What is the best european country for a scalable, exit-friendly and low-taxes company?

[JeremyCos]

Hi,

I'm currently in Estonia and I would like to confirm if opening a PLC here is a good idea for scalable revenues (+3M€), low taxes and an easy way to sell when exit?

The main advantage I see is the ability to put different sources of income streams into the company (multiple fields of activity).

But maybe you have better company structures in mind with another european country?

It's better if the country is not so expensive, easy with paper and less setup/run costs.

Thanks!

 

[Martin Everson]

Estonia is very good and easy in general for business.

JeremyCos said:
I'm currently in Estonia and I would like to confirm if opening a PLC here is a good idea for scalable revenues (+3M€), low taxes and an easy way to sell when exit?
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For low taxes it is good as your only taxed upon distribution of profits meaning you can reinvest profits. Nothing wrong with having an Estonia company with +3m euro revenue. When you say "exit" do you just mean leaving the company after a sale of it? You don't mean exit EU or something and are concerned about EU Exit Taxation. Please clarify.

JeremyCos said:
But maybe you have better company structures in mind with another european country?
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Depends what you find wrong with Estonia company structure?

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[JeremyCos]

Martin Everson said:
For low taxes it is good as your only taxed upon distribution of profits meaning you can reinvest profits. Nothing wrong with having an Estonia company with +3m euro revenue. When you say "exit" do you just mean leaving the company after a sale of it? You don't mean exit EU or something and are concerned about EU Exit Taxation. Please clarify.
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Yes, for exit, I mean leaving the company after a sale of it. Company could be bought by another foreign company for example.

Martin Everson said:
Depends what you find wrong with Estonia company structure
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Nothing's wrong. But maybe it exists better schemes for a tech company in Europe.

Thanks for the response

 

[Martin Everson]

JeremyCos said:
Yes, for exit, I mean leaving the company after a sale of it. Company could be bought by another foreign company for example.
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Then it is fine for acquisition.

JeremyCos said:
Nothing's wrong. But maybe it exists better schemes for a tech company in Europe.
Click to expand...

Ahh ok I get you. Good question.

Estonia ranks high in Europe but would have said UK (had it still been in EU) due to its higher standing, proximity to one of the biggest capital markets, access to M&A firms, EIS (which is tax advantageous for investors), language, clear legal system, talent pool and networking ability. There is a reason lots of tech firms were setup in UK as you know by Eastern Europeans. Also when you want to exit via i.e an IPO also it would be much better to do so their over Estonia imho.

Maybe someone else can chime in. There could be specific advantageous schemes in other EU countries.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Don]

JeremyCos said:
Hi,

I'm currently in Estonia and I would like to confirm if opening a PLC here is a good idea for scalable revenues (+3M€), low taxes and an easy way to sell when exit?

The main advantage I see is the ability to put different sources of income streams into the company (multiple fields of activity).

But maybe you have better company structures in mind with another european country?

It's better if the country is not so expensive, easy with paper and less setup/run costs.

Thanks!
Click to expand...

I believe it's one of the best structures in terms of value for money, low tax, low red tape, friendly regulations, etc., for startups.
https://startupgenome.com/article/rankings-2021-top-100-emerging-ecosystemsEstonia's main issue has been attracting talent, but they have recently implemented some new regulations which help to overcome this issue. It really depends on your activities but in some cases, you could easily outsource a lot of the activities to countries with even cheaper labor.
A lot of the startups end up forming companies in 2-3 jurisdictions eventually, but I believe Estonia is a really great place, to begin with. For example, you could structure the company under a Cyprus holding, and later sell it without any CGT.

 

[JeremyCos]

Martin Everson said:
Then it is fine for acquisition.



Ahh ok I get you. Good question.

Estonia ranks high in Europe but would have said UK (had it still been in EU) due to its higher standing, proximity to one of the biggest capital markets, access to M&A firms, EIS (which is tax advantageous for investors), language, clear legal system, talent pool and networking ability. There is a reason lots of tech firms were setup in UK as you know by Eastern Europeans. Also when you want to exit via i.e an IPO also it would be much better to do so their over Estonia imho.

Maybe someone else can chime in. There could be specific advantageous schemes in other EU countries.
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Yes,

I thought about UK, but I think it complicates a much more the setup (and I'm not so attracted to live there). I don't see so much bigger advandages compared to estonian private limited company OÜ (apart from business and capital ecosystem, but I dont really aim for raising money or exit with IPO).

Thanks for your help!

 

[JeremyCos]

Don said:
I believe it's one of the best structures in terms of value for money, low tax, low red tape, friendly regulations, etc., for startups.
https://startupgenome.com/article/rankings-2021-top-100-emerging-ecosystemsEstonia's main issue has been attracting talent, but they have recently implemented some new regulations which help to overcome this issue. It really depends on your activities but in some cases, you could easily outsource a lot of the activities to countries with even cheaper labor.
A lot of the startups end up forming companies in 2-3 jurisdictions eventually, but I believe Estonia is a really great place, to begin with. For example, you could structure the company under a Cyprus holding, and later sell it without any CGT.
Click to expand...

This scheme with Cyprus holding seems interesting. I guess I would have to relocate in Cyprus to get personnal residency, and sell the estonian stock to the Cyprus holding?

And what about the reinvested profits ? Can I use it to buy capital of a real estate structure I use to invest in Europe? What's the scope of "reinvested" profits for OÜ?

Thanks

 

[Don]

JeremyCos said:
This scheme with Cyprus holding seems interesting. I guess I would have to relocate in Cyprus to get personnal residency, and sell the estonian stock to the Cyprus holding?

And what about the reinvested profits ? Can I use it to buy capital of a real estate structure I use to invest in Europe? What's the scope of "reinvested" profits for OÜ?

Thanks
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Yes you can buy properties. Usually it makes sense to establish an spv for this purpose.

Expenses are related to business if they have been incurred for the purposes of deriving income from taxable business or are necessary or appropriate for maintaining or developing such business and the relationship of the expenses with business is clearly justified.

In all cases its best to consult with advisers who understand both local and international tax.