Best countries to open a non-resident solo company: Estonia compared

Estonia has become a popular destination for freelancers and solo entrepreneurs seeking to establish their businesses in a tech-savvy, innovative and supportive environment. Since the launch of Estonia’s pioneering e-Residency scheme in 2014, many other nations have followed with their own non-resident company formation programmes.

That can be a lot of info.

So today we compare Estonian e-Residency with other countries and what they’re offering, highlighting some strengths and weaknesses of each location, and providing insights on the factors that make Estonia an ideal choice for e-Residency (non-resident) solo company formation.

This article unpicks a range of factors, including the ease of doing business, potential B2B market size, remote company incorporation for non-residents, minimum share capital, incorporation government fees, providers' costs, incorporation speed, corporate taxation, e-government services development, and the process of remote incorporation for non-residents.

Everything you’ll need to make a truly informed decision before you start rocking and rolling with your sweet new business.

Best countries to open your solo company, compared

Ease of Doing Business Remotely

Estonia ranks 16th in the World Bank's 2019 Ease of Doing Business report, outperforming Germany (24), Ireland (23), and Cyprus (57). Although Singapore (2) and the UAE (11) hold higher positions, Estonia's e-Residency programme makes it easier for non-residents to incorporate their businesses remotely, and direct access to the EU common market offers a competitive advantage over other countries.

Estonia's favorable ranking is a testament to its well-developed infrastructure and business-friendly environment. The country has invested heavily in digital solutions, providing a seamless experience for entrepreneurs to manage their companies via secure digital signatures. 

The Estonian government continually works on improving regulations and reducing bureaucracy, ensuring a smoother and more efficient experience for business owners — in fact, the Estonian e-Residency scheme itself identifies ease of doing business as one of its 4 key values (alongside trust, opportunity, and community).

Compared to Germany, which ranks 24th and requires EU residency for remote incorporation, Estonia's e-Residency program offers a more accessible solution for non-EU residents to establish their businesses, being open to people from almost anywhere in the world. This ease of doing business in Estonia makes it an attractive destination for freelancers and entrepreneurs looking for a supportive environment.

And who doesn’t love blood sausage, beer and black bread, if you’re visiting, of course.

Potential Addressable Market - Business and Consumer

With a national population of just 1.3 million people, the potential B2B market size in Estonia is relatively small (20,329) compared to Germany (72,774) and Singapore (42,217). However, Estonia's e-Residency program allows entrepreneurs to access the European market, making it an attractive option for those looking to expand their business beyond its borders.

Estonia may not have the largest local markets, but its strategic location and membership in the European Union provide significant opportunities for businesses to grow. A trip around some of Estonia’s cities, like Tartu and Tallinn, quickly showcases just how driven the people are — the business centers, markets and renovated districts are teeming with young and fresh business ideas.

Did you know? In 2021, according to a Statistics Estonia report, there were just over 127k enterprises in Estonia — about a 1:10 ratio of businesses to people — with over 500k people working in them?

You’ll find that Estonia's tech-savvy workforce, affordable office spaces (which you can immediately skip paying for if you opt to work from home), and well-developed startup ecosystem offer excellent resources for solopreneurs, entrepreneurs and freelancers to build and scale their businesses. The country's reputation as a tech and startup hub continually attracts talent and investment, further strengthening its position as a viable option for e-Residents.

E-Government Services and Digital Infrastructure

Estonia has always scored high in e-government services development, as underpinned by the UN’s 2022 digital services ranking (placing #1 within the EU.) The country's e-Residency programme and its advanced e-government services provide entrepreneurs with a streamlined, user-friendly experience for managing their businesses remotely.

Estonia's commitment to digital governance and innovation has made it a leader in the provision of e-government services. The country's robust digital infrastructure allows business owners to access essential services, such as online banking, digital signatures, and virtual office solutions, from anywhere in the world. 

This level of convenience and accessibility sets Estonia apart from other countries, making it an attractive destination for non-resident entrepreneurs. One example of this is the fact that government digital information is provided in full in both Russian and English, as well as Estonian, ensuring that international users are not left reliant on in-browser translation tools - which can be unreliable for statutory and legal documentation.

Compared to other countries like Germany and Ireland, which have middle-ranking e-government services, Estonia's very high ranking demonstrates its dedication to leveraging technology for the benefit of its citizens and businesses, and soon-to-be digital e-Residents!. 

Estonia's developed digital infrastructure and favorable business environment also makes cross-border operations simple, so it’s easy for entrepreneurs to target clients across Europe. Indeed, it has incubated many world-leading brands on the fintech and neobank stage. The country’s outstanding digital infrastructure creates an exceptionally stable and consistent environment for content delivery and streaming.

Simply put, Estonia’s advanced digital solutions minimize hassle in all the processes of starting, managing and scaling a business, providing a more efficient and enjoyable experience for solos and entrepreneurs.

Meaning you get to focus more on the work you do best.

Speed of Incorporation

Estonia offers a super-fast incorporation process, with Xolo’s managed service typically offering formation on a same day or next day basis. And while that’s pretty darn fast, the record for launching is actually 15 minutes, for entrepreneurs in a big hurry (we’re excited to see it get beaten again!) 

It is fair to note that this kind of turnaround speed is only available to current holders of Estonian e-Residency IDs, and for new applicants this process will take several weeks to complete. Your application has to be vetted and approved by the Estonian Police Border Guard, and your digital identity kit produced and shipped to your pick-up point of choice. There are now more than 50 global pick-up points to choose from worldwide, with more being registered every year.

Singapore is quicker than most, with an incorporation time of up to three days, however you will also need to appoint a Singapore-resident director, making it a less attractive and flexible option for solopreneurs in general. Both countries' incorporation speeds surpass that of Germany, Ireland, Cyprus, and the UAE, making them more attractive options for entrepreneurs seeking quick business registration. 

So much depends on the intrinsic digital infrastructure of the nation in question, or in practical terms, how much literal paperwork is involved! The more digital signatures and verified credentials are embedded in national governance, the less will depend on things being printed, copied, stamped, signed, couriered and so on. 

Did you know? Estonian citizens and residents do nearly every interaction with their unique digital signatures, from instant bank transfers to paying taxes and voting in elections.. 

The rapid incorporation process in Estonia enables entrepreneurs to hit the ground running, allowing them to focus on their business operations without waiting for lengthy registration procedures. That’s pretty nifty, considering that over 80% of German companies still use fax machines .

Estonia’s commitment to reducing bureaucracy, streamlining incorporation procedures, and e-Residency truly set it apart from other countries. At Xolo, we provide a business launching package that handles all of the e-Residency procedures for you, so you can focus on your core business from the beginning. 

This speedy and hassle-free experience is a fantastic way to generate income more quickly. 

Business Incorporation Procedures for Non-Residents

Estonia’s e-Residency program has provided an equally streamlined and straightforward process of remote incorporation for non-residents. This structure was designed for the specific objective of giving foreigners direct and secure access to the unique digital infrastructure of Estonia.

Did you know? Since the launch of the programme in 2014 its success has attracted global notice, and at least 8 other countries have launched e-Residency programmes of their own since, from the vast nation of Brazil to tiny Liberland.

Estonia has deliberately streamlined and refined its procedure over the course of onboarding more than 100,000 digital citizens, while at the same time ensuring the robust vetting procedures of the Estonian Police and Border Guard are not compromised.

However, the actions involved (from obtaining an e-Residency card to company formation)) can all be carried out without needing to visit Estonia. In comparison, other countries typically have more complex incorporation processes for non-residents. 

In Germany, entrepreneurs must prepare and notarize Articles of Association, open a bank account and transfer share capital, and undergo commercial and business registration by an incorporation provider, and that’s before depositing the hefty €25,000 in share capital. Singapore requires approval of the company name, finding a local director, and submitting documents to the Accounting and Corporate Regulatory Authority (ACRA).

Estonia's simplified incorporation process for non-residents eliminates many of the barriers faced by entrepreneurs in other countries, making it a particularly appealing option for solopreneurs looking to establish their businesses remotely, without scaling and hiring local offices and representatives. Independent operators may also grow their business from the single shareholder OÜ to a larger corporation when, and if, ready.

Estonian e-Residency is a popular pathway for good reason, allowing solopreneurs to skip costly and cumbersome procedures and more easily access the benefits of being incorporated instead of freelancing — limited liability anyone?

Share Capital Commitment

Prior to February 2023, Estonia’s requirement here was higher than that of Cyprus (€1), Singapore (€1), and Ireland (€100), as it was set for many years at €2,500. This investment could be deferred, but the business did not have the full benefits of incorporation until that point.

Earlier this year Estonia’s Commercial Code was modified, and the requirement is now for the founders, and then shareholders, to assess the minimum amount of share capital necessary to set up and run the business. As a great many e-Resident companies are essentially fully digital in nature without fixed assets and infrastructure, the minimum nominal value (face value) of a share at one euro cent according to § 148 (1) of the Code is perfectly acceptable, for a single founder and shareholder, and this is the default amount displayed in the e-Business Register.

This allows business owners to invest their resources into growing their companies and generating revenue before fulfilling the share capital requirement — supporting entrepreneurs with the freedom to manage their finances without excessive financial constraint, and to take risks in innovative industries without the threat of personal loss.

Meanwhile, other countries like Germany demand a much higher share capital (€25,000), and the UAE requires approximately €12,500 — these investments have to be made before the entrepreneur can grow their company and generate revenue.

Corporate Taxation

Before any comparative discussion about tax, it is first important to clarify two things:

1. Having an Estonian e-Resident business does not confer personal tax residency, nor does it release you from any other personal tax obligations you may have, based on where you live or what passport you hold. Unless you physically relocate your permanent residence, e-Residency means that your business is a resident in Estonia, but not you as a person.
2. Estonia is definitely not a tax haven. If you are trying to evade or avoid paying your taxes, Estonia — with its unprecedented digital transparency — is the last place you want to be doing business.

With those two disclaimers duly made (phew!), let’s talk about why Estonian corporate taxation is competitive: It has a 22% tax rate on profit distribution only, and 0% tax on reinvested dividends. 

Estonia is committed to innovation,growth, and the highest levels of fiscal policy.Of course Estonia supports taking profits from your business - but if you’re growing your business as well, there’s extra incentive to do so. 

This unique taxation system encourages business growth by allowing companies to reinvest their profits tax-free. That means e-Resident entrepreneurs can allocate more resources to expanding their businesses, hiring talent, and investing in research and development. The bigger the pie, the larger the slice.

It’s important to bear all these factors in mind when it comes to your longer range business planning. UAE and Singapore boast lower corporate tax rates, and are recognized as global tax havens, making them especially attractive to certain industries and markets, if access to EU markets and opportunities are not required. Estonia's business taxation system is more favorable than those of Germany, Ireland, and Cyprus, as well as many other EU nations, that also require a change of residency to access. Estonia also imposes a 22% VAT rate (with reduced rates of 5% and 9%), comparable to rates in other EU countries.

The overall competitive corporate taxation in Estonia, combined with its EU membership and access to the European market, makes it an attractive destination for non-resident entrepreneurs looking to optimize their tax situation. 

Incorporation Government Fee and Providers' Costs

Estonia has a reasonable government fee (€290) and low providers' incorporation costs (€80). In contrast, Cyprus and the UAE have higher fees and costs, while Germany, Ireland, and Singapore have comparatively lower government fees but higher providers' costs.

These affordable costs in Estonia make it an attractive option for any freelancer or solopreneur, especially those trying not to break the bank or put pre-revenue investments at risk. These competitive costs allow entrepreneurs to allocate more resources to other aspects of their business, such as marketing, product development, and hiring talent.

It’s not surprising then that Estonia stands out to global freelancers and solopreneurs looking to incorporate their businesses. The country's commitment to e-government services development and its innovative e-Residency program continue to provide entrepreneurs with a seamless experience for managing their companies remotely.

And while Estonia may not be the best choice for those seeking the largest B2B market or the lowest corporate tax rates, its unique combination of benefits makes it a strong contender for establishing businesses in a friendly and digitally advanced environment.

Ukrainian nationals can access special support to bring their businesses to Estonia. 

Aspiring to own your e-Residency business? Many entrepreneurs are using Xolo’s Leap today to launch their business from anywhere on the planet.

About Maya

Maya Middlemiss is a freelance journalist and author, excited about the future of work, business, money, and technology. She operates her e-resident business through Xolo Leap, so that she can work frictionlessly with brands and publications all over the world, and she is the host of the Future is Freelance podcast. Exploring the social impact of technology on our changing world, and bringing those stories to life in an accessible and inclusive way, is her passion — because all of this is far too exciting to leave it to the geeks. Maya is a 'digital slowmad', originally from London, presently living with her family in Eastern Spain.