Estonia
Not quite blessed with the same climate as Malta, Estonia is one of the three Baltic States, nestled in the north-east of Europe.
Known for its historic old town (a world UNESCO site), located in the capital Tallinn, Estonia is officially one of the most digitally advanced nations on the planet and is, therefore, a beacon for all digital nomads.
The small Baltic nation launched a Digital Nomad Visa relatively recently. This visa allows remote workers to live in Estonia and legally work for their employer or their own company registered abroad.
As of 1st August 2020, eligible location-independent workers have been able to apply for the chance to go to Estonia to live for up to a year with peace of mind that they can legally work.
Similarly to Malta, successful applicants would need an active employment contract with a company registered outside of Estonia, conduct business through their own company registered abroad, or work as a freelancer for clients mostly outside of Estonia. This may also require a local company — which InCorpora can help you with.
Applicants must provide evidence that their income met the minimum threshold during the six months preceding their application. Currently, the monthly income threshold is €3,504 (gross) monthly.
A relatively low cost of living compared to its larger mainland-Europe or Scandinavian compatriots, coupled with the highly-advanced digitisation make Estonia a great option for expats.
Malta
Located in the Mediterranean, midway between Europe and Africa, the beautiful island of Malta is an excellent option for many expatriates to set up shop. Not only is it blessed with a year-round warm climate, it’s also recently announced some excellent conditions for digital nomads.
A new temporary residency scheme aimed at people who want to move to Malta but work remotely was announced at the beginning of June, causing quite a stir among the expat community.
The programme offers a six-month visa and gives the option of obtaining a one-year ‘Nomad Residence Permit’.
To qualify, applicants simply need to show that they’re contracted to work remotely by a company based overseas, show that they run their own business or offer a freelance service to customers based abroad. This may also require a local company — which InCorpora can help you with via a wide partnership network.
Applicants must provide evidence that their income met the minimum threshold during the six months preceding their application. Currently, the monthly income threshold is €2,700 (gross).
At just €300, the programme is also a cost-effective option for those looking at moving (at least in the short-term) to the Mediterranean.
The living costs in Malta are considerably lower than the larger countries in central Europe, and the international schools reflect this low cost of living.
In addition, the aforementioned climate and relaxed pace of life make it an attractive location for expatriates, especially those with families. EU Membership also lends to the country’s political-economic stability.
What about taxation?
For digital nomads, few things are more important than taxation. Let’s see how Estonia and Malta compare in that department.
| Estonia LLC | Malta LP | |
| Residency | No restrictions | No restrictions |
| e-Residency | Yes | Residency permit |
| Digital Nomad Visa | Yes | Yes |
| Company Form | LLC | Limited Partnership |
| Min. number of partners | 1 | 2 |
| Min. share capital | €2500 | N/A |
| Corporate Tax Rate | 0% / 14% / 20%* | Tax Transparent |
| Limited Liability | Yes | General Partner – No / Limited Partner – Yes |
| Accounts | Yes | No, yet recommended |
| Annual financial statements | Yes | Tax return only |
| VAT no. | Yes, if required | Yes, if required |
| Remote Management | Yes | Yes |
| Audit | No | No |
| Local CSP** required | Yes | Yes |
| Currency | EUR | EUR |
| Income tax rate | 20% | 0% if not remitted to Malta |
| Taxation of residents | Global | Territorial |
| Foreign dividends | Tax exempt | Taxed only if remitted to Malta |
| Capital Gains Tax | Taxed at 20% | Tax exempt |
| Costs | Min. 850 EUR | Starting from €75 per month |
| Shelf Companies | Yes | No for MLPs |
* The Corporate Tax Rate in Estonia is 0% until dividend distribution, and flat 14% or 20% at corporate profit distribution. Estonia has a deferred corporate tax system.
** Corporate Service Provider
The table above shows just how tight these countries are in terms of their conditions for digital nomads. Which is best? It totally depends on the specific individual. If you need help deciding which option is right for you, you can always get in touch with us and book a free 15-minute consultation.
Estonia
- Limited liability;
- No Corporate Tax until profit distribution;
- There’s a digital register and highly-digitized society;
- Fast registry procedures;
- The flexible e-Residency programme;
- Offers a simple tax system;
- Tax residents pay no tax on foreign dividends;
- Access to start-up ecosystem;
- If the Estonia LLC holds more than 10% in a foreign subsidiary, there’s no tax on foreign dividends.
Malta
- Great climate, year-round;
- Tax transparency option for your company, i.e. you pay your tax at home;
- Territorial taxation for tax residents;
- No requirement for accounting for MLPs;
- Only a simple annual MLP tax return needs to be filed;
- The foreign income of the tax resident is not taxed if not remitted to Malta;
- Exemption from Capital Gains Tax, even if remitted to Malta.
Take the first step with us!
Regardless of which of these countries you choose, InCorpora is the perfect partner to help you establish your presence.
Estonia LLC
Setting up an Estonian entity couldn’t be more straightforward, thanks to InCorpora. Our tailored package covers all aspects of company establishment in Estonia, including:
- Setting up an IBAN for borderless banking;
- Boosting substance with payroll, leased office, etc.;
- Giving you limited liability;
- VAT registration, if required;
- Producing a tax residence certificate within 2 days;
- Setting up payment gateways.
Company registration takes as little as one week.
Malta Limited Partnership
Malta Limited Partnership is a simple and tax transparent business solution. It’s also extremely cost-effective, costing just 75 EUR per month, making it the ideal solution for freelancers and digital nomads looking to set up quickly and easily in Malta:
- Fast on-boarding — your application is processed and submitted the same business day.
- Flexi payments — a choice of 4 packages from as low as only 75 EUR per month.
- Accounting services — provided by top experts or simply a secure access to our accounting program.
- Business substance — any level: from local administrator to exclusive office for your company.
- Banking — setting up an IBAN for your company is smooth and fast.
- Payment gateways — set up payment gateways and obtain VAT for MLPs
Conclusion
Although there is no clear right or wrong answer as to which of these countries is a better location for digital nomads to call home, today, Estonia clearly outperforms Malta in attracting new business.
Why is that? Let’s take a closer look with 9 facts that show the immense benefits Estonia has to offer.
- More than 20 000 new Estonian companies have been set up by non-resident freelancers, digital nomads and e-residents;
- Absence of corporate tax is always a winner;
- Estonia is a start-up hub, producing ca. one unicorn per annum (Skype, Bolt, Wise, etc.). The country ranks no. 1 in the world for unicorns per capita;
- It has an incredibly simple tax system;
- It offers a low level of bureaucracy;
- Estonian LLC’s provide limited liability;
- It offers a transparent, secure and fully-digitized Company Register;
- There’s a highly-advantageous e-residency programme;
- Estonia offers a tax-free environment for expats regarding foreign dividends.
If you’re interested in starting or continuing your digital nomad journey, take the first step and get in touch with us today to book your free 15-minute consultation.
