And, after four years, I have reopened my company in UK and trying to liquidate my Estonian one (today I have received a denial letter which says that only Estonian citizen can close my company)..
In short: Vague frequently changing rules, introduction of strange complex regulations over time (e.g. contact person, management board member tax which is kinda avoidable or not at the same time - "Schrodinger tax").. Expensive business services and accountants (yes, US and UK are cheaper!), volatile tax rules interpretations.. Lack of googlable good information overall, and local accountants are not that hi level pros in nomadic IT matters at all. Also totally non-cooperative Estonian banks.
Upon all of that, UK manages doing everything without fragile e-card, which, honestly, adds more anxiety over access loss instead of benefits. Has TONS AND TONS of proper official information with tutorials. Generations of good accountants and stable business and tax regulations.
Edit: perhaps calling it a scam is inappropriate. It just doesn't seem like the program offers anything new over what other countries offer. I guess the nice thing is that it tries to be a package deal that's easier to market and find information about.
Like with those nasty surprises when in reality you need to "know" some Estonian to start and stop a company.
I'm not too familiar with the e-residence in Estonia but I'm not surprised that a country of 1.3M people that fairly recently escaped from underneath the iron curtain doesn't have the resources of the big EU countries who have had centuries of financial power. I'll say starting a business in the US was 100x easier than the EU countries I've stayed in.
BTW have started a company in US also - can confirm that was also easy. But one needs to have a bank account in US, and US banks are not remote friendly, after opening an account too (I had an accident with account locking, lots of grey hair from nothing). I know Stripe Atlas makes this easier now.
Also my experience in UK proves it is not exactly a EU - much easier too. And GOV.UK is something extraordinary.
so in order to close your company, you need some citizen to acquire it first?
At they same time they have allowed me to appoint myself first through that form and kept me waiting 5 days.. (The e-resident system is supposed to know who am I, right?) Go figure.
Just a business address can be easily 5x of what one has to pay in US or EU, and this is given Estonian govt really doesn't send you any letters there, in UK and US does.
BTW just learned company closure takes months and 400-1600 EUR, depending on whom you ask..
I'm a EU resident and I have heard there is no way to open a business bank account in the UK without living there (i.e. without NI number + rent contract + utility bills).
If anyone has any info on how to run a UK company with a local bank account (not with an Internet bank) without being a UK resident, I'm all ears.
As for Estonia, de facto e-residents have to open accounts in internet and non Estonian banks too.
There are no taxes to pay for the yearly profit, which makes it much easier for companies that do plan to reinvest the income over the years or just hold it.
Also, one should probably have employees or customers physically in Estonia, otherwise the company tax residency might change into other jurisdictions.. IANAL.
I'm curious if there are any other EU countries with a similar flexibility (corporate income tax not applied until the "payout event")?
You no longer need physical presence with their e-Residency program.
That said, ofcourse there are things that can be learnt and applied to similar sized towns, cities, states etc that want these features.
Countries aren't their own silo anymore.
A small country that's in Eurozone, EU and NATO has a lot of "big country" benefits than a small country not in those groups.
As an EU citizen, I see Estonian e-residency oriented more towards the people who are from outside the EU and want to establish their presence in the EU market.
For instance, it's one of the easiest ways to get access to Stripe for people from Russia, Ukraine, Belarus, Serbia, Israel, Turkey, and many countries from other continents.
But it's not such a good option if you operate from other EU country, such as Germany, because your Estonian company will likely be taxed as a local company there.
In any case, I would personally choose Ireland over Estonia because of the absence of language barrier and almost 40% lower corporate tax, or even the UK, where incorporation is not that much harder or more expensive than in Estonia[2], but regulations are much clearer and laws are much more stable.
The taxation system itself is very simple, if VAT isn't involved. You can just enter your annual income and the calculator will tell you all of the numbers. Just make sure you use the "salary/wage fund" as the income field for a freelancer.
One thing to keep in mind though is that countries where you actually perform the work usually want a piece of the pie. That can complicate things significantly.
If I ever do business again within the EU area, I will give Estonia a try. The prospect of an administration set up for working remotely is very attractive to me.
I also agree with you on the tax front; at least with regards to the French authorities. Luckily Australia and the US are much simpler in this regard.
It was surprising how the country behind so much technology innovation was so bad at using it. It was noticeable both in the private and public sector.
It was something that I was later reminded of when reading guns, germs and steel. The author Jared Diamond remarked that the technological progress of any society is not primarily decided by your ability to innovate but by your ability to adopt and use the inventions of others. As he remarks, most innovation happens outside your own country, so it is the ability to learn from others which matters most.
A thing I think people should be aware of when obsessing about having the most cutting edge researchers rather than a technology literate population.
America is very backwards because of one thing that happened to you that has literally never happened to me in the 21+ years I have been an adult here?
How did you even find a human to pay? I have always used a ticket vending machine at SFO.
That's not to say that Germany is less advanced than the US as a whole, but when it comes to consumer-facing software stuff, it feels substantially behind.
Since moving back to the states from China 3 years ago, I’ve gone to the ATM twice, and I no longer have to fumble with a phone to align QR codes. To each their own, I guess.
Very generous to them.
In the UK, the payments system works quite well, but what amazes me is how much physical letters are still a thing: for doctors' appointments with the state-run health system (the NHS), for schools communicating with parents, etc, taking personalized plates on and off a car, ...
Elementary school wants to communicate about some appointment? Do they use the email from us they already have? Haha no, of course they send a letter (that arrives the day of the appointment, natch), and then later call us to complain that we didn't show. And their website looks like it was designed by an intern in 2006, and is virtually never used to communicate useful information throughout the year.
The current elementary school we have does use email...but much of the content they send actually comes in a PDF instead of the email itself, and not the type of with actual text, it's just a bitmap, so to translate we type shit in manually into Deepl (or use OCR for the longer things).
Want to re-up your alditalk account without going to the store? Want to use a credit card, or even Germany-specific debit card? Nope, you tell us your address and we'll send you a letter, which you can then use to authenticate your bank account for transfers. I guess they're worried about...people paying for my phone service on my behalf?
The vast majority of people use BankID, a login system run by a consortium of most banks.
It used to require a cumbersome 2FA device, but for the last 5 years it has also been available as a Sim Toolkit App, so most use that now.
The way it works is pretty cool, you just type your SSN in a login form and immediately a popup window with a word based 2FA appears on your phone.
Seems like less of a hassle to just use your phone than the Estonian system with a physical card reader.
And also the newest is SmartID(used by banks), also based on mobile devices, but without requiring a special SIM card.
OTOH, the issue with USA is the conflict of interest between the public and private sector. Turbotax is a prime example.
What today is Germany used to be about 100 separate nations until 1871, and a still somewhat loose federation until 1918. I think the mentality from that time is still pervasive today in many areas, particularly in bureaucracy.
Add to that that Germany is large enough to make the other EU countries play by its rules most of the time. That removes incentive to overcome nonsensical idiosyncrasies. Estonia is under a lot more pressure here because they cannot win by weight alone.
Tech companies have many problems that I don't want see in a Government:
- Security breaches (and just like every other tech company Bulgaria recently had a dump of the personal data of 5 million citizens)
- Privacy issues, like contractors listening in on sounds recorded by their devices
- tons of intrusive ads
- discrinatory pricing
- products people rely on being killed off for no reason
- hype-, and resume-driven development
- general lack of accountability, masked with trendy but misunderstood methodologies like Agile, Scrum
- move fast and break things works for Facebook, but not for health insurance software
Tech companies fail all the time, but the pieces are picked up by investors, yet governments cannot afford to fail in the same way.
The major difference being that an inept government is generally much more visible than an inept company. But as someone that's worked both commercial and government, I've seen enough to make a definitive statement that a lot of companies are incredibly poorly ran. You just don't see it.
Companies can fire people. Countries cannot. Companies are typically not democratically controlled whereas countries should be. Companies are not obligated to meet the basic needs of their employees, protect their rights even if it isn't profitable, defend against foreign adversaries.
Companies have one, very narrow, purpose and efficiency is one property which is induced by that arrangement. States, on the other hand, are human institutions constituted to much broader purpose and scope. I'd actually argue its deeply inhuman to expect efficiency to be a primary property of a state.
The point is that Estonia invested in Internet connectivity penetration, computer literacy for children (and adults too probably), and moved or instituted many/most government services on-line.
Finnish entrepreneurs are being denied bank accounts despite the close ties of the two countries: https://www.hs.fi/talous/art-2000006279056.html (Article in Finnish only, sorry)
The background for this change is a huge money laundering scandal where Estonian banks took in Russian money over decades with very few questions asked... It sucks that "little guy" startup founders are the ones getting excluded, but that's how it goes.
The fact that the meeting only takes 40 minutes is just extra injury if you had to travel 6000km to get there.
It feels like the banking system has its own rules and the Estonian government can't do much about it.
https://corporatefinanceinstitute.com/resources/careers/comp...
https://corporatefinanceinstitute.com/resources/careers/comp...
https://corporatefinanceinstitute.com/resources/careers/comp...
0: https://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&...
https://www.youtube.com/watch?v=oTyOboVluxA
It's interesting how the East of europe seems to have similar aspirations. Growing, poor or former poor countries (Estonia, latvia, Romania, bulgaria, cyprus, malta) are bullish on using the EU status to attract foreign investors and enable entrepreneurship, including lowering their taxes, while the west of EU seems to be doing the exact opposite, sending their entrepreneurs abroad.
BUT: Eastern Europe also has huge drawbacks. In countries like Poland, Hungary, or Bulgaria, your risk of abrupt changes in the law (see above) or simply ignorance of the rule of law, is somewhat elevated compared to France, the US, or Germany.
And while these countries want to attract foreign investors, if you actually want to spend significant time in the country, or hire foreigners to work there, you better make sure your neither dark-skinned nor jewish.
(Opening a business bank account is a lot of pain, so there is still room for improvement)
That was 3 years ago, though. Maybe things have changed?
It sucks being Russian these days because of our warmongering dictator. :-/
Money laundering scandals with Danske Bank and Swedbank have made it more complicated.
But I guess it is still easier than in other countries.
My personal favorite is their wireless PSTN: Take existing NMT technology and give people tabletop terminals that will accommodate ordinary analog phones.
https://www.slideshare.net/DataReportal/digital-2019-indones...
That they (WSJ) published Erdogan's piece is (to me) perplexing, but for completely different reasons.
This one on qz.com seems, at least to me, nothing different from the several "puff" articles we have read in the last few years about the digital "revolution" in Estonia (and e-residency, etc.), but till now they were all or almost all by either enthusiasts/futurists/thintankers or by people directly or indirectly involved in the program at a much lower level than the President.
Personally I always had the feeling that these pieces are not entirely unlike the good ol' gnome business plan:
1) get digital in Estonia (id, residency, etc.)
2) ?
3) profit
No doubts that there may be a number of non-Estonians that may benefit from the one or the other provisions of the program, but all in all they should be a niche of "digital nomads" and/or "digital only" very small firms.
Or the Mayor of Rome more or less the same relevance as the President of Ireland.
Maybe I am too old fashioned, but I see a president of an independent country, small as it might be, as having a different, higher status than a mayor.
I can only speak from the context of India where many things have indeed moved online, but are not exactly accessible. For one thing, they are essentially restricted to a small class of English speakers - which is expected since the English-speaking elite have a monopoly on education and thus technological literacy. This has meant that all the small shops which are now forced to file GST invoices (3 times a month ?) need to hire touts of some kind to get their work done. There are touts for everything, since very few people have computers or the necessary skills to use them - touts for filling in passport applications, for filling in DL forms etc.... and frankly it's all very frustrating, since you'll have to take a printout of the online application and visit some Indian Babu anyway.
Since "Indians" have been decided by the rulers to be essentially corrupt, it has also meant that there is no escape from the inflexibility of the straightjacket that is the Indian bureaucracy. Classic case of extremely poor people employed as manual labour being denied food rations because their fingerprints don't match that on record, or simply because the cellular data is patchy has quickly been covered by the UIDAI and their cronies in the government.
The language issue also shows up often because, after 70 years of so-called independence, the country has yet to create a unified transliteration scheme to go along with its "destroy all Indian languages" policy... and different transliterations of brahmi (for instance "sri" and "sree" are both the same श्री) often require absurd name-change announcements and numerous "letters" to random officers (and the usual palm greasing) in order to get access to services.
For much of India's "independence" a extractive state run for a handful of elites generally kept away from governance while its elites enjoyed vacations abroad and went to hospitals in Vienna (other than passing insane, unenforceable laws). I'm generally afraid what the deeply rooted colonial mindset will give rise to, now that it has also has access to technology. UIDAI and its sister schemes was and remains a rather scary venture with what appears to be a view of replicating China's draconian policies.
Curious how it compares to Estonia.
Right or wrong, it's not that unexplainable. People leave their cell phone carrier over bad customer service. They buy their things from a different website because of poor service, or go to a different store. It's cheap to change your allegiance to a different brand. It's a lot more expensive to change your allegiance to a different government. Governments in most places in the world have little incentive to improve.
Governments and private companies are both institutions, they just face different incentive structures. Governments aren't somehow magically protected from the people that run them having incentives.
For those interested in opening an e-business in Estonia, please be mindful that due to the 'Tech Company' way in which the government looks to operate, that there is an increasing rate of change in regulations which can impact your business decisions, although major generic areas such as Corporate and Personal tax rate has trended downwards (around 25% in 2004 and 20% now).
[1] https://en.wikipedia.org/wiki/Danske_Bank#Danske_Bank_(Finla...
It's interesting but to me Estonia cant quite compete with its neighbors to the point of becoming wealthier than they are now.
Of course NZ is usually ranked as either 1 or 2 on the "ease of doing business" rankings and has low levels of bureaucracy so that might not be typical but I'm also a UK citizen and I renewed my passport from NZ online with no fuss.
https://e-resident.gov.ee/marketplace/service-providers/ https://www.facebook.com/groups/eResidents/
Relatively sound advice is that whenever someone advertises to run the government 'like a business', the outcome is going to be 90% disappointing and hot air.
This is essentially just a huge PR campaign, the electronic voting is a security disaster, and if you see a government official talk about putting things 'on the blockchain' just run.
It is a blockchain in the only way that makes sense: a cryptographically secure ledger run by a central authority (government).
https://www.zdnet.com/article/estonias-id-card-scrisis-how-e...
The timeline may also match the hack the GCHQ and NSA did against the Estonian e-ID provider, Gemalto:
https://theintercept.com/2015/02/19/great-sim-heist/
So remember that even with hardware tokens used in electronic voting, which are supposed to be much more secure than using other forms of authentication, you still run the risk of having the election compromised, especially since an election is something important enough that more than one major country could be interested in manipulating at any given time.
It's not like the "well, I'm nobody, so why would the NSA/other spy agency target me?!" situation at all. We're talking about the decision of who gets to run a whole country, and sophisticated adversaries will be very interested in influencing that if it can serve their interests.
We know China hacks tons of countries, we know Russia has been meddling with all sorts of elections lately, and we also know that for the past 70 years the USA has interfered in about one election per year, on average. This is not just theoretical stuff that would never happen. And I'm sure there are many Middle-Eastern and other Asian countries interested in influencing their rivals' elections, too.
https://www.channel4.com/news/factcheck/americas-long-histor...
I have faith in the Estonian system once they make e-voting completely transparent (which is something they're working on, but it's not there yet)
