Entrepreneurial consultations: company formation, an address and contact person services, accounting, VAT number, etc. specifically in Estonia, in EU.

FAQ Tag: E-residency

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I have an Estonian company, but my customers are outside of Estonia. How about taxis?

E-residency in Estonia does not automatically mean tax residence. It only provides the opportunity to use the e-services that the Estonian state offers. Among them is the establishment of the company. If your turnover is less than EUR 40,000 per the calendar year, you don’t need to add VAT to your invoices. If the turnover is generated outside Estonia, you do not have to add VAT to your invoices if you exceed this amount. If the employees do not work in Estonia, the labour tax according to Estonian law does not have to be taken into account.

 

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E-resident tax status?

An e-resident is a non-resident according to Estonian tax legislation. Only income derived in Estonia is taxed in Estonia.

If there is no activity or income derived from Estonia, taxes should be paid in the country where the service is provided or activity is done or income is derived from, the pure e-residency alone does not influence foreign or Estonian taxation.

An Estonian company established by an e-resident is an Estonian tax resident. The Estonian e-residency does not automatically exempt from taxation elsewhere.

Tax residency is the place where you actually have to pay the taxes. For example, if you are an Estonian citizen, but have lived more than 183 days per year in Finland, then you become a tax resident in Finland and have to pay the taxes there.

Generally, a company’s tax residency is in the country where the company is established. So, if the company is based in Estonia, then by law the tax residency is in Estonia. There are exceptions to this rule that will change the tax residency of your company, which we will discuss later in this article.

When talking about tax residency or even e-Residency, it is essential to emphasize that neither is an actual residency. So, if you receive your e-Residency card, then this doesn’t make you a resident nor a tax resident of Estonia – it is a common false perception. E-Residency is not related to a visa or a resident permit and doesn’t enable you to travel to Estonia. An e-Residency card is a digital identity that allows you to run a business in Estonia from a distance and fully online.

NB!

  • e-Residency will not change your personal tax residency
  • A company registered in Estonia is automatically a tax resident in Estonia
  • Your personal residency may trigger tax residency for your company in your place of residence as well
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E-residency and Estonian taxis?

As per Estonian tax legislation, an e-resident is considered a non-resident for tax purposes.

The only income that is sourced within Estonia is subject to taxation in Estonia. In cases where there is no activity or income sourced from Estonia, taxes must be paid in the jurisdiction where the service is provided, activity is conducted or income is derived from. It is important to note that e-residency alone does not have any bearing on taxation in Estonia or any other jurisdiction.

Furthermore, e-residency does not automatically provide an exemption from taxation in other jurisdictions. It should also be noted that an Estonian company established by an e-resident is deemed an Estonian tax resident.

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