Why to start an e-Business?


  • Hello there,

    I have spent good part of today trying to understand if and why I should set up a business in Estonia.

    There is a lot of info around but right because it is a lot, it is also difficult to find the right answer.

    I am an Italian citizen living in Finland since 2005 (10+yrs) and I also have the Estonian e-Residency.

    Now the main question I have is: why should I open a business in Estonia as an e-Resident?

    Case 1) - Freelancer - As a freelancer at the moment I don't see a lot of benefits (I would probably never make any profit and I will anyway pay income taxes in my country of residence). Finland has quite modern banking system, I guess very similar to Estonia and I can anyway do most of what I have to do online (taxes, payments, establishing a business, etc...). (*) And I am an European resident anyway already.

    Case 2) - Startup Business - If I had to start a company which would (one day?) make a profit maybe there might be a benefit in reinvesting company's profits inside the company itself but I can postpone that decision to later.

    I don't see any other benefits or reasons why I should be more inclined to start a business in Estonia rather than Finland right now (as long as I remain a Finnish resident).

    Am I missing something? Is there anything which I have misunderstood? Anyone can help?

    So why would I want to start a freelancer or a real business in Estonia as a Finnish e-Resident? This is a fundamental question that e-Residents program (and we ourselves) need to answer otherwise all the hype will turn into no real change (and of course I am all for change ;) ).

    Thanks
    Stefano

    Ps. this compose interface is terrible...

    (*) According to the Tax Treaty double taxation will be avoided http://vanaweb.emta.ee/?id=1776


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  • @Stefano-Mosconi said:

    Want to start a freelancer or a real business in Estonia as a Finnish e-Resident? This is a fundamental question that e-Residents program (and we ourselves) need to answer otherwise all the hype will turn into no real change (and of course I am all for change ).

    Thanks
    Stefano

    Ps. this compose interface is terrible...

    (*) According to the Tax Treaty double taxation will be avo

    Great question! I didn't quite understand if you do have a company in Finland or not? I would also like to hear more from someone who has a company in both countries perhaps. My personal experience with Finnish business bank account only (not a company) was pretty bad though. First of all I had to pay ~20€ monthly fee for an Internet bank service?? (compared to 0€ in Estonia), then I also had to pay a fee for every transaction, both incoming and outgoing (compared to 0€ in LHV bank and nearly 0€ in most other Estonian banks). Then the Internet bank itself was horrible (although it was the same bank that we have in Estonia - Swedbank. It comes out that these kind of Internet banks are still different in different countries even if it is the same bank).
    Opening the Finnish bank account as well as closing it (couldn't tolerate it long) were both long an annoying processes with some decant fees again (compared to Estonian 0€).

    Ps. Indeed, the compose interface is pretty bad...

    Erik Ehasoo
    Skype / twitter: erikehasoo
    www.rubiksdigital.com



  • Thank you for your proactive and direct topic. I’m Kaspar Korjus, running this programme. Very valid questions and do let us know where you have information overload and need more direct answers.

    e-Residency has evolved through time and now we see three main products of it. Let’s call them Personal, Business, Service Providers. Here is a draft 1pager about it - https://drive.google.com/file/d/0B0K0xbKWxszjWUdIckZIMC1NclE/view?usp=sharing .

    So, when you are speaking about product two – Business – then the main value has been to establish and run location independent business. One thing is that Estonian business environment is rather hassle free. Second thing is that quite often you can still have some business activities in Estonia and can be part of the tax system. Third thing is that through digital signature you don’t need to physically be in Finland, Estonia or even in the EU and you can still communicate with the government. Fourth thing is that you can access all the business services relevant to you which only e-Residency card will give you (e.g. at https://www.funderbeam.com/ you can do paper free investments or at https://stampery.com/ you can verify your IP on blockchain or.. at https://eresnetwork.eu/ you have access to extra functionalities and contacts).

    True, now there are not so many but more services but the examples like Nasdaq (http://www.nasdaq.com/press-release/nasdaqs-blockchain-technology-to-transform-the-republic-of-estonias-eresidency-shareholder-20160212-00058) indicate that there are a lot more services coming along.
    And of course when you are from outside the EU then the main benefit is that you can access EU bank account and a payment provider, such as Braintree, and can start doing internet business which in many cases you cannot do today.

    Perhaps you find use cases from product 3 also? What is your business?



  • @Erik-Ehasoo This is going to be a new business separate from the ones I have. I use Nordea (which I believe is also available in Estonia) and even though it's not breezing new it still has a decent interface.

    As a private person I don't pay nothing for it but I need to check what will be the situation as a business. Will let you know



  • @Kaspar-Korjus said:

    So, when you are speaking about product two – Business – then the main value has been to establish and run location independent business. One thing is that Estonian business environment is rather hassle free.

    Thanks Kaspar,

    Always welcome when there is no hassle :)

    Second thing is that quite often you can still have some business activities in Estonia and can be part of the tax system.

    What does this number 2 mean exactly? That I can choose where to pay taxes, Estonia or somewhere else?

    Third thing is that through digital signature you don’t need to physically be in Finland, Estonia or even in the EU and you can still communicate with the government.

    That's good but why exactly would I need to communicate with the government once the company is setup? Filing taxes?

    Another thing would be if I can sign any contract (not just with the government) even when the other party does not have a digital signature. That would be a great advantage.

    Fourth thing is that you can access all the business services relevant to you which only e-Residency card will give you (e.g. at https://www.funderbeam.com/ you can do paper free investments or at https://stampery.com/ you can verify your IP on blockchain or.. at https://eresnetwork.eu/ you have access to extra functionalities and contacts).

    True, now there are not so many but more services but the examples like Nasdaq (http://www.nasdaq.com/press-release/nasdaqs-blockchain-technology-to-transform-the-republic-of-estonias-eresidency-shareholder-20160212-00058) indicate that there are a lot more services coming along.

    :) I think this still has to see a real solid use case, I understand the potential but as we are at the beginning this is quite limited benefit.

    And of course when you are from outside the EU then the main benefit is that you can access EU bank account and a payment provider, such as Braintree, and can start doing internet business which in many cases you cannot do today.

    Good but not applicable to my case.

    Perhaps you find use cases from product 3 also? What is your business?

    If the paper would say explicitly what a KYC is then it would be more comprehensible :D Anyway why would I want to use Estonian KYC instead of for instance Google, FB or Twitter in this case?

    I am still exploring at the moment but the possibilities are a freelancing business or another likely one an online service/tool.

    Thanks
    Cheers



  • I am hopeful that all this good discussion may be aided by a chart which I have recently presented to our Anguilla government. http://www.anguilla-counts.ai/Res-chart.pdf

    The issues can be complex but they must be resolved if you realize that virtually all business will become "international" and much of it will be "digital".

    Next, you must carefully define how your product or service is monetized, the nature of the income, where it is earned, and the separation between the corporate and personal entities.

    As a 35 year veteran of "no global taxes" ... I would be happy to discuss my chart or my Web sites. Cheers, Lyn



  • Stefano, answering your questions.

    “What does this number 2 mean exactly? That I can choose where to pay taxes, Estonia or somewhere else?”

    • You can choose how you are going to run the business – where you employ stuff, where is accountancy, sales, marketing etc taking place. According to this you can say you’re your business activity is based more in Estonia than in Finland and you are paying taxes in Estonia.

    “That's good but why exactly would I need to communicate with the government once the company is setup? Filing taxes?”

    • Every company has continues communication with the government. Besides digitally signing tax declarations, once you need your VAT number, you can do that through digital signature, then you need to declare annual report, then you need some licence etc Digital signature enables that location independence.

    “Another thing would be if I can sign any contract (not just with the government) even when the other party does not have a digital signature. That would be a great advantage.”

    • From this Summer EU directive called eIDAS will be enforced in a way which says that all the member states who have any kind of digital signature, needs to start accepting other member states’ digital signatures. This means that you can also use this when you communicate with other governments.
    • And of course, when you have Estonian partners, clients, or whatever.. bank accounts… then you can use e-Residency digital signature and I guarantee that it is OK for them.

    “Anyway why would I want to use Estonian KYC instead of for instance Google, FB or Twitter in this case?”

    • Because Estonian e-Residency KYC is the only government one which is available to every world citizen. You can build your credit card company, or online payment service and tell to a person from Egypt that if he wants to use your service then he becomes e-Estonian and then he can use it. Because we have done facce2face check, taken biometrics, passport etc and guarantee that you are you who you claim to be. Do you understand how big this potential is? It means that you don’t need to go to every specific country to apply with local regulations but everybody can come to you and you can scale from day 1 internationally.
    • Or if you offer any service on top of blockchain then you can add e-Residency and it makes the service more legit. For example, the case of stampery.com
    • Etc.

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