This post was first published on Medium.com. To avoid duplicate content (Google does not like that), I have added a link to a full article below the post.
We’ve compiled some of the most popular questions in the e-residency Facebook community. The goal of this post is to simplify the life of the e-residents by answering to the FAQs, so the new community members would have an easier way to navigate through the questions they probably have. Bear in mind, answers given to these questions are general, and your specific situation might require more information for the proper answer.
Additionally, there are certain questions that can not be answered in this post, and these are usually related to the country where the e-resident is from. For example, if someone is from Spain, and asks how the taxes should be reported in Spain, then I am not addressing questions like these here, as they are country-specific and describing the procedures of each country is too broad and exhaustive. It would be valuable, though, but the community is more than helpful to give an hand on such occasions. Also, if we have Spanish/German/Italian/Russian/Turkish etc e-residents that have gone through these processes and are willing to contribute to this article, I would absolutely be happy to include the information.
So, let’s dig in.
What are the costs of the e-residency card and opening the company?
The cost of the e-residency card is 100€ — this is the state fee that has to be paid when you submit your application. To open the company, you need to pay the state fee of 190€ — this is the same amount everybody pays in Estonia for establishing the company. The minimum share capital contribution is 2500€, but you do not have to pay it in when you start. Instead, you can choose the time-frame when you’ll pay it, for example, 3 years, 4 years, 5 years, or, something else. I really don’t know whether there will be problems if you actually won’t pay it in during the time you said you will. I haven’t experienced any problems nor I know anyone that has.
One thing you will need to take into account — every company needs an address. Virtual office, if you will. So you need to get in touch with some service provider before establishing the company. The prices are usually around few hundred euros per year. The more prominent address can be more expensive, though I am not sure what can be considered as prominent here in Estonia and whether it makes any difference. It might — we always say to our clients that address in a known brand like WTC gives more credibility.
Do make sure what additional fees apply. If you pay very little, then the digitalization of the mail and forwarding costs might be high. The service provider has a low entry price but will ask higher fees later. That’s pretty common. Avoid that, if you can. From the 2018, you’ll also need a local contact person. It can be a legal entity, i.e, the service provider of the virtual office or the accounting company. Just make sure they offer the service as it will become mandatory.
How long does it take to get your e-residency card?
They say it’s one month. I think it was 2 weeks when the program started, but with the rising popularity, the verification process takes more time due to the big demand. As much as I’ve understood from the e-residents, they sometimes wait 6 weeks and maybe even more. I guess it varies per case. if you don’t need it by tomorrow, then a week or two additional waiting time shouldn’t be the biggest problem. If it’s already 3 months you’re waiting, then better get in touch and ask what’s the status of your application.
How long does it take to register your company? How to do it?
Once you have the e-residency card, you have downloaded the software and everything is set and ready, you can start the process by going to the rik.ee web address. The time it takes depends on you, really. If it’s your first time, it can take up to 2–3 hours, as you might want to read everything that is written and you’re kind of testing the system. However, the articles of association and the constitute of the company is standardized — you can customize some parts, but you don’t have to. Hence, it can be done really fast — for example, I’ve established many, many companies and I know already what’s there. So I do it in 20 minutes.
The second part of the question — how to do it, is something that’s easier to show. I have done instructional videos for that, so if you’re interested in getting them, send me an e-mail to email@example.com — and I will send you a link to the videos.
This depends first and foremost on your business. How big is your volume, do you have employees, what kind of business do you do and whether you need more than basic accounting. Different service providers have different pricing structures. Most common ones in Estonia are either entry based or hourly based pricing structures, while fixed pricing is less common. However, it’s a definite trend of the accounting industry in Estonia. I would say it’s difficult to get pricing below 50€/month if you actually do some business. If you don’t do anything, then yes, everything is possible, as you probably won’t need to submit VAT declarations monthly. Be wary of the” hard to believe” cheap prices. It won’t do your business any good.
When it comes to choosing your accountant, there are obvious things to look for. For example, it’s easier if he or she speaks English, right? It’s also important that the accountant is capable of giving a sound tax advice, and, has the capacity to understand the business you’re in. Why? Because it gives the extra dimension for the accountant to generate useful reports based on your numbers. For example, which clients are the most profitable, what are the biggest expense categories and how these expenses correlate with the revenue, and a lot more. There are many things that can be measured, and should be measured, in the business.
In conclusion, it depends on your business and what you need. The more precise description of your business you can give to the accountant, the more realistic offer you will get.
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