Starting a business shouldn’t be smothered in red-tape and bureaucracy. If you’re ready to evolve your idea into a registered company, then you’re likely looking for the simplest path forward. Like millions of other entrepreneurs, finding that path can itself be a journey.
Two European countries, Austria and Estonia, offer contrasting environments for independent will-be business owners. Taxes, ease-of-operation, support and costs vary between each nation in considerable ways.
This article delves into the details of running a business in each nation. We compare taxes, setup times, costs and other essentials so you can make the most informed choice.
- 5 considerations when starting a business in a new country
- Comparing business creation in Austria and Estonia
- Opening a business online
- Cost of opening a business
- Time taken to open a business
- Comparing taxes between Austria and Estonia
- Estonian and Austrian business support availability
- Ease-of-use for opening and managing a business
5 considerations when starting a business in a new country
Over a dozen countries around the world offer an e-residency program in some form. Estonia pioneered the movement with e-Residency, establishing the program in 2014 while rising up as the world’s digital nation.
No two countries are equal among them. Before considering Austria, Estonia, or any other spot for starting your business, you should take a thorough look at the following:
- Legal: Grasp the regulations around forming your business and operating it.
- Taxes: Compare the corporate tax rates and available incentives for your business, its type and your status.
- Ease: Factor in the time, costs and tools available to you before beginning your business.
- Digital: Evaluate the quality and power of digital services available for managing your new business.
- Support: Compare the availability of local expertise, government infrastructure and services for legal and admin assistance.
Building a business in Austria and Estonia: Compared
Both Estonia and Austria seek to entice entrepreneurs with various offerings. When starting a business, and having factored in our 5 considerations, you’ll likely look towards some simple, powerful differentials.
Can I open my business online in Austria and Estonia?
Austria: Austria differs from Estonia in a major way, requiring applicants to visit the country when starting a business. Some of the steps may be completed online, but notarizing documents and opening a bank account mean an in-person visit or two.
Estonia: Estonia's e-Residency program allows one to start and manage a business entirely online. The digital ID provided by e-Residency enables remote access to all necessary services, including company formation, banking and tax filing. The digital ID is mailed to you, and an in-country visit is never required.
How quickly can I open my business in Austria and Estonia?
Austria: Starting a business in Austria typically takes several weeks. This includes registering with the commercial register, obtaining all necessary permits and fulfilling various other regulatory requirements.
Estonia: Estonia's e-Residency program allows one to establish a company within hours. The process has been designed for efficiency and to allow for a quick, easy setup. Once approved, immediate access to business services is granted. The physical e-resident card takes several weeks to arrive in the mail and it can take a couple weeks for approval as well, but digital access is instant.
What does it cost to start a business in Austria and Estonia?
Austria: The cost of starting a business varies, depending on the specific business type and scale. On average, you might expect to pay between €1000 and €2000 for registration and legal fees, but the overall entry cost sits around €7400.
Estonia: The cost to start a business through the e-Residency program is €265 for company registration. Additional service costs may include obtaining a legal address and contact person. Combined, a typical e-resident spends under €400 for a fully incorporated business from start to finish.
💡 The required share capital for Estonia is €1. In Austria, a Gmbh requires €5000 in starting share capital. Check out our e-Residency Estonia cost breakdown guide.
What’s the tax difference for my business in Austria and Estonia?
Austria: Austria has a progressive corporate tax system with a corporate tax rate of 25%. There are social security contributions and other employment-related taxes that businesses must consider before starting out. The overall tax environment is relatively high, including additional taxation at the shareholder level, but this comes with the benefits of a well-established social welfare system.
Estonia: Estonia offers a unique tax environment with a 0% corporate tax rate on *undistributed profits. This allows businesses to reinvest their profits without immediate tax liabilities. When profits are distributed as dividends, a flat tax rate of 20% applies. This system is advantageous for startups and small businesses focused on growth in early stages.
*Undistributed profits are earnings by the company that are reinvested and not taken out as salary or profit. For a full breakdown of how to pay taxes in Estonia, check out our guide!
What support do Estonia and Austria offer businesses?
Austria: Austria has a robust digital infrastructure, but the business registration process still involves significant bureaucratic procedures. However, the country offers strong support for businesses through various public and private sector initiatives.
Estonia: Estonia is renowned for having advanced digital infrastructure. The nation is, as we’ve mentioned before, a pioneer and powerhouse in digital governance. e-Residency brings this center stage, offering seamless digital services for company formation, banking and administration. Estonia also boasts a supportive ecosystem of service providers tailored to e-residents, like Xolo!
How easy is it to conduct my business in Austria and Estonia?
Austria: Austria ranks well in the global scheme for ease-of-business, particularly when it comes to regulatory quality and infrastructure. The complexity and cost of the regulatory environment can be challenging for new businesses, but is not insurmountable.
Estonia: Estonia consistently ranks high in its ease of doing business, thanks to efficient digital services and a quite favorable tax environment. The e-Residency program has significantly simplified business operations for international entrepreneurs by giving global citizens a chance to register and grab onto these advantageous systems.
Estonia’s pioneering e-Residency program is a compelling option for entrepreneurs looking to start a business in Europe. Managing your entire business online, and combining that with a flexible, growth-driven tax environment, makes it an attractive destination for digital nomads and startups.
While Austria offers a robust business environment with strong infrastructure, Estonia's digital-first approach and e-Residency program provide unmatched convenience and efficiency. For entrepreneurs seeking a modern, flexible business setup, without a high initial overhead, Estonia reigns king.
