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Why the best tax residency for digital nomads is Estonia.

Optimize your taxes as a digital nomad or expat and don't fall into the Malta Trap.

Estonia is better than Malta for nomads.

I have been living as a nomad for more than four years now, and I never want to miss that freedom again.

I am spending Christmas on Koh Tao, then jumping to Japan for the cherry blossom season and spending the summer in a cabin in south Sweden.

And all this while working full-time and running a company.

I have spent countless hours and a ton of money to find the best country as a digital nomad.

There are so many countries that seem attractive, but which one is the best?

The winner is, by far, Estonia.

I could have saved 1.8 million euros if I had incorporated my first company in Estonia instead of Germany.

Every knowledge worker can achieve this freedom.

And everything evolves around your tax residency.

I explained before why you need a tax residence.

Today, I share with you my top 5 reasons for choosing Estonia.

And why the highly recommended Malta is such a bad choice.

First, we need to talk about requirements.

A great country for digital nomads needs to tick a few boxes.

Exceptional tax system that supports business owners.
Low cost and overhead of running a business.
The government has an international mindset.
And no exit tax for business owners.

One extra requirement for me is that the country is inside the EU.

This has several reasons, like access to amenities and international status.

With that out of the way here is why Estonia is the clear winner in this race.

5 Reasons To Choose Estonia As Digital Nomad

1. Fair Tax System

I have never seen a fairer tax system, and I looked into 71 countries.

Taxation is a 20% flat fee income tax for individuals and companies.

And taxes are only paid when you enrich yourself.

The company owns every Euro that is flowing in.

There is a 0% tax on everything remaining inside the company.

In Germany, you pay 30% for everything that remains in your company.

That is a 30% runway cut, or your growth stunted by 30% every year.

I regret not incorporating my first company in Estonia for the tax system alone.

It could have saved us 1.5 million Euros in taxes.

That is over a year of runway for a team of 20 the German government took from us.

It sounds utterly unbelievable if I speak it out loud.

On another note, the system is simple and understandable.

I don't need a degree in tax law to understand how it works.

Which is quite the opposite in countries like Germany, the UK, and Malta.

We paid over 100k EUR annually for legal and tax consultation in Germany.

In Estonia, I would be surprised if you paid 10k EUR per year just because support is not necessary.

2. E-Residency For Remote Control

I got my Estonian E-Residency right after I realized I had to control my 5Ws in Life.

The E-Residency program allows you to open a business and bank accounts as if you lived here.

You don't even need to come to Estonia once.

Complete remote control over your business from everywhere in the world.

And it costs only 120 EUR to join the program.

If you open a company as an E-Resident in Estonia, everything is taxed in Estonia, no matter where you live.

Germany, for comparison, taxes a company according to where the directors live.

When you run a company from abroad in Estonia, you need a local contact person in Estonia for your company.

You can get this contact person in a bundle with a company address for 500 EUR per year.

In Malta, you need a resident director to run your company for you. 🤮

3. Cost of Operations Are Marginal

I calculate in Germany 5-15k EUR per year in operational costs for a non-operative company.

This is as cheap as it gets, and it includes legal aid, tax accounting, bookkeeping, and government fees.

In Estonia, I calculate 1000 EUR for that, including the 265 EUR one-time incorporation fee to open an LLC.

Speaking about LLC incorporation, opening a company in Estonia took me 3 hours and only 265 EUR.

This is what the process looks like:

Go to their website with your ID number and click Register a new company.
Fill in the necessary information (15 min)
Wait for the email telling you it is processed (2h 45min).

Do you know how much it cost me to only talk to a lawyer to get information on how to open an LLC in Germany?

And that talk is only the start of the 2-6 month long company incorporation process.

It is so easy to do official stuff in Estonia because everything is digital.

You get your ID number, log in to the online portal, and handle everything from there.

They even provide great help articles and service registers to find professional help.

As a last point often overlooked, everything can be done in English.

I didn't need a translator or professional help for anything.

In Malta, most contracts and documents you receive are in Maltese.

In Germany, everything is in German.

4. Tallinn Is The European Silicon Valley

When I first came here, I was completely blown away.

On the outside, everything looks old and run down.

But if you look behind the facade, everything is packed with high-tech.

Bolt for example, originates from Tallinn.

I can order my groceries via a delivery robot from the supermarket.

In Germany, we have Deutsche Bahn for transportation.

And supermarkets close on Sundays for religious reasons.

I'm getting depressed just thinking about it.

As I said above, the Government runs 100% digital.

I can do everything online in minutes, any time of the day.

Health care, residency, retirement, taxes, contract signing, and corporate management.

No months until the right authority processes a simple request.
No letters taking weeks to arrive.
No costs for things that shouldn't exist anymore.

I say this by now every week, but let machines do what they do best.

Humans only introduce errors into governmental systems.

5. The Government Is On Your Side

I thought I would never say this about a government.

But the Estonian government is doing a great job.

They're cool and work to improve the lives of their people, including digital nomads.

The first example of this is their online system, of course.

But also, their residency laws and mindset are forward-thinking and open to change.

The E-residency program is the best example of this.

Also, a few years ago, the Estonian government tried to start their own cryptocurrency.

Which was shut down by the EU for fear of weakening the Euro.

Still, crypto is widely spread in Estonia and is not seen as something only criminals use.

I'm not joking. This is a sentence one of my lawyers handling a crypto matter for us once said to me. 🤦🏼‍♂️

The government checks on you in Estonia to see if they can support you somehow.

The default in Germany is that you must prove that you didn't do anything wrong.

This is the difference in mindset we need to change this world.

Malta Is Only For The Super-Rich

I talked enough about Estonia.

Let's talk about why not Malta.

Why is every business consultant recommending Malta without even knowing about Estonia?

While working with KPMG, EY, and Delloite on relocating my companies, I found two reasons for this.

They don't know about digital nomads.
They focus on the super-rich.

I talked to many consultants about this topic, but none ever considered location-independence.

They usually have a standard procedure that they recommend to everyone.

Usually, the List goes like this: Ireland, Malta, Switzerland, Luxembourg, …

Each country on the list needs a director to live there to run the company.

This recommendation makes sense for boards of big corporations.

They aim to optimize taxation and pay a director to live in that country.

It doesn't work for nomads running small businesses.

This brings me to the second point: Malta is only for the super-rich.

You benefit only from your company in Malta if it makes tens of millions in net profits yearly.

Before that, the operational costs outweigh the tax savings.

I could speak for hours and hours about this topic.

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DISCLAIMER

This article is no financial or legal advice.

Please do your own research and talk to lawyers.

I'm only speaking from my experiences living as a digital nomad and setting up my own international company structures.

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5 Reasons Why Estonia Is The Best Country For Digital Nomads Inside The EU