The Ultimate Guide to Estonian E-residency, Banking, and Taxes

Updated: Feb 11, 2021 • by Thomas K. Running

The internet seems to have been buzzing a lot about Estonia in the last few years, and a lot of it is due to the innovative new e-residency program that was launched in a limited form in December 2014, and has been rolling out additions and improvements ever since.

Yet, there has been a certain degree of confusion of what the e-residency is and isn’t, and what you can and cannot do as an e-resident of this progressive Baltic country.

Instead of relying on press releases, shallow news articles or random speculation from internet-commenters, I have gone through the process of obtaining an e-residency as well as actually traveling to Estonia to go through the process of opening a bank account as an e-resident and learn more about the program first-hand.

I’ve since gone through the process of registering an Estonian business, and opening banks accounts for it both in Estonia and abroad.

In this extensive article I go into detail of why you might or might not want an Estonian e-residency, how it can make it really convenient to bank and run a business in Estonia, some basic tax implications, and lastly, explaining the process of obtaining e-residency.

I will not go through the actual process of opening a business—I’ll save that for another article that will be published soon. Although registering and managing a business in Estonia is quite straightforward, using a service provider like Xolo (formerly LeapIN) to deal with regulations, accounting, and a mandatory business address is affordable and well worth it.

Special offer: Xolo is currently giving Nomad Gate’s readers €100 credit when signing up through this link.

But first of all, there are a lot of misconceptions surrounding the e-residency. Let’s just get a few of the glaringly obvious ones out of the way right now.

What the Estonian e-residency is not:

  • IT IS NOT an actual residency. It does not give you any rights to stay in Estonia, the EU or the Schengen zone whatsoever. Nor any other social rights in Estonia or anywhere else.
  • IT IS NOT a way to avoid paying tax in your actual country of residence.
  • IT IS NOT a citizenship, and you will never receive any consular support from the Estonian government for holding an e-residency.
  • IT IS NOT a travel document. It is not a picture ID. It can not be used as a form for identification in the "real world."

Currently, it’s an electronic form of identification allowing you to log into online services in Estonia such as government portals and online banks. To some degree, the card can also be used around Europe, and this is bound to increase.

You can also use it to legally sign documents electronically within the EU and increasingly also elsewhere.

Basically, it’s a digital identity card accepted by many banks, services, and the Estonian government. In the future it will be accepted as online identification in all EU countries.

So why would you need an e-residency then?

Well, most people wouldn’t.

But it can be very useful if you want to either bank or run a business in Estonia. Or if the e-residency just resonates ideologically with you and you want to show your support. That’s a completely valid reason too.

Reasons to bank in Estonia

Here are just a few reasons for why you might want to bank in Estonia:

  • You live there or spend a significant amount of time there
  • You have friends, family, or customers there
  • You want a euro account or a multi-currency account (which many Estonian banks offer)
  • You want to diversify your assets as part of an internationalization strategy
  • You want access to modern banking that you can manage from anywhere
  • You want to place (some of) your assets in a country where the government isn’t consistently running huge budget deficits
  • You want to do your banking in English, Estonian or Russian
  • You want to incorporate a business in Estonia, for example to access the EU market
  • You have an e-residency card and want to use it for something

The challenge of opening a bank account in Estonia, even for e-residents

If you just get on a plane to Tallinn, walk into a bank branch and expect them to open an account for you without any fuss, you are bound to be disappointed.

The e-residency does not give you a right to open an account with any bank in Estonia.

You read that right. As long as you are not an actual legal resident of Estonia, no bank has any obligation to open an account for you whatsoever.

Due to fairly strict Anti-Money Laundering (AML) rules, it is unlikely that you will be able to open an account if you can not demonstrate a strong connection to Estonia. Basically, you need to demonstrate why you want to bank in Estonia, and most of the reasons listed above will not cut it.

However, the following reasons are considered valid by most banks in most cases:

  • You live in Estonia long-term
  • You are Estonian (but may currently live elsewhere)
  • Your parents are Estonian
  • You’re employed by an Estonian company
  • You own or manage one or more businesses that are physically located in Estonia
  • You own property in Estonia

In short, unless you’re part of the lucky sperm club or have strong investment or business ties with Estonia, it will be a bit more challenging to open a bank account, no matter if you’re an e-resident or not.

Luckily there are ways for the rest of us. I traveled to Estonia to explore options. Through this boots on the ground-approach I learned a whole lot, which I will share in the next few paragraphs.

Also read: The Ultimate Guide to Banking for Estonian E-residents

Choosing a bank

Currently, there are only three banks in Estonia that support the e-residency card for logging in and managing your account. I’m sure this number will grow over time. But to be honest, the banks that currently support it is likely the banks you would want to bank with anyway.

  • SEB (Sweden)
  • Swedbank (Sweden)
  • LHV (Estonia)

Both SEB and Swedbank are fairly large, world-class, Swedish banks with large-scale operations in Estonia. LHV is a mid-sized, modern Estonian bank with roots as an investment firm. LHV is actually the bank used by Transferwise for all their SEPA transactions in euros.

SEB and Swedbank both have branches scattered throughout the country, while LHV only has to two branches in total, one in Tallinn and one in Tartu. While that might seem like a disadvantage at first, I actually perceive it as a big plus.

First of all, it gives them a lower overhead which results in cheaper banking for you. While they in 2018 have started added some fees for non-residents (and e-residents are still considered non-residents), they are still more affordable than the two Swedish banks. They are also used to dealing with their customers remotely, even their Estonian ones.

If you want to manage your bank relationship 100% remotely, the latter point is a big plus. As long as you’re an e-resident, you only ever have to step foot in an LHV branch once. Even if you want to open a business account at a later date, as long as you are already a customer you can handle everything electronically from anywhere in the world.

The only caveat is that if you want a debit card with your account, you might have to come back to pick that up a week or so after the account opening has been approved. In my case, I did not have any need for yet another debit card denominated in EUR, especially since I already have the fantastic debit card from N26 in Germany (which surprisingly is accessible to most people if you know what you’re doing).

If you require a debit card and don’t have the time to stick around in Tallinn, I would recommend that you contact LHV up-front to see if it’s possible to have the card ready for you pick up when you come in to verify your ID.

Still, the biggest plus with LHV and the definite deciding factor for me for which bank to open an account with was that they allowed me to open one. With SEB and Swedbank, if you do not meet any of the criteria listed above (or potentially deposit a huge amount of money), they will not open an account for you.

Swedbank used to be more willing to open business accounts as long as you had already registered a business in Estonia, but that has been changing in the last year.

SEB will consider opening an account for you and your business as long as you have large clients that you work closely with in Estonia.

LHV, on the other hand, accepted one more reason for opening an account in addition to the above list. Critically it’s a reason anyone can give. It does not require having any prior ties to Estonia at all, nor does it require any huge investments of time or money.

"I wish to invest in the Estonian and Baltic stock market."

That’s it.

It might have something to do with their history as an investment firm, and the fact that they offer some great investment options. Or maybe they are just a little bit more flexible than the two giants, because that is what it takes to succeed as a smaller player? I’m not sure, but at the end of the day, it doesn’t really matter.

TIP: Xolo (formerly LeapIN) has a partnership with LHV, so if you open your company through them (which is included in their ongoing pricing) they will help you open up an account with LHV. As far as I know they have a ~100% success rate. LHV will also give you 50% off their monthly fee when opening through Xolo (€10 instead of €20). And if you’re for some reason unhappy with Xolo’s services, you can cancel anytime.

Special offer: Xolo is currently giving Nomad Gate’s readers €100 credit when signing up through this link.

The fintech alternative

As of January 2019, it is no longer required to have an Estonian bank account to confirm that you paid the share capital of your company, so you are free to choose any bank or electronic payment institution in the EU/EEA (such as TransferWise Borderless) if you prefer that over traveling to Estonia to open a "real" bank account.

Why you might want to set up a business in Estonia

Businesses registered in Estonia are by default considered to be tax resident in Estonia.

If you are running the business from a different country where you are personally tax resident, please consult the relevant tax treaties and talk to a tax professional to see if the company might be considered resident in your home country instead.

The tax burden in Estonia is far from the highest, but also not quite a tax haven either. The tax code is generally straightforward, with 20% flat tax on most stuff. That includes 20% income tax, 20% corporate tax on distributed profits (meaning 0% on undistributed profits, see below), and 20% VAT. Note that there are social taxes totaling around 35% for employees and directors that perform their services within Estonia.

The social taxes will not apply to someone living outside of Estonia and not performing any actual work within Estonia, with one exception. If you spend a large portion of your time on board member duties you will typically pay yourself a board member salary in addition to a regular employee salary. In case you don’t already pay social taxes somewhere in the EU, you pay social tax on the part of your salary you label as being for the board member duties, in addition to Estonian income tax (20%). You’ll typically get credits for these taxes where you live (check the relevant treaty for specifics).

Luckily, you’re not legally required to pay a board member salary—especially if you do all the work outside Estonia, and you spend most of your time working on the actual business (like developing your product, freelancing, consulting, getting clients, etc). There has been some confusion regarding this, but as of the end of 2018, the Estonian Tax Board has confirmed that you do not need to pay yourself a board member salary in the above situation.

And even if you do opt for paying some board member salary, you can pay proportionally to how much time you spend actually managing the company instead of working for the company. So if you only spend 8 hours per month managing the company (which is likely if you use a service such as Xolo to manage most of your accounting and reporting), and 152 hours actually working on the business (creating products, working for clients, etc), then it could make sense to pay about 5% of your salary as a board member salary.

Overall Estonia has an average tax burden, so if low tax is all you care about there are better options. If you care about cash-flow, easy day-to-day remote management in English and a generally business-friendly environment, Estonia might be for you.

One exception is if you are resident in a country that does not tax salary income from abroad. In that case you can pay yourself a salary completely (or nearly) tax-free. Just make sure the Estonian company won’t be considered tax resident where you’re resident. This will often be the case if you’re a nomad or perpetual traveler with a primary tax residency in a country with territorial tax or another favorable tax scheme (such as Malta and even Portugal).

How does Estonia’s 0% tax on undistributed profits actually work?

Estonia’s tax system is quite unique due to one small quirk that makes it especially attractive to growing businesses that reinvest profits into further growing the company: The 20% corporate tax is only paid on distributed profits. So as long as profits are reinvested rather than being distributed to shareholders through dividends, no corporate tax is owed. You still need to pay the tax whenever the company actually do decide to distribute profits (unless paid as salary, not dividends), however.

This makes this option great for someone who’s personal tax situation is less than ideal at the moment, since you can reinvest the profits into for example index funds or other investments now, then start cashing out more from the company once you have moved your personal tax residency to a more tax-friendly country—particularly one that does not tax salary and/or dividends from abroad.

To be clear, when profits eventually are distributed as dividends, the 20% tax is paid by the company (as corporate income tax) not the person receiving the dividends. There’s no dividend withholding tax in Estonia.

In most cases, the receiving person (legal or natural) needs to pay dividend or income tax according to taxation rules in its relevant country of residence.

I think a quick example will make this crystal clear: If an Estonian company decides to distribute €10,000 of its profits to a natural person resident in Country X (a country with a 25% tax on dividends), this is the tax that will be paid by the company and the individual:

  • The Estonian company pays €2,000 in corporate income tax on distributed profits
  • There’s 0% withholding tax on dividends
  • The individual resident in Country X then pays 25% of the remaining €8,000 (also €2,000). The individual ends up with €6,000 after tax.

However, if the person receiving the dividend is a resident nowhere or resident in a country with territorial taxation (e.g., Panama), in many cases, no other tax than the 20% Estonian corporate income tax will need to be paid.

To read up more on the tax situation for legal and natural persons in Estonia, check out PwC’s excellent tax summary.

A step-by-step guide to acquiring Estonian e-residency

The whole process can be done in about a month, without having ever to visit Estonia. The application process is online, and the card will be sent to an Estonian embassy near you where you can pick it up.

Possible locations for picking up your e-residency card: Australia: Canberra, Austria: Vienna, Azerbaijan: Baku, Belarus: Minsk, Belgium: Brussels, Canada: Ottawa, China: Beijing, Czech Republic: Prague, Denmark: Copenhagen, Egypt: Cairo, Estonia: Tallinn, Finland: Helsinki, France: Paris, Georgia: Tbilisi, Germany: Berlin, Greece: Athens, Hungary: Budapest,India: New Delhi, Ireland: Dublin, Israel: Tel Aviv, Italy: Rome, Japan: Tokyo, Kazakhstan: Astana, Latvia: Riga, Lithuania: Vilnius, Netherlands: The Hague, Norway: Oslo, Poland: Warsaw, Portugal: Lisbon, Romania: Bucharest, Russian Federation: Moscow, Pskov, St Petersburg, Singapore: Singapore, South-Korea: Seoul, Spain: Madrid, Sweden: Stockholm, Turkey: Ankara, UK: London, Ukraine: Kiev, USA: New York City, San Francisco, Washington D.C.
  1. Go to the e-residency website and fill out the application. You will need a scanned copy of your passport, a passport photo, as well as a Visa or MasterCard to complete the payment. You will also select which embassy or consulate the card should be shipped to or if you want to pick it up in Tallinn, Estonia.
  2. You should receive an email about two weeks later with the result of your application. It may take longer if they have a lot of applications to process at the moment.
  3. If your application is approved, you can expect your e-residency card to arrive at your specified embassy or consulate around 2 weeks later. This may also vary a bit depending on location. You will be notified via email and asked to set up an appointment to pick up the e-residency card within their opening hours.
  4. At the embassy, you will need to show your ID document (typically your passport), sign a couple of forms and be fingerprinted.
  5. *Important: If you want to use your e-residency card right away, you should ask the staff at the consulate or embassy to report back to the Police and Border Guard Board that you have picked up the card as soon as possible. Ask them when you can expect the card to be activated. If you forget to do this and your card isn’t functioning properly, see the troubleshooting section below.*
  6. Congratulations, you are now an Estonian e-resident!

How to use your e-residency card

The welcome pack you collect at your nearest embassy or consulate. It contains your e-residency card and a small, foldable USB card reader.

After collecting your welcome pack at the embassy, you are probably anxious to start using your new e-residency card.

You should find the following items in your welcome pack:

  • Your e-residency card
  • A small, collapsible card reader
  • Your PIN codes

  1. To start using your card, unfold the card reader and insert the e-resident card into the reader (chip first). Do not connect the card reader to your computer just yet.
  2. Download and install the DigiDoc4 application and the web browser components from the installation site.
  3. After installing the software, make sure the DigiDoc4 client is closed. Insert the card reader with the ID card into your computer.
  4. Before attempting to use the card, you can check if it has been activated (it can take about 24 hours from you pick up your card). To do so, go here and enter the document number (the letter N followed by 7 digits). As long as it returns the status Document N0123456 is valid you are good to go.
  5. Verify that the ID card is working correctly by logging in to for example You will be asked for a PIN code, which is the PIN1 listed in your welcome pack.

If you encounter any issues logging in, try restarting your browser and computer. If it still does not work, have a quick look at the troubleshooting section below.

You can change the PIN1 and PIN2 codes in the DigiDoc4 application, which can also be used for digital signing of documents.


Error when trying to log in online: "Error! OCSP: User not authenticated, certificate status unknown (0) LDAP: Client certificate does not exist in LDAP directory or service failed!"
Error when for example trying to load your picture in the ID-card utility software: "ID-card certificate is not valid"

If you get one of the errors shown in the screenshots above (or anything else remotely similar), your certificate might not have been activated yet. That can typically be the case if you recently picked up the ID card and the embassy or consulate have not yet reported back to the Police and Border Guard Board that you have picked up your card. You can check the status of the activation here.

Don’t worry, your card should be activated soon. But if you want to speed up the process, send an email to [email protected] and tell them that your card has not yet been activated.

Note: Some similar errors you might encounter are usually easily fixed by restarting or trying another browser:

This error might just mean that you need to restart your browser or computer before trying again.


How much does the e-residency cost?

The current application fee is €100, plus €1.99 to cover the payment processing. Since the card is valid for 5 years, that works out to about €20 per year.

As of January 6, 2020 there’s an additional "courier fee" of €20 if you want to pick up the card at an Estonian embassy (as opposed to in Estonia). The fee is paid when submitting your application.

If you choose to pick up your card in Tokyo, San Francisco, or Seoul, you don’t pay any courier fee during the application. However, you’ll pay a fee of approximately €30 when picking up your card. Estonia doesn’t have embassies in these locations, so they work with third-parties to facilitate the card delivery.

How long is the e-residency valid for?

The validity was recently increased from 3 years to 5 years.

How do I renew my e-residency?

You will have to go through the same application process again, as well as paying another application fee.

Do I need to have an Estonian bank account for my Estonian company?

Not really. The only reason you needed it in the past was to confirm that you paid the share capital. However, you can opt to delay that for up to 10 years. And since 2019 the law has changed so that you can use any bank or payment institution in the EU/EEA to confirm the share capital. And that includes easy-to-open options such as TransferWise Borderless (free).

Is Stripe available in Estonia?

Yes, since 2019 they have been available in Estonia. Their pricing starts at only 1.4% + €0.25 for European cards.

There are also several Stripe alternatives available for you payment processing needs, such as Braintree and and the local offering EveryPay.

Which service provider do you recommend?

Xolo is the service provider that I personally use in Estonia, as I’ve found them to offer excellent service, and offer the most competitive pricing long-term. Unlike most other providers they give you one predictable fixed monthly price, which includes everything that others charge extra for, such as forming your company, giving you both a contact person service and legal address service (including scanning and forwarding), submitting any government reports automatically without you ever having to ask them to do so. Other companies also charge extra for things like creating and submitting your annual reports, tax returns, extra accounting entries and so on. But with Xolo everything is included—even a very nice interface where you can easily get an overview over how your business is doing, including easily upload documents, create and send invoices, etc.

They are also the only service provider who provides automatic daily import of all your transactions from LHV, TransferWise Borderless, and PayPal (from any country). If you use another service (such as Holvi) where you can give their accountant read-only access they will even manually import your transactions once per month, so you never have to download and send them monthly CSV exports from your banking solution.

Xolo will also help you open a bank account in Estonia (if you want one), and LHV will even give you half their normal monthly price if you’re a Xolo customer.

By joining Xolo, you put your company on auto-pilot!

Open an Estonian company with Xolo

Special offer: Xolo is currently giving Nomad Gate’s readers €100 credit when signing up through this link.

Note that to keep their service so affordable, Xolo have two important restrictions:

  • They only work with certain kinds of businesses, such as freelancers, consultants, app developers, SaaS providers, bloggers/content creators, and so on. The most common one they don’t work with is e-commerce (physical sale of goods over the internet).
  • You need to sign up for their services at the same time as you register your company. If you already registered and started running your company for a significant period of time, you normally can’t sign up anymore. So it’s better to join right away, then switch later if you’re not happy (there’s no lock-in). Then they will even register your company for free!

If Xolo for some reason isn’t able to offer their services to you, there are other, more customizable providers to choose from instead.

What’s the €100 Xolo/LeapIN referral code?

Xolo used to offer new customers who signed up with a referral/coupon code a €100 credit towards their membership fees. However, since March 2020 there are no such coupon codes.

Instead, if you sign up via this special link you’ll still get the €100 credit.

They will also incorporate your company completely free of charge, just passing along the government fees. There’s no lock-in, so you can switch to another service provider at any time… but I doubt you will!

Open an Estonian company with Xolo

Do you have any questions about the Estonian e-residency that I wasn’t able to answer in the article? Leave a comment below! I will try my best to answer all your questions and post the answers here as well, so more people can benefit from them.

Please note: I am not a lawyer and nothing in this article is to be considered as legal advice. It is simply a best effort representation of the information I have gathered through countless hours of online and offline research into the subject, as well as my more than 4 years as an e-resident.

Join now!

Get free access to our community & exclusive content.

Don't worry, I won't spam you. You'll select your newsletter preference in the next step. Privacy policy.

Did you enjoy this article?

Recommend it to your best friend, your mom, the stranger you met at Starbucks...or maybe even your arch-enemy? It's up to you, I'm just throwing some ideas out there.

Join the discussion

Continue Discussion 50 replies
Dec '18

pbm Nomad Gate legend

You do state it at the bottom, but I think it bears highlighting that from January 2019 (3 weeks from now) you don’t need an Estonian bank account, and it’s perhaps worth considering the possibility that one reason that this rule was changed was because foreign customers were underwhelmed by the services offered by Estonian banks, but here’s the official explanation: Estonian companies now have greater freedom in business banking | by Victoria Saue | E-Residency Blog, E-residentsuse blogi | Medium

I’m an e-resident, and while the application process and embassy visit were smooth, their national websites and the (Windows) card software are badly designed and full of bugs.

1 reply
Dec '18 ▶ pbm

tkrunning Founder

Honestly, I think LHV is one of the best banks I’ve ever had to deal with. I’ve also had good experiences with SEB. However, it is true that many e-residents have struggled with being approved for local Estonian bank accounts so it’s definitely a welcome change.

Unfortunately, the major Estonian banks have started to charge higher fees for non-residents this year, sot that’s another good reason to do your banking abroad.

Regarding the websites, it seems at least some of them have been improving lately. I also think the software has improved since DigiDoc4 launched. I haven’t noticed any bugs on Mac other than occasionally having to restart for it to recognize my card in a browser.

But that has also been less of an issue since Smart-ID launched (which I should probably also mention in the article). Basically, it will enable you to do most of the things you would normally need your ID card for through a secure app on your phone.

Dec '18

amadeann Pioneer

If anyone is looking for banks that are willing to open accounts for Estonian companies, outside of Estonia I know of 2 (first hand experience), who are willing to do it in Poland:

ING charges monthly fees, and fees for each transfer. It’s also nice, since you have an option to open accounts in multiple currencies (including USD). Idea Bank has some free options.

But please keep in mind that your milage may vary - I’m a Polish resident, and our company was started 2.5 years ago, so the entire procedure was likely simplified (still required documents from Estonia translated to Polish though).

Jan '19


this article references VAT tax - in the 10,000euro scenario described above, VAT tax is not dealt with…where does VAT tax present itself in the estonian e-residency and business process?

1 reply
Jan '19 ▶ boypablo

tkrunning Founder

The example in the article talks about distributing profits/salary. VAT is charged on sales to consumers in the EU. Sales to any EU company with a VAT number is VAT free (reverse charge mechanism), and sales to any person or entity outside the EU is also VAT free.

For sales to individuals in the EU you will have to charge either Estonian VAT (20%—among the lowest in the EU) or the customer’s local VAT rate (depending on what you are selling).

Also non-EU companies are supposed to charge VAT to individuals in the EU, although not all companies follow the rules.

Note that the VAT registration threshold in Estonia is €40,000, meaning that if you have a lower turnover than this per year you don’t have to register or charge VAT to your customers.

Jan '19


i am a screenplay writer and i’m hoping to sell screenplays to european production companies…i’m selling a service, not a product…how would the VAT play in that scenario? estonian company is going to be a film company that sells films that i’ve written…

1 reply
Jan '19 ▶ boypablo

tkrunning Founder

In that case (selling your services to EU companies with VAT numbers, or non-EU companies) there will be no VAT.

Jan '19


is there a type of company like a ‘sole proprietor’ where there are no taxes paid to estonia?..also, can i write off expenses against revenue that might be taxed otherwise? and others that i’ve read refer to taxing ‘profits’, but i’m wondering if your definition of profit is the same as mine…revenue minus costs = profit

1 reply
Jan '19 ▶ boypablo

tkrunning Founder

You can only be a sole proprietor in the country where you live, since sole proprietorship isn’t a separate legal person.

And yes, that’s the definition of profits: Income minus legitimate business costs (including salary paid to yourself).

Jan '19


the example in the article reads like the taxation could be excessive, but i think that’s due to the fact that it starts with ‘profits’, and then distributes those profits as a taxable income…however, if one were to take the distribution as ‘salary’ it would be considered an expense and thus not taxed in estonia, but taxed in the employee’s domiciled country as employment income…

is this correct? - in my scenario could i just drain the company of its profits by taking more employment income personally…i did this with a corporation in california and it was all perfectly legal…

thomas - i thank you for taking so much time with me, for some reason i’m struggling to comprehend the 20% extonia tax as anything but double taxation…

1 reply
Jan '19

tkrunning Founder


is this correct? - in my scenario could i just drain the company of its profits by taking more employment income personally…i did this with a corporation in california and it was all perfectly legal…

Yes, of course. Your salary is a perfectly legitimate business expense. In that case you’ll just pay whatever taxes you owe on your salary locally where you live.


for some reason i’m struggling to comprehend the 20% extonia tax as anything but double taxation…

The 20% is the corporate income tax, and you will only pay that once. If you pay corporate income tax to Estonia, you won’t corporate income tax where you live (and vice versa). Estonia also don’t have any withholding tax on dividends.

So whether it makes sense to pay yourself mostly a salary or mostly dividends depend on your personal tax situation. What would you end up paying most for where you live (after accounting for the corporate tax that precedes any dividends)? And since you’re American, you need to take into account that FEIE only applies to earned income, meaning salary, not dividends.

Do you for example qualify for the special tax regime for foreigners in Spain? (That would only apply if you’re working for a Spanish company as well.)

You should also check with a local accountant/lawyer where you live, and ask how the Spanish tax authorities will treat your Estonian company. If they will tax it as a company resident in Spain, it doesn’t serve much of a purpose—at least from a tax perspective. Then you might be better off just incorporating in Spain instead.

1 reply
Jan '19 ▶ tkrunning


So you could build/invest your money in your Estonian company. Then after 10 years move to a country where they don’t tax on personal income. And then get all the money as a salary without paying anything because salary is a business cost? This would be better then paying yourself a dividend because then then the money will be taxed at 20% right?

What happens when you live in a country where CFC rules apply. A condition to be seen as a CFC is that the taxes are maximum the halve of the taxes of a similar parent company.
Belgium: 25% taxes (main country)
Estonia: 20% taxes
So every country below 12.5% taxes would be seen as a CFC and CFC rules will apply according ti the Belgium government. But what if it’s not seen as a CFC? like for example Belgium and Estonia? Then it would be OK for Belgium?

Jan '19


I was wondering, if i were to setup e-residency and then create a private limited company in estonia, move savings to that company and then buy index funds which i will not touch for a while would that cause any trouble?
I reside in Belgium.

Also would that mean that if i pay out dividends on e.g. 10000 Euros i would pay 2000 Euros to Estonia and then 25% dividend tax in Belgium?


Mar '19


A word of caution: I have set up an e-company as an e-resident. The process was expensive (€ 700,-) and cumbersome. After it was set up, I found out that I actually will not use it due to changing circumstances. Cancellation costs: € 1200,- for a registered company without any transactions or a bank-account attached to it. My impression is, that the e-residency program is a modern layer over an ancient bureaucratic infrastructure, that not only drives you crazy by continuously trying to communicate with you in Estonian, but above all will spam you a lot - not only in Estonian, but in Finnish and/or Swedish as well. For me as a Dutch citizen, the benefits do not outweigh the cons.

1 reply
Mar '19 ▶ Rene_Post

tkrunning Founder

I’m curious to hear which service provider you used who charged you this much? Opening a company should be about €200 (+€100 for the e-residency), and while I’m not sure about the costs of closing it down €1200 seems extremely excessive. Might have been better to just sell it off as a shelf company.

I’ve been an e-resident for more than 4 years now, and while the emails from the state often arrive in Estonian, you just need to scroll down to read the English version.

That being said, if you’re a full-time (tax) resident in another developed country, then opening a company abroad probably wouldn’t make sense.

EDIT: I just checked, and LeapIN is charging €200 for the liquidation of a company, which I’d say is very reasonable.

Apr '19


Thanks for this informative guide!
I’m trying to put my head around the taxes again using some examples.

Please correct if I’m wrong in any part.

From what I understand so far, as non-resident Estonian company owner:

  1. You don’t pay any corporate taxes (20%) until you distribute the money. Awesome.
  2. Following other posts - you don’t obligated to pay board member salary to yourself and thus pay almost 40% taxes for this salary. Worst case you pay a really low salary. Awesome.
  3. Really depends on your situation, but in general you can "drain" the money by paying yourself a regular employee salary and pay taxes only in your country of residence for personal income. Awesome.

So far so good?
The only part I’m missing is regarding #3 - you as employee shouldn’t pay taxes to Estonia but your home country. However, should you-as-company pay extra taxes for this paid salary? As a company, paying for your employee a salary carry any additional expense? If so, how much? and what is the lowest salary you can pay to yourself to avoid that?

2 replies
May '19 ▶ Rom_Shiri


You are right . 20 % Corporation Tax is paid in the event where the company pays dividend to its shareholder. A lot of companies take decisions to not distribution profits only re-invest

You need study double taxation agreement between Estonia and your country of residence and you will find opportunities of friendly and effective tax optimization.

F.e in most cases royalities are taxed in country of residence. Estonian company can pay non residents and f.e if work is performed out of Estonia, salary will be taxed out of Estonia. But remember you should avoid constitution of permament establishment (PE)

May '19


First of please accept gratitude for writing such an elaborate and excellent article. Through this article many of my doubts are clear and I am a fan already. However :

I have a question. I am working on a website on which a particular kind of items will be sold. For which I am currently contacting companies. The buyer will be making a payment on my website. I will be taking payment on behalf of the companies that will be selling on my platform, after deducting my commission from the entire amount I will forward the entire amount to the companies. In that case, I will be generating an invoice on behalf of companies in my name for the buyer of the product, so will it still be part of my turnover or just the service that I am providing will be part of my turnover. Because I am not buying anything from the company, I will be just providing them a platform to sell. Kindly advice on the same, also how will VAT work, on the service or the entire Invoice of the good sold? I know it is a mind-boggling question but it will help me a lot


1 reply
May '19


Is LeapIn could Manage a company for dropshipping

Jun '19


Thank you so much for this detailed article!

I’m just getting started on my digital nomad journey and I’m considering to become an e-resident of Estonia mainly to get access to Transferwise (I don’t have it in my country).

So I was wondering if:

a) I’d need to open up a bank account separately with Estonia.
b) If I’d need to pay any monthly fees for anything (if I want to be an e-resident + access Transferwise)

I know the questions were partly covered in the article, but I would just like to confirm and get advice.

Thank you!

1 reply
Jun '19 ▶ Prakhar

tkrunning Founder

Hi @Prakhar and welcome to the community!

a) No, you don’t need any additional bank account.
b) You need at least a legal address and contact person, which often will cost you 300-500 EUR per year. The cheapest offer I’ve seen is from Nordic Consult, which charge 125 EUR per year.

In addition you need to do accounting for the company and submit an annual report. It’s possible to do both on your own, at least if you have some accounting background, but it’s not recommended. If you only have a few transactions per year, then it might not be so expensive to outsource. If you go over the VAT threshold it gets more complicated as you’ll have to submit monthly reports.

Finally, I’m not sure if you can open a TransferWise account if you don’t qualify personally. Normally you’ll open a personal TW account, and then from there open one for your business. Business accounts are always tied to your personal account. So before going ahead and opening an Estonian company, I’d recommend that you contact TransferWise to see if you would actually be able to open an account.

1 reply
Jun '19



I am totally new to this topic, read quite a bit about the Estonian e-residency now, and have a simple question left.

I am from Austria, therefore my home residence is within the EU. I am looking for a way to live location-independent. What could be my motivation to go with the e-residency and registering a company in Estonia if I have the disadvantage of paying taxes on both countries then?

Jun '19 ▶ tkrunning


Thanks for taking the time to answer, Thomas.

Jun '19


Hello everyone,

I am a new e-resident and I’m waiting for my card to arrive. It’s a great article, LeapIn was my first choice, but since I’m opening an online shop and they don’t provide this kind of services, can you recommend me someone else? It would be great to read an article about opening Estonian company that deal with physical goods and what to do next. I’m new to all this and beside building a websites and working as a web designer, I don’t have idea how to run a company, so any advice is welcome and useful. I wish you all a nice day

1 reply
Jun '19 ▶ Amar_Pandey


Very good question, I would like to know a little bit more about that also?

Jul '19


Hi, I want to know if there is a minimum share capital requirement for opening a private LLC company in Estonia.


1 reply
Jul '19 ▶ Solomon09

tkrunning Founder

Yes, assuming you’re referring to an Estonian OÜ (private corporation), the minimum capital is €2,500, although you don’t have to pay it upfront (it can be delayed for several years).

1 reply
Jul '19 ▶ tkrunning


Several years? Are you sure?

Leapin says it’s one year.

1 reply
Jul '19 ▶ Solomon09

tkrunning Founder

Yes, it’s 10 years to be exact. See e.g. Share capital contribution – Knowledge Base

It is possible to defer the payment of share capital up to 10 years. However, when doing so, all founders of the company will be held personally liable for the deferred amount.

You also cannot pay dividends until the capital in contributed (but you can pay yourself a salary).

1 reply
Aug '19

hezom​099 Pioneer

Can anybody tell me about starting a new construction company in Estonia.I am already running a construction company in Pakistan,with successful completion of various projects.E-Residency will be helpful in this regard?

Aug '19


Starting a new construction company in Pakistan with Estonian corporation based on e-Residency card? This will be impossible. As - we do not recommend this solution, because the solution may be risky - ready bilateral agreement concerning "Permament Estabilishment". Your company can constitute PE in Pakistan when the place of business activity will be in Pakistan ( bulding, construction activities ).

Aug '19

zakariye_​Abdirahman Pioneer

I recently applied e residence program waiting to pick up my card. Thanks for sharing useful information I just want ask you. in my residence country I’m not obligated to pay any income tax. Will I need to prove that for Estonian tax officials ?

Oct '19 ▶ Rom_Shiri


Hi, did you figure out what the answer is on your question? I believe you’re referring to the (social) contributions an employer normally has for an employee, right?

I’m also really curious to know what happens with this part?..

Oct '19


Thank you for an informative article.

Quick question: If a company is paid in other value than cash (like options or shares in return for consulting services), would there be any corporate tax payable by the company at the end of its fiscal year, based on the value of the shares (the value is likely determined by a third party)?

If I understood the article correctly, you only pay corporate tax on distributed profits. Since options or shares cannot be distributed in cash per say, is it correct that the company would not pay corporate tax for "revenue" of non-cash character?

Thank you.

1 reply
Oct '19 ▶ Natalija_Str

Xcellent​Nomad Pioneer

I also want to know an answer on this question. Tia

Mar '20 ▶ Peter-r


Yes tax is charged on the value of consideration received in return for services provided, irrespective of the nature of consideration. For further reading kindly refer here

Apr '20


What if you are currently not a resident in any country?

May '20


Hi Thomas,

I hope you can help me. I am part of an Estonia company. We have been dormant last year.

The annual return is due on 30 June 2020. We have some very serious problem at the moment
and may not be able to submit the tax return by the 30 June.

I read from reliable source that a late submission penalty will probably be applied. Would
you happen to know approximately how much the penalty is? There are probably two elements.
A fixed penalty and/or then a penalty with a percentage of the due cooperation tax.

I did my best to google but only managed to find the late submission for VAT for Estonia companies which is a max of 2000 euros.

Thank you for your help.

May '20

tkrunning Founder

I’m not sure how much the penalty would be, but failure to submit the annual report could eventually lead to forced closure of the company.

Note that the annual report is not a tax return, those are submitted on a monthly basis, and only when corporate income tax is due (e.g. after distributing dividends).

Generating and submitting the annual report only takes a few minutes to do online, and for a dormant company I think you’d be able to do it yourself. Worst case you hire someone to do it for a few dozen euros.

May '20


Hi Thomas,

Thank you for your very quick response. I was under the impression that only the VAT returns
is done on a monthly basis and not the corporate tax.

We were advised that we could not submit the tax returns ourselves as we
are not Estonian citizens (or e-residents)

Thanks again.

Jun '20

aragon Pioneer

Hello Community,

I have some questions regarding Xolo, in case any one knows. Xolo don’t seem very responsive by email. Maybe they only respond to their established customers? Anyway, my questions:

  1. Their FAQ says they only accept business bank accounts with their banking partners (presumably just Wirecard, TransferWise, and LHV). How would that prevent a company from opening a business account with, for example, Revolut Business?

  2. Anyone know why the regular Leap service is limited to only one bank account? And what would prevent a company from opening another account itself anyway?

  3. Their FAQ states that a company owner can pay himself a salary when operating from outside Estonia. However it also states that an Estonian company can not employ anyone outside Estonia on a permanent basis. Do these rules not conflict at all?

Thank you in advance for any insight!

Jun '20


Hi Everyone!
New to the community but already have an established company in Estonia with the E-residency program.
There are some really useful info here in the thread!

I am now trying to find a service provider for accounting/bookkeeping.
Anyone has any good experience with any of the service providers? I got an offer from 1Office that almost made me fall off my chair.
The company is pretty new and small but growing. (not reached VAT threshold yet)
Anyone has experience with doing their own accounting/submitting annual report? Is it worth trying with limited accounting background?
Thanks in advance!

Sep '20


Hi, I’m looking to establish a company some place and a friend sent me this article Running a business in Estonia and the UK - I’m wondering if anyone has experience in the UK and Estonia. Would you recommend one over the other? Is it really that inefficient to take out a wage from an Estonian company?

21 Mar


Great article Thomas, plenty of useful information.

I’m still working in some alternatives and studying if Estonian e-residency would be beneficial on my needs. I was hoping you could shed some light after yours years using it.

I’m a permanent traveller, usually spending no more than 3 months on each country I visit performing my activities of independent consultant.

As consultant I get paid on my TransferWise account by companies in "X" countries to perform activities on another countries. So in the end I have no ties with any country.

As I live nowhere, I’m planning to maybe get an e-residency on Estonia more to have a Legal Address and use it on TransferWise, so I could use more of their tools, which I currently can’t as my registered address is on my home country that allows me only Borderless account, and perhaps use this address for everything I may need address to.

Based on your experience, would be possible and even valid, to have e-residency and legal address, to act as Freelancer for my independent consultancy? I assume I would have to open a company where I’m the only employee, and then all income I receive on my TransferWise account could be left on TransferWise, or even moved to my home country for monthly expenses, but any idea how would be Estonia taxation in this scenario?

Thanks a lot!

1 reply
25 Mar ▶ henry.clark

hanna Staff

Hi Henry,

I’ll jump in for Thomas here—thank you for your nice words!

Yes, you can have an Estonian e-residency company in order to provide consultancy service. You can still receive payments via Transferwise but you need to open their business account with your Estonian company. Many e-residency service providers have a platform with direct integration to Transferwise as well to make accounting more convenient. I recently wrote an article comparing the best e-residency service providers available. You might find it helpful when choosing your own.

Regarding taxes, usually, the best way is just to take out dividends as the owner of the company. You will have to pay 20% corporate tax, and since you are a perpetual traveler, that should be all the tax you pay.

11 May


as the owner of an e-res corporation in estonia - may I pay myself a salary, as an expense on the corporation, and then pay taxes in my tax domicile country (USA)?..wouldn’t that be a more tax-efficient way to pay oneself if the salary was minimal?..

1 reply
12 May ▶ boypablo

hanna Staff

Yes, you can pay yourself a salary—in that case no taxes will be deducted in Estonia. You will only pay the taxes you need to pay in the US.

1 reply
12 May ▶ hanna


does an e-res corporation have to pay year-end income taxes for each calendar year, not just when a dividend is paid or profits are taken by the owner?..i ask this because I’ve only heard of taxes being paid to estonia when dividends are paid…

1 reply
13 May ▶ boypablo

hanna Staff

There are no year-end income taxes. You can keep the revenue in the company, and the taxes are only payable, when you pay out dividends.

Your guide to a location-independent life

© 2015-2021 Nomadic Media Group LLC