The 6 Best Countries to Set Up a Company for Your Online Business

Last Updated on 07/02/2024 by Edy Ragnoli

Do you want to incorporate a PLC in Singapore as a foreigner? Is it better to set up a company in Dubai, Ireland, or should you choose another country? Let's discover where to set up a company for your online business.

Whether you are a blogger, freelancer, digital nomad, online entrepreneur, e-commerce website owner or a web agency, learn the key factors to consider when choosing the company type and incorporation country. You will discover the absolute cheapest place to open your business abroad.

Disclaimer: I'm not a financial, taxation or legal professional. I'm a self-taught entrepreneur who likes sharing lessons learned. Given the complexity of the topic, this article may contain some inaccuracies regarding the laws and taxation of the countries mentioned. Always consult a professional before making your choice.

Working online allows you to do business where and when you want. You can live anywhere and move continuously, following your needs and desires. But when you start an online business, you must choose carefully the type of business entity and the country of incorporation. That's why I created this guide.

There are countries with corporate income tax rates above 30%, such as France and Colombia. However, other locations offer a more convenient and lower tax rate. And with the correct business setup, you can reduce the taxation rate to zero.

So, making the right decision can give you significant advantages with taxes, expenses, potential revenue, and business management abroad.

In this article, you'll discover the best countries to incorporate your company, how to choose the right location for founders and startups and the top jurisdiction to set up an online business.

This guide isn't about not paying taxes. This article explains where and how to set up your company for maximum income, minimum costs, and better business success.

For this purpose, I examined the best entity types and countries where you can:

  • Pay below 21% in taxes.
  • Have a zero per cent tax rate.
  • Pay zero corporate tax thanks to a pass-through entity (taxes are paid at the shareholder's level).

Best Countries to Set Up a Company – an Overview

There's no perfect country for incorporating a company, but diverse solutions and locations for different business needs. So, there are several variables you must consider to understand what's the best country to set up a company.

Top five factors for choosing the best startup countries

  1. Type of product/service you sell.
  2. Country of your potential clients.
  3. The available company capital.
  4. The reputation of the incorporation country.
  5. Your country of residence.

In the next chapter, I will dig deeper into it and explain all the ten variables that will help you make the best possible choice.

Groups of Countries to Set Up a Company

In the world, you can find many countries that offer competitive corporate tax rates. We can divide them into four main groups.

1. Offshore countries with no income tax rate (tax havens or offshore jurisdictions). They offer attractive yet abusive tax practices. For this reason, they are considered as non-cooperative jurisdictions for tax purposes. They are blacklisted countries and can vary depending on the organisation. For instance, the EU list of non-cooperative countries is different than the FATF blacklist and greylist.

Notoriously, blacklisted countries have a poor reputation. Generally, companies incorporated there are “inactive” because they use them only for money hiding or laundering. Some of the most popular tax havens are Panama, Seychelles, and the US Virgin Islands. For the record, last October 2020, the EU Council has removed the Cayman Islands from its tax “blacklist”.

2. Whitelisted countries with low tax rates. Unlike tax havens, these countries have a good reputation and infrastructure yet offer attractive tax conditions. Some examples are Malta (5%), Gibraltar (10%), Cyprus (12.5%), Latvia (15%), The United Kingdom (19%), and Estonia (20%).

3. Countries with a preferential tax regime. These are locations such as Ireland (12.5%), the Netherlands (19% up), and Luxembourg (15%), where companies can benefit from low tax rates. As an example, look at the big corporations (mainly holdings). How many of them are incorporated there? The list is quite long.

4. Countries which are a mix of the groups above. They present some of the characteristics already mentioned but make an exception. Let's see three of them and why they are different.

  • Delaware, USA (0% tax rate). It's not blacklisted. It's more suited for big companies or businesses not selling to the US (otherwise, you'll pay taxes on each country where you sell your products or services).
  • Florida (0% tax rate). It's not considered an offshore country.
  • Singapore (8.5% to 17% tax rate). It's neither on the blacklist nor on the ‘grey list'. It has a positive international reputation. I explain why in Chapter 3.

How to Choose the Incorporation Country

Legal advice on the best countries to start a business online
Legal advice to open a company

What does your business need to be successful? Are you sure a zero per cent tax rate is enough or necessary? Do you prefer $2,000 revenue with 0% tax or $2 million with 40% tax, which means a $1.2 million profit?

If I made this question to all 8 billion people on Earth (at the time of writing), I'm sure they would all choose the second option.

What does it mean? It means a country with a zero per cent tax rate is not necessarily the best choice if it allows you to earn just $2,000 while you could get 600 times more elsewhere. You must consider all the other factors that can help you get fast and accessible payment processing, reliable banks, a smoother business, and more clients.

Consequently, you must consider the business entity type, country regulations, and the following ten variables.

For example, a UK LTD company differs from a UK Limited Partnership. In the same way, a PTY LTD company in Australia can get different benefits compared to a PTE LTD company in Singapore (keep reading because later, you'll discover the benefits of incorporating a limited company in Singapore).


Banking is essential when you start a business. Easy, cheap, and safe banking makes your business operations faster and more profitable.

Imagine a country that has a low tax rate but inadequate banking. Without a bank account or with problems in receiving payments, your company will become fruitless.

But even if banking is good, country local procedures and habits might not be ideal for your business. Let's make just two examples to clarify what I mean: the USA and Canada.

In the US, cheques are still very popular. Does your business need it? In Canada, instead, you must be located there and walk into a branch each time you need to make a simple wire transfer. Can you do that also while working online, sitting on the beach in Thailand?

So, what should you look for to have good banking for your online business? Wherever you are located, verify that your bank account offers at least the following things.

  • Internet banking for local and wire transfers of a minimum of $10,000.
  • A corporate debit/credit card for your business spending.
  • Easy import/export feature to a known bookkeeping system.
  • Ease of receiving funds/payments for several thousands of dollars (transactions can get lost, experience processing errors or extreme delays).

Believe me. Getting your money lost can happen. For example, I experienced that with some financial technology companies. It's all good on paper or with small amounts of money. But it can get frustrating when you deal with higher amounts. So, you could miss the boat and say goodbye to that prestigious contract or early-stage investor just because money never arrives.

Therefore, check carefully the incorporation country's banking system. But don't worry. You can overcome this banking problem by opening a bank account in another country.

For instance, you can set up a company in Hong Kong and open a business bank account in Switzerland or Singapore through an agency expert in foreign company incorporation. They will suggest the best bank for your needs.

Merchant Accounts & Payment Processing

The payment processing and merchant account must be easy, fast, safe, and affordable for your customers and the company. This ensures your business is profitable and successful.

Do you have an international target? Make sure the payment method is accessible globally. Everything depends on the nature of your business and the type and location of your customers.

Are you considering a wire transfer? Think about how easy and comfortable it might be for your clients and whether it'll create any friction that will eventually translate into missed sales or a higher churn rate if you run a SaaS business.

Are your potential customers more comfortable with cash? Then, you must arrange a professional and trustworthy POD (Payment on Delivery) process. For example, in some places in the Philippines (but the list can be longer), there's no chance you sell a product if you don't offer payment on delivery. I experienced that several times.

Do you want to reach as many users as possible faster? Accepting credit cards is the easiest way, and here's the payment gateway I suggest.

My Recommended Payment Gateway Provider

There are many payment gateway providers and processors. Some of the most used worldwide are PayPal and Stripes. But before making your choice, you must answer a few questions.

  • Are they safe?
  • How much do they cost?
  • Do they accept your business?

Not all payment platforms are the same. Not all businesses are accepted by major providers, especially if you run a high-risk business.

I suggest SecurionPay, a cross-device payment solution that offers both an online and mobile-based payment gateway. The platform is designed to maximise merchants' revenue. It accepts high-risk businesses (to the banks) at a competitive price.

To make things easier, I created a simple table for you to discover the fees and accepted businesses.

Regular Merchants

2.95% + €0.25 per successful transaction

Supported eCommerce products

  • Clothes & Shoes
  • Sports & Hobbies
  • Technological Devices
  • Toys, Children & Baby
  • Home, Garden, Pets & DIY
  • Educational Courses

Supported business models

  • B2B recurring products/services
  • Subscription-based shopping
  • SaaS applications

High-Risk Merchants

From 4.9% + €0.35 per transaction

Rolling reserve from 5% to 10% withheld for six months (depending on the business model and volume processed).

A minimum registration fee of €500 may apply for high-risk merchants.

Supported High-Risk businesses

  • Online Gaming
  • Travel, booking, and tickets
  • Dating
  • Adult-Themed Websites
  • Regulated Forex Trading
  • Regulated Online Casinos
  • EU-licensed investments & money transfers

Supported countries

Unsupported High-Risk businesses

  • Technical Support & Web Development
  • ISP and Hosting Services
  • Software & Other downloads
  • Smartphones – sale, resale & spare parts
  • Electronics
  • Health & Wellness Products
  • eCigarettes
  • Nutraceuticals
  • Multi-Level Marketing
  • Jewellery, watches & related accessories
  • Credit Repair
  • Money Transfer

Full list

Limited Administrative Overheads

Are you a super-smart entrepreneur who knows all the administrative procedures required by the government?

Can you learn everything quickly and do it alone?

Move to the next chapter if you replied yes. Otherwise, keep reading.

Administrative tasks and bureaucracy can be tedious, time-consuming, and pricey. Moreover, there's a big chance you make mistakes if you don't know things well.

Therefore, a country with limited administrative overheads offers significant advantages. There are many examples, but I will list the most common.

Business Licenses

In many countries, you are required to get one or more licenses to start a business. This means more work, time, costs, and hassles.

So, what choices do you have?

a) You find a country that doesn't request a license.

b) You change your business.

c) You choose a country with the most straightforward business license process.

Tax Reporting

If you're reading this guide, you're probably interested in learning how to set up a company and run your business as best as possible. This also includes finding the easiest way to report and pay taxes.

Some jurisdictions require you to do that once a year, but others quarterly. This means, again, more time, work, and expenses. Instead, you should opt for easy tax reporting and focus on growing your revenue and business.

Operating Agreements & Share Certificates

Depending on the country of incorporation and the type of business, you are legally required to create and file certain documents, such as the operating agreement, certificate of formation or share certificates for your LLC.

An operating agreement states the company's internal operating procedures and how the members – or owners – relate to each other. The share certificates are documents issued by the company and certify the ownership of one or more shares. The certificate of formation (aka articles of incorporation, certificate of incorporation or corporate charter) establishes the relationship between the company and the incorporation country.

Incorporating a company or making changes can be smooth and affordable sometimes. However, it can become time-consuming and costly in some countries. The faster and more effortless the procedures, the better for your business's success.

An example can clarify better. Let's assume we open a business with two other partners, and after two years, we want to change the ownership structure of our LLC (and, maybe, the entity type). What would happen if we incorporated the business in the US and Andorra?

In the USA, we have to

  1. Update the operating agreement.
  2. Sign it digitally.
  3. Notify the banks and payment processors.

Time and effort: a couple of hours or less and a few dollars.

Andorra is a sovereign microstate in the Iberian Peninsula, in the Pyrenees. Personal and corporate income tax is reasonably low, but procedures can become a nightmare for many entrepreneurs.

In Andorra, we have to

  1. Write and update the documents in the local Catalan language.
  2. Book a physical meeting with a notary and inform him (or her) about the changes.
  3. Review the document with the notary.
  4. Sign the document in the notary's presence.
  5. Pay a substantial fee to the notary.
  6. Notify the banks and payment processors.
  7. Update records with the government offices (which is not instant nor free).
  8. Change any references to the company name.

Time and effort: a lot of days and money.

Who's the winner?

Resident Directors or Local Office Requirements

Do you need a physical presence in the country of incorporation and have a local office to start and run your business? Well, it depends on the jurisdiction.

Do you live in the country where you incorporated the company? Do you have a trustworthy partner located there (relative, friend or wife/husband)? Then, you can incorporate in a country that requires a resident director (you or your partner).

Do you run a large enterprise that earns millions in profit each year? You can then set up a company as a foreigner in a country that requires a local functional office like the UAE RAK Free Trade Zone (FTZ) (although you may rent a flexi desk to reduce expenses).

But can you truly afford this if you are an average digital nomad earning $1,000 monthly?

There are jurisdictions where you can pay others to have a local nominee resident director and registered office. Sometimes, this can be pricey. For example, a Singapore nominee director service can cost $2,000/year.

Perception & Reputation

The country of incorporation has an impact on business perception and reputation. For example, according to CodeCondo's ranking of the best tech startup countries, the United States and Singapore are the top locations for technological companies.

Conversely, if you wish to set up a company in a tax haven, be ready to inherit the bad reputation of some offshore companies due to their illegal activities.

This doesn't necessarily mean you'll be working illegally. You can do a legitimate job from an offshore country, too. However, this will still influence the perception of your business. In what ways? Here's a quick list.

  • Your local tax department will audit your business to confirm its legality.
  • Banks will ask for more information.
  • Payment processors will be more suspicious.
  • Credit card companies could block customers' payments.
  • Clients could refrain from buying your products/services due to mistrust (even without evidence).

Each country has pros and cons, and everything depends on the business sector. So, in the next chapter, you'll discover the top 6 countries to set up a company based on the industry and other factors.

Your Customers and Suppliers

In some countries like the US, when you conduct a trade or business connected in the country (with customers and suppliers), you get the so-called Effectively Connected Income (ECI).

This means that regardless of your country of residence or incorporation, you must pay tax in each US country where you effectively conducted your business. This can happen, for instance, if you are one of the following subjects.

  • A nonimmigrant temporarily present in the United States and receive a scholarship or fellowship grant.
  • A member of a partnership engaged in a business in the US.
  • A business performing personal services in the USA.

Other categories of income are included, but there are also some exceptions.

CFC rules

CFC stands for Controlled Foreign Corporation. It's a corporate entity registered and doing business in a different country than the one where the controlling owner resides. The ownership threshold is usually 50% or more, but some countries have different percentages. The owners of a controlled corporation can be individuals or companies that open a foreign subsidiary.

CFC rules were created to prevent tax evasion, and each country has its own CFC laws (although the structure is similar). CFC rules apply when the controlled company is set up in a low or no-tax jurisdiction (e.g. a tax haven), and the owner's resident country has a higher tax rate. In this case, you (the controlling owner) are liable to pay taxes in your country on certain income (active or passive) generated by the controlled foreign corporation.

As said, each jurisdiction is different. So, before choosing the best country to start your business, I suggest you check the CFC rules around the world because they can be strict, soft, absent and with exceptions.

Double-Tax Agreement

Many countries signed treaties for double taxation avoidance. But if there's none between your country of residence and the one of business incorporation, you'll pay the income tax twice.

So, look for a country with which yours has a Double Taxation Agreement (DTA). I give you two references that can help you find the best combination.

The Best Countries to Start an Online Business

Now that you know the basics, it's time to choose where to set up a company to start your online business.

This list reveals the best jurisdictions and business entity types in the world. I focused on solutions for small businesses (bloggers, freelancers, and digital nomads) and mid-sized enterprises (web agencies, e-commerce platforms, etc.).

Tallinn in the best country to set up a company abroad
Tallinn Capital of Estonia

Estonian Limited Liability Company (OÜ)

Best Country for Digital Nomads, E-commerce (European Market), Information Businesses, Tech Companies
Country (and Company) Reputation: 
Bank Account Opening: 
Cost to Open a Business: €320/US$390 
(€100 e-residency + €190 State Fee + €30 Provider Fee)

In Estonia, an OÜ (“osaühing” in Estonian) is a Private Limited Company whose owners' liability is limited to their share. This is the most common form of business in Estonia, and you don't need to be physically resident there.

Estonia is well-known for its e-Residency program. But don't get confused. You won't get a tax residency in Estonia. E-Residency is a government-issued digital entity and status that lets you start and manage an EU-based company online. This makes Estonia the ideal country for tech startups, freelancers, and digital nomads who want to start a business in Europe effortlessly and with little incorporation expenses.

In Estonia, you have a 20% flat income tax paid on distributed dividends but no corporate tax. The tax rate is not among the lowest. Jurisdictions such as Malta, Gibraltar, and Cyprus offer lower taxes. However, they have higher incorporation expenses. Furthermore, these countries are more suited to medium-sized and large enterprises.

As for the sales tax, the VAT rate in Estonia is 20%, but obtaining a VAT number becomes mandatory only over €40,000 in sales in a calendar day. Read the last chapter for more information on this regard, and eventually consult a tax advisor to know all the variables and exemptions – on the other hand, this is a general rule of thumb you should always follow.

Note: When you open a company in Estonia through the e-Residency program, remember to check which payment processor supports both your business model, country of incorporation, and your physical residence (or the director's country of residence). For example, Stripe supports companies registered in Estonia through e-Residency, but only if the individual associated with the account is located in one of the supported countries.

Entity Type: Company
Liability: Limited
Law Type: Civil
Time to Establish the Entity: 2 days
Min. Govt. Fees: €190
Corporate Tax Rate: 0%
Double Taxation Treaties: Average
Min. Shareholders: 1

Min. Directors: 1
Resident Director: Not Required
Min. Secretaries:
Resident Secretary:
 Not Required
Minimum Share Capital:
Public Records:
 Over €4M sales revenue or income
Return Filing:

London, UK - top best country to set up a company
London Capital of England

UK Limited Liability Partnership

Best Country for E-commerce, Service Businesses, Payment Processing
Country (and Company) Reputation: Excellent
Bank Account Opening: Easy

The UK is a respected jurisdiction and well-known international trade and financial centre. The country has economic and political stability and is highly desirable for company formation.

A UK LLP (Limited Liability Partnership) includes at least two members (person or company). It's perfect for foreign entrepreneurs who don't carry business within the country, don't want to pay any local UK taxes, but wish to get all the following benefits this business entity type grants.

  • Limited liability to the owners.
  • Zero corporate tax.
  • Organisational flexibility.
  • A great choice of digital banking solutions.
  • Tax transparency.
  • Cheap, easy and fast company registration (electronically, by post, through an agent).

A UK LLP is a pass-through entity. So, each member pays tax on their share of the profit in the country of residence. What about the sales tax? For an annual turnover below £81,000, you are not required to register for the UK VAT.

Are you planning to register a UK LTD instead (one of the most common business entities)? Remember this is a separate entity, and your company will pay a 19% UK corporate tax.

Last but not least, CFC rules don't apply as long as the CFC's accounting profit is under £500,000.

Entity Type: Partnership
Liability: Limited
Law Type: Common
Time to Establish the Entity: 1 day
Min. Govt. Fees: £10
Partnership Tax Rate: 0%
Double Taxation Treaties: Many
Min. Partners: 2

Resident Partner: Not Required
Min. Secretaries:
Resident Secretary:
 Not Required
Minimum Capital:
Public Records:
 Yes (by default)
 Over £10.2M turnover
Return Filing:

Skyscraper in Miami, Florida

USA Limited Liability Company

Best Country for E-commerce, Service Businesses, Payment Processing
Country (and Company) Reputation: 
Bank Account Opening: 
Cost to Open a Business:
 from US$79 to US$249 + State Fees

Although the United States is rich, setting up an LLC is quick, easy, and affordable. The US is one of the cheapest countries to incorporate a company. It has an excellent reputation and is ideal for any online business. In the US, you'll have plenty of choices for banking, credit cards, payment processors, and more.

The average US federal corporate tax rate is 21% if you carry out business in the country. However, a US LLC is a pass-through entity (similar to the UK LLP). Therefore, if you're a non-resident and don't trade within the United States, you can benefit from a 0% tax rate.

There are several attractive States where you can incorporate your LLC in the USA. Anyway, taxes and fees can vary. Some of the most common business entities are:

  • Delaware LLC for online businesses and large enterprises thanks to the State's extensive corporate case law.
  • Wyoming LLC for small businesses thanks to more privacy and lower operating costs.

Here are more details about registering a Wyoming LLC.

Entity Type: Company
Liability: Limited
Law Type: Common
Time to Establish the Entity: 1 day
Min. Govt. Fees: US$25
Corporate Tax Rate: 21% (average)
Double Taxation Treaties: Many
Min. Shareholders: 1

Min. Directors: 1
Resident Director: Not Required
Min. Secretaries:
Resident Secretary:
 Not Required
Minimum Share Capital:
Public Records:
 Not Required
Return Filing:

Skyline Toronto, Canada

Canadian Limited Liability Partnerships

Best Country for Consulting, Marketing Agencies, Sales Agents, and Payment Processing.
Country (and Company) Reputation: Excellent
Bank Account Opening: Easy

In Canada, you can register either a Limited Partnership (LP) or a Limited Liability Partnership (LLP). You can use it as a disregarded/pass-through entity and pay zero partnership tax. This makes them ideal for foreign investors and online entrepreneurs who want a presence in Canada.

Here are the three main reasons for setting up your online business in Canada.

  • There's a 0% tax rate at the business level.
  • Company registration is easy and cheap (it costs a few hundred dollars).
  • Canada has an exceptional reputation for consulting, marketing and sales businesses.

So, which business entity is better for you? A Limited Partnership or a Limited Liability Partnership? Let's see the structure.

Most provinces offer LPs. These entities require a general partner with 100% liability (usually a corporation to reduce liability) and one or more limited partners with limited liability. Entrepreneurs often use them to raise money for some business ventures.

Conversely, LLPs give limited liability to each partner. In most provinces, they are exclusive to regulated professions such as accountants and lawyers. However, in British Columbia (BC) and Ontario, LLPs are available for types of businesses.

Entity Type: Limited Partnership
Liability: Limited
Law Type: Common
Time to Establish Entity: 1-5 days
Min. Govt. Fees: C$305
Partnership Tax Rate: 0%
Double Taxation Treaties: Many
Min. Partners: 2

Resident Partner: Not Required
Min. Secretaries: 0
Resident Secretary: Not Required
Minimum Capital: C$1,000
Public Records: Yes
Auditing: Not Required
Return Filing: Not Required

A glimpse of Hong Kong at night

Hong Kong Private Limited Company

Best Country for E-commerce, Investment Funds, Holdings
Country (and Company) Reputation: Average
Bank Account Opening: Difficult

Hong Kong was once one of the favourite offshore destinations for online business incorporation. Today, Hong Kong is slightly losing its appeal because opening a bank account is getting difficult (or impossible), although the banking system is excellent.

Despite that, it's still a good country to start a business if you run a big company or an e-commerce platform to sell electronics and tech products, and here is why.

When you register a PLC in Hong Kong, you pay a 16.5% corporate tax. But you can sell outside the country, apply for the offshore tax exemption and get a 0% tax rate.

Moreover, the city has no withholding tax, no tax on capital gains, dividends, and sales (or VAT). That's why Hong Kong is a popular shopping destination (online shopping included). For instance, have a look at the electronic products listed on eBay. Cameras coming from Hong Kong usually cost US$200-US$300 less.

The downside? Setting up a company in Hong Kong and running the business can be expensive. You can choose the cheapest DIY way, but it won't be easy. Alternatively, you can use intermediaries (formation agents or registration agents). This can raise the cost to US$2,000 or more.

Entity Type: Company
Liability: Limited
Law Type: Common
Time to Establish Entity: 1-4 days
Min. Govt. Fees: HK$1,720
Corporate Tax Rate: 16.5%
Double Taxation Treaties: Average
Min. Shareholders: 1

Min. Directors: 1
Resident Director: Not Required
Min. Secretaries:
Resident Secretary:
Minimum Share Capital:
Public Records:
Return Filing:

Singapore skyline

Singapore Private Limited Company

Best Country for Tech Startups, Financial Services, Investment Funds, Trading Companies
Country (and Company) Reputation: Excellent
Bank Account Opening: Easy

Singapore is one of the major financial centres in Southeast Asia. It's rich in cash and financial services. Online trading companies can find the right audience to grow their business.

Singapore is also an ideal incorporation place for e-commerce and web platforms that can attract the attention of local venture capitalists looking for tech startups.

The corporate tax rate is 17%, but certain businesses can benefit from a partial or three-year startup tax exemption or other tax incentives.

Additionally, companies in Singapore pay taxes only on profits. So, there's no tax on dividends, capital gains, and foreign-sourced income if already subjected to taxation overseas.

Foreigners can't self-register their company but have to appoint an agent. Costs for setting up and running a PLC in Singapore can be high, going up to US$2,500. But you can also find consulting companies that offer Singapore incorporation packages at a promo price.

Entity Type: Company
Liability: Limited
Law Type: Common
Time to Establish Entity: 1-3 days
Min. Govt. Fees: S$315
Corporate Tax Rate: 17%
Double Taxation Treaties: Many
Min. Shareholders: 1

Min. Directors: 1
Resident Director: Required
Min. Secretaries:
Resident Secretary:
Minimum Share Capital:
Public Records:
 Over S$5M turnover
Return Filing:

Which is the Winning Country? Estonia!

There's no perfect country to set up a company that operates online. As explained in the previous paragraphs, you must consider many variables and personal needs (your country of residence, the sector and type of business where you'll operate, the available company capital, and so on).

Based on my personal experience, Estonia is the best choice for any professional who offers marketing consultancy services (for example, SEO, Paid Advertising, Social Media Management, Affiliate Marketing, etc.), aspiring successful bloggers eager to monetise their websites through affiliations and display advertising, or for small and medium e-commerce startups.

Keep reading below to discover why in detail.

Set Up a Company in Estonia: Advantages

Estonia is one of the European countries with the most active startups registered. Furthermore, for the sixth consecutive year, the Tax Foundation (the US independent and non-partisan research institute) has positioned the Estonian system as the most efficient tax system in OECD countries.

Each year, the institute prepares an index, the International Tax Competitiveness Index, which measures the tax system effectiveness of the top countries in the world through the adherence of each system to the criteria of competitiveness and neutrality.

You have heard that Estonia was the first country in the world to have established a “digital residence” to attract brains from all around the globe and encourage the opening of new digital businesses.

The e-residency allows “digital nomads” (or remote workers) from all over the world to acquire, under certain aspects, the same rights as an Estonian resident: open a business in Estonia, submit applications and requests for certificates to the public administration, pay taxes, etc.

Opening a company in Estonia gives several advantages. Let's see the main ones.

  • Possibility to open the company without having to travel to Estonia.
  • Low establishment costs: €290 (€ 100 e-residency and € 190 state fee).
  • Low share capital: €2,550 (deferrable over ten years),
  • Flat Tax: 20% on annual dividends (if any).
  • VAT: 20% over €40,000 in annual turnover.

Let's see all the advantages in detail.

Opening a Business in Estonia: Tax Benefits

Corporate income tax in Estonia

When you set up a company in Estonia, you can benefit from one of the most favourable tax regimes in the world. A 20% flat tax is applied regardless of turnover but with an exception. When the corporate profits are reinvested in the company (and there are no distributed dividends), the income tax rate is 0%.

To simplify the concept as much as possible, if you withdraw money in the form of a salary, for example, without distributing dividends at the end of the year, you pay ZERO TAXES!

Little Known Tips on Personal Taxation

If you incorporate a company in a country other than the one in which you are resident, you have double taxation. In the country in which you have incorporated the company, you'll pay the company tax, while in your country of residence, you'll pay taxes as individual on the income produced abroad. Let's see the example where you are resident in France and have your company in England. You'll pay company taxes in England plus personal taxes as a natural person in France.

However, there are some exceptions that few people know about. If you are resident in Ireland or England (not born there, therefore without citizenship), you acquire a "Res Non-Dom" (non-domiciled resident) status. This status allows you to pay zero taxes as an individual if your company is located in another country and you don't physically transfer the profit generated to your country of residence.

The same exception also exists in Malta. Unfortunately, since 2019, the authorities have imposed a flat-rate tax of €5,000/year for incomes over €35,000 annually. This means you pay zero taxes if you earn less than €35,000. Otherwise, you'll pay a minimum tax of €5000 regardless of the profit produced.

So, as a resident in Ireland or England, if you have a foreign company and don't transfer the profits to your country, you pay zero taxes as an individual or very little if you reside in Malta.

VAT rate in Estonia

The standard VAT rate for business activities in Estonia is 20%. There's also a reduced rate of 9%, which applies to the sale of hotel services, books and pharmaceutical products.

However, you can open a company in Estonia without registering it for VAT purposes. This way, you obtain a total exemption from the Value-Added Tax, even on sales made in Estonia. The condition? Having an annual turnover of up to €40,000.

I also remind you that Estonia is part of the European Union. Therefore, all goods and services sold to other EU companies outside the country are not taxable for VAT purposes.

Costs for contributions paid to employees

Employers registered in Estonia (including permanent establishments of foreign companies) must pay for their employees' social security and welfare contributions.

The rate of contributions is 33% of the salary (20% for social security and 13% for health insurance). The minimum wage in Estonia for a full-time employee is €500/month as of 2018.

How to Set Up a Company in Estonia: Step-By-Step Guide

If you plan to set up a company in Estonia, follow these five steps.

  1. Apply for the Estonian e-Residency.
  2. Register the company electronically.
  3. Open a virtual office in Estonia.
  4. Choose the company for monthly accounting management and annual tax return.
  5. Open a multi-currency bank account.

How to Apply for Estonian e-Residency Card

You can apply for the Estonian digital residency at the following web address:

In the form, in addition to personal data, you have to upload your photo and a copy of your identity card (for European citizens) or passport (for non-EU citizens) with a minimum size of 1300×1600 Pixels in .jpg .jpeg formats. You must also pay the state fee to complete the application: the amount is €100 plus a €1.99 fee for the payment collection service.

Depending on the chosen pick-up location, the following additional fees apply.

  • €0 if you choose an office in Estonia as the pick-up location.
  • €20 upon application if you choose a foreign representation of Estonia as the pick-up location.

After completing the procedure, you can collect the card within six months at the Estonian Embassy selected as a “pick-up location” (on average, it's ready in 30/40 days, and you'll receive an email notification from the Police and Border Guard Board).

This is what your Estonian digital resident card will look like.

Estonian e-Residency Sample
Estonian e-Residency Sample

NOTE: E-residency does not give you Estonian citizenship but legal residency. This means it's not a way to live abroad and pay Estonian taxes (notoriously low). So, it's not a way to encourage tax evasion. Furthermore, the E-resident digital card cannot be used for travelling as an ID or passport. It's simply a document within the Estonian system.

How to use the Estonian e-Residency Card

Estonian e-Residency Kit
Estonian e-Residency Kit

The Estonian digital identity card allows you to sign and encrypt documents digitally.

To use your e-Residency identity card electronically, you must have:

  • PIN codes: They are issued together with the identity card.
  • A computer: It must have an active Internet connection.
  • A smart card reader: It's included in the kit when you collect your card at the Embassy.
  • The software ID: It allows you to use your identity card electronically. You can download it at this link:

Now, you can proceed with the establishment of the Estonian company.

Here are the other steps to take.

  1. Locate a service provider (virtual office).
  2. Establish the company electronically.
  3. Open a corporate bank account.

Consulting, virtual office, and accounting management in Estonia

To register a company in Estonia, you must find a registered office.

You can choose one of the following locations as your registered office.

  1. A physical space (in which case, you need to rent an office).
  2. An address at a company that offers domiciliation and mail forwarding services.

Of course, the second option is the cheapest one. Many digital entrepreneurs work from home and don't need a physical space. Therefore, they opt for this second solution.

Opening a company in Estonia with a virtual office is a simple and inexpensive solution. The company that provides the service will give you the address and register it as your corporate address with the Register of Companies. The Estonian tax authorities will use it to send you official communications.

With Whom Provider to Open Your Company?

Are you a freelance, digital entrepreneur or digital nomad? Do you sell digital or consulting services or monetize your sites through affiliations? Your best choice is Xolo.

With Xolo you can open your company in 3 simple steps (in 2-3 days if you already have the e-residency card, 4-5 weeks if you need to request it). You'll benefit from a simple and intuitive platform where you can register and issue your invoices.

The Xolo team will help you register your company in Estonia, provide you with the virtual office, manage your accounting, file your annual tax return, and issue your employees' payslips (if you have any). Yes! And all this starting from €79 per month!

To register the company, you need to connect to the online portal of the Estonian Company Register at the address (you will still receive all the information, step by step, from the service provider you choose ).

There are two fundamental aspects you must take into consideration.

  • If the corporate/administrative structure of the company is made up of more than one person, each of them must have a digital residence with smart cards and software installed. This is because each shareholder/administrator must digitally sign the deed of incorporation.
  • Upon incorporation, you'll be required to declare the share capital. The minimum share capital is €2,500, which can be paid immediately online or in 10 years. In any case, you must pay it to distribute dividends to shareholders.

The company incorporation request costs €190 (additionally, the providers apply a fee of €20/€30). The Register of Companies usually processes it within a single working day.

Opening a bank account in Estonia

Once you set up a company in Estonia, you must proceed with opening a bank account. The most used Estonian banks are LHV Pank and Swedbank.

Note: only company administrators can open an account with traditional banks. They must physically go to the branch to sign the contract and present the documents.

Do You Want to Open a Bank Account Without Going to Estonia? 

I have the perfect solution for you: Wise. You can open a business bank account with a multi-currency IBAN code and receive a Mastercard debit card completely online. With TransferWise, you can also send money to over 80 countries around the world at a cost 19 times lower than Paypal (That's according to independent research agency Alderson Consulting(Bristol) Ltd). 

Check on Trustpilot what over 106,000 customers say about Wise.

Choosing the best country to set up a company depends on many variables. The right mix can define the perfect solution for your online business abroad as a digital nomad and international entrepreneur. Therefore, you must consider all the economic, tax, and legal aspects to determine the most suitable incorporation country.

This guide provides the primary information to help you discuss your project with your tax consultant or lawyer and decide where to start your business abroad.


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  1. Hello Edi, excellent article. This is my situation: I carry an Italian passport and moving back to Italy at the end of July. Just got monetized on Youtube and will be working from Italy for my channel. I will be also doing services and making commissions from Italian companies for sponsoring episodes on Youtube etc etc.
    But I obviously do not want to pay taxes in Italy due to its ridiculous tax system.
    So my question is, can I open a company (I’m looking at Estonia or Malta) invoice customers from my company, pay taxes in Estonia or Malta and live in Italy?
    I do have an LLC registered in Florida that maybe could be good to use.
    Could you advise me on this, or point me in the right direction please, thank you

  2. Hey Mark,

    I am so glad I came across your post! It has helped me a lot to get an overview and tips on incorporating an online business. I still wonder because in my (our) case we will deploy a business quite similar to Stripe and have calculated to have an annual turnover of about €60.000 (in the first year of business). And I wonder what your thoughts on which country we might be best suited for is?

    1. Hi J,

      in your specific case, since these are financial products, I am not able to advise you correctly because it is a complex sector where specific authorizations are required in order to operate. I recommend that you contact a lawyer/accountant expert in international taxation.


  3. Hi!

    I am a social media advertising freelancer in Belgium.

    Can i setup my company in Estonia and pay taxes there and live in Belgium?

    1. Yes, of course. In Belgium, however, when you file your tax return, you will have to declare the income produced in Estonia and you will pay taxes as a natural person.

      1. Ok so would it be beneficial for me to setup a company in Estonia then? Or would i just be being high taxes again here in Belgium
        (Total noob)

  4. Great post ! If I want to build a social media business in Estonia while working from Germany, it works then and i’m not having double taxation.
    How does it work when you have a corporate job in Germany, work from there while building your own business on the side (registered in Estonia then)? I guess i’d pay an income tax in germany for my corporate job & then income tax in Estonia for my own business?

    Thank you

    1. Hi Sophie and thanks for writing to me. That’s right, if you are a resident of Germany and open a company in Estonia, at the end of the year you will have to declare your profits made anywhere in the world in Germany. So you will pay tax on your business in Estonia, and tax as an individual in Germany.

  5. Hey!

    I’m from Belgium. I want to start my own online company. I sell courses/e-books but I also teach online. So my business is completely online. I came across the e-residence subject of Estonia. Are there other countries worth considering because I’ll have to stay another 9 months in Belgium before I can travel around. My goal is to be a digital nomad. It’s important to me to have low tax rates (Belgium is bad for this), be in full control of my company, easy set-up, various payment methods, etc. What could be a good possibility regarding my situation.

    Or is Belgium just a bad choice in general to be a resident in the country? I know a bit about the Belgian tax system and it’s bit tricky…

    Thank you for your help already!

    1. Hi Lorens,

      you have to distinguish two things: taxation on your company and taxation as an individual. If you are a resident of Belgium and open a company in Estonia, at the end of the year you will have to declare your profits made anywhere in the world in Belgium. So you will pay tax on your business in Estonia, and tax as an individual in Belgium.

      Personal income taxes in Belgium range from 25% to 50%. If your company produces €20,000 of income per year you pay 40% as an individual. Definitely a lot, so residing in Belgium is not convenient.

      If you want to open the company in Estonia you can do it without leaving Belgium. You can apply for your e-residency and collect it at the Estonian embassy in Brussels. Read the article well and you will also find the accountant and the bank to open online.


  6. Hi edy,
    I read your article carefully and very attentively. Actually I have been doing research about the topics you addressed in your well organized article. You helped me to fill the gaps in my own research.
    after reading your article I still have some unanswered questions so please read my comment carefully so that you can understand my issues and therefore help me solve them.
    I am an Algerian citizen and I reside in Algeria. I am a teacher and I am in the final phase of launching a website to sell online courses. My concern is in integrating a payment gateway such as strippe or 2checkout to my onlline platform. The only probllem here is that I was born and reside in Algeria which is not supported by any known payment service provider.
    I did a research about the estonian e-Residency and looked at the services provided by xolo. But I found that after setting up the company I would still have to travel to estonia to set up a merchant account. And even if I manage to do that I still have to reside in a country that is supported by payment providers like stripe.
    And even if I manage to do all of this sometimes banks and service providers ask merchants to provide proofs of there residential addresses (by sending electricity bills for examplle)
    My first question is is there any bank that accepts to open and maintain my merchant account
    And my second question is: is there a service provider that accepts to open and maintain my merchant account?

    1. Dear Karim,

      Unfortunately, I am not able to help you solve your problem, in most African countries it’s difficult (if not impossible) to open merchant accounts for online payments.

      Try to do careful research online, if you don’t find a solution, the only alternative is to move to another country where you have more opportunities.

      I wish you the best!

  7. Hi, This is a very well informed article, thanks for that! I do have a situation though that is specific and I am struggling to find a conclusive answer to what I should do. I live in Indonesia(became a tax resident there) but am originally from Belgium. I am doing sales and marketing for a Dutch company but I also make music and have clients all over the world. So My question is, because Estonia didn’t sign the double tax agreement with Indonesia, then is it still profitable for me to start a business in Estonia or do I look for US or UK? Because to me it seems then that I will have to pay corporate tax in Estonia, then tax on dividend in Indonesia and Estonia and then also Tax on personal Salary both in Estonia and in Indonesia? Or if I pay myself a salary I also pay tax in both countries or am I wrong?

    1. Hi Arthur,

      your situation is quite complex, it is better to ask for information from an Indonesian consultant who knows aspects of international taxation well.

      Generally speaking, I believe that as a natural person, you will only pay taxes in Indonesia, while for companies you will pay them both in Indonesia and in Estonia if you withdraw them as dividends. If, however, you withdraw them from Estonia as salary, you must be careful because they could be cumulated with those produced in Indonesia, so you pay more taxes as a natural person.

      This is information that comes to mind but should be verified because I don’t know the Indonesian tax system in depth.

      I wish you the best!

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