Why and how I incorporated an Estonian company for freelancing

Why and how I incorporated an Estonian company for freelancing

Last month I incorporated my Estonian company keinois. Many people asked me why, the benefits and how is the process. So I'm writing this post to leverage that knowledge.


None of the following is in any case, legal advice. I'm just talking from my experience and knowledge, which is limited. If you detect that something is not accurate, please let me know. Treat this post like a conversation between two friends in where one of them says to the other 'Hey! Check this out because it may be helpful for you'. If you are interested in doing the same, please hire a professional advisor as I did. Every case and situation is different and things that apply to me, may not apply to you.


  • Operating as a company has more benefits than operating as a freelancer, even if the initial investment and paperwork is more.
  • I considered Swiss, Spanish, Singaporean, Maltese and Estonian companies.
  • Estonian was the only one that fulfilled my requirements—for now. It also offers other fiscal advantages, like only paying taxes when the money leaves the company and the expense is not a reinvestment into the company.
  • After receiving my e-residence pack, the process for opening the company was 100% online, super easy and took only 48 hours.
  • I have never been to Estonia. But I have an Estonian company 🤷‍♂️

Being freelance vs. incorporating a company

When freelancing, some people choose to operate and invoice as an individual. Others choose to open their own company and became their own employees.

The latest has some disadvantages:

  • Less flexibility.
  • It requires more time and paperwork to manage, or more money to pay someone to do it for you.
  • Incorporate a company requires a bigger initial investment. For example, 3.000€ in Spain or 20.000CHF in Switzerland. In some situations this could be too much.

Nevertheless, incorporating a company has, generally speaking, more advantages:

  • Your company and you are two completely different entities. Therefore, you are not liable for your work, your company is.
  • If you are invoicing more money than you personally need per month, you can pay yourself a lower salary—just what you need—keep the money in your company and invest it. This usually translates into paying less taxes and more money in your and your company's pocket.
  • Depending on the country—for example, in Spain where companies generally don't respect employees rights—a service agreement contract between companies is more powerful than a freelancing contract. However, it always depends on how the contracts are written.
  • Last but not least, your company can spend money on business-related things, and these acquisitions are usually VAT free—computer, mobile phone, internet, education, company car, flight to do a workshop in Thailand... Also, money spent by the company doesn't have to pay personal taxes; therefore, it has more acquisition power. 1.000€ inside a company are 1.000€ to spend, but those 1.000€ paid as salary convert into 700€ in your pocket after 30% personal taxes.

Incorporating a company

If you are a solo founder and you live in one specific country, you probably have only the option of opening a company in the country you are living.

If you are opening a company in a secondary country, the country you are living in may consider that the main activities of the company are happening in the country you are resident. They may initiate a process to consider your company from there regardless the initial incorporation and pay taxes in that country. This can vary from country to country.

Incorporating a company + Nomad + Covid. My options

I wanted to incorporate a company, but I'm a nomad, and I don't live in any country. Where and how do I open a company, and how should I operate? I also needed to do it in Covid times, meaning less travel allowed and certain countries completely closed. I started to think about some solutions:

Swiss company

I used to live in Switzerland, and I had a Swiss working permit for 3 more years, which would have converted almost automatically in 5 more because of my EU nationality. I also used to be inside one company with a couple of friends with a similar setup. Should I open a company in Switzerland?

Yes 👍

  • Swiss taxes are very low but is not considered tax heaven.

No 👎

  • If you want to have a company in the country as a sole owner, Swiss laws force you to live in the country at least 6 months per year and being resident there. I was forced to go back from Vietnam when I didn't want to and still causes me pain. So this was a clear deal-breaker, I don't want that to happen again.
  • Swiss german paperwork and prices. If you pay someone to do it, which I definitely need, is too much money to spend if you are not working 100% and with a Swiss/San Francisco salary.
  • Everything needs to be done in person.

Spanish company

I'm Spanish, and I can always go back to Spain and use my mother's house as a residence without paying anything at all. Easy and straightforward. Right?

Yes 👍

  • I couldn't come up with one positive thing.

No 👎

  • I don't want to go back to Spain. If I open a solo company in Spain, I need to be fiscal resident in Spain.
  • I would have paid a lot of taxes in Spain. From 24% to 45% plus 290€ fixed per month (autónomos).
  • The process to open a company is tedious. I don't know how much time took for GouBlue, but A LOT.
  • Everything needs to be done in person.
  • Spanish authorities are slow, and the system is in the Paleolithic era. I already experienced it years ago.
  • Spanish corruption. Some years ago, I missed to add 25€ in my declaration, and they sent me a very powerful and threatening reminder letter. In the other side, politics, ex-presidents and very rich business people do whatever they want.
  • I'm not going back to Spain. PERIOD.

Singaporean or Maltese company

I've had heard some positive things about having a company in Singapore or Malta. Sounds exotic. Should I open a company in some of these countries?

Yes 👍

  • Low corporate taxes and they are not considered tax heavens.
  • It is not necessary to live in these countries to have a company there, or at least not during too much time.
  • I heard some other good things about these options, but I didn't research deeply because of the deal-breaker no. They may be a worthy option to consider in the future.

No 👎

  • They require you to go personally there to open your company. In the case of Malta, also for signing any important contract related to the company and became resident there. Something that could have been OK in a normal situation, but a no-go with Covid.

Estonian company

After a lot of research, asking and talking with people who were already operating with an Estonian company and after a couple of professional consultations, I went for it. These are the reasons:

  • Everything can be done online, without ever putting a foot in Estonia. I have never been there, and I have a full operating Estonian company in less than 48 hours—after obtaining the e-residence card.
  • Again, everything is managed digitally. Signing documents and all administrative processes. You can do everything from your sofa, and everything works very smoothly and fast. It is an administrative paradise.
  • You can have an Estonian company opening a bank account in Transferwise, a good provider when managing multi-currency accounts. You open the account online.
  • Estonian companies only pay taxes when distributing their profits. Either when the company pays a salary to its Estonian residence employees or dividends to its shareholders. They don't pay corporate taxes at the end of the fiscal year, and all the expenses reinvested in the company don't pay taxes—paying to a freelancer, business-related expenses or investing in the stock market as a company.
  • Dividends in Estonia have flat-rate taxation of 20% over the brute amount.
  • If you are not resident in Estonia, the salary is tax-free for your Estonian company. You still need to pay taxes as a person in the country you are resident, if you are resident in one.
  • Full European license from a respectable country that is growing super fast thanks to its fully digital and contemporary mentality towards innovation. Many innovative startups are born every year in Estonia.
  • Low company expenses. I pay a flat monthly amount to my accounting provider of 94,8€ for everything my company needs. Invoicing, expense management, tax consulting and reporting, accounting, legal address, contact person, mail forwarding... No more hidden expenses. And I have a nice app to manage everything online.

How to open an Estonian company

The process is straightforward and has only three major steps.

1. Apply for the Estonian e-residence

You need to be Estonian e-resident for being able to open an Estonian company. It is not a physical or fiscal residency, but a virtual residency which only benefits are being able to do any official Estonian paperwork online, including opening an Estonian company.

You apply here and, once approved, the package takes between 4 and 6 weeks to arrive at one of the designated Estonian embassies you select. You need to pick it up at the selected Estonian embassy, and it is the only thing you need to do physically. The process is very easy, the price is 100€ and includes a card, a USB to connect to your computer and a small set of instructions to know how to use it. It is super simple, you connect the card with the USB, and any time you want to sign or do something, you just need to introduce one of the security PINs.


2. Open the company

One of the easiest ways to open the company is through one of the official providers Estonia has in its marketplace. I choose Xolo because it is the most used, the price if you want to connect payments with Stripe or similar is good, and they have a nice app to manage everything.

The price is 290€ for incorporating the company. The process took 24 hours and was like the following:

  • I entered in Xolo, created an account, filled my personal data and an assessment asking why I wanted to open a company in Estonia. I sent it and waited for its validation. This was on the 19th of November at 12:05.
  • The same day, just a couple of hours later, I received the confirmation from Xolo to continue with the process.
  • I filled the rest of the things, related to the company I wanted to create and signed electronically. I had to wait for them to process my company application.
  • Next day in the morning, my application was ready for signing and sending to the Estonian authorities for being registered. I signed it and sent it.
  • 4 hours later, I received an official confirmation from the Estonian government. My application was approved, and I already had an Estonian company!!! WOW 🤯

This is the process inside Xolo's interface


3. Open a bank account

After that, I had to open the bank account for my company. I wanted to operate fully digitally and with multi-currency account due to my international target market. So I choose Transferwise.

  • I created a new business account, followed a short onboarding, uploaded my passport, paid 19€ for verification and waited for validation.
  • Next day in the morning, I received the confirmation of the verification of my bank account and contacted Xolo back letting them know.
  • Xolo confirmed that everything was OK.
  • I just needed to do one more thing, Login in the Estonian state webpage for granting Xolo the powers to do my annual paperwork.
  • 48 hours after starting the process of opening my company I had everything in place 💃

Support me by subscribing and help me stay accountable for my progress

This blog is a tool to keep me in the pace of creating stuff and openly sharing my journey. If I don’t make progress, you can point me and tell me: GO FUCKING DO IT! 👉

Made with Super.so + Notion.so