals. Estonia's good tax policies have drawn the attention of global players and FDI to Estonian in its various sectors, spanning from cryptocurrency, logistics services, electronics to shared services.
The VAT has a low compliance burden, and the property taxes in Estonia applies only to the land's value. Having a VAT number is not mandatory; only a company with an annual turnover of 40,000€ has to apply for the VAT.
The USP Of Estonian Tax Competitiveness
Rather than providing special incentives like most European nations for specific industries & business activities, Estonia ensures the tax policy is straightforward and clear to promote competitiveness & investment.
Estonia belongs to a handful of countries in the OECD that have no property transfer taxes. It means there is no tax on the transfer of residential or commercial property from one individual to another.
Easy Filing of Taxes in No Time
No matter if you are filing taxes as an individual or for your business, the process to file the taxes is completely hassle-free online with a few simple clicks.
It takes not more than five minutes to declare your taxes online.
Summarizing the Tax Benefits of Starting Your Company in Estonia
0% Corporate Income Tax on reinvested & Retained Profits.
Property Taxes Only Implies to the Value of Land.
Fair Labour Taxes & Regulations.
Equal Playing Field Within Estonia.
No Annual or Monthly Tax Fees in Case of Distribution of Dividends.
In merely two decades, on the back of various reasons with tax competitiveness topping the list, Estonia has truly become one-of-its digitalized society. You can submit your business taxes, without the need to fly to Estonia and file the taxes at a government office. In the coming years, it is believed that the Estonian government will bring new reforms to boost further the ease of opening & doing business in Estonia.
If you have any queries about opening an Estonian cryptocurrency company, do consult our local advisors to assist with you the entire procedure to launch your business in the Baltic nation, and clear all your doubts. We're more than happy to serve you any day and anytime.