Why Estonia is a Perfect Place for Software Developers

If you’re bearing an idea of a tech start-up, you need to know that Estonia ranks first in the number of unicorns per capita in Europe. Now it’s ten Estonian-founded companies with the most recent update Glia in March 2022. Wise, Fortumo, Playtech, GrabCAD, and Pipedrive of them are software companies.

Conditions to be considered as an Estonian-founded company are as follows:

• a founder is an Estonian citizen, or
• company headquarters or a significant part of its R&D operations are situated in Estonia.

That is good news for entrepreneurs from around the world that everybody can apply for the e-Residency program and incorporate a company in Estonia online. You’ll get a digital ID, access to e-government services, and eventually fully remote business management.

A company incorporated in Estonia will suit you, even in case you do not plan to move. You’ll continue doing your business merely put in a more convenient jurisdiction. With an Estonian legal person, it’ll be easier to obtain VAT, OSS and EORI numbers, IBAN, etc.

You’ll be able to gain support from state-backed foundations such as the Estonian Development Fund and Enterprise Estonia and a community as well. There are a number of start-up conferences, online events, and so on.

If you actually want to place yourself in Estonia and open an office there, it’s a perfect destination for relocation too. Get Digital Nomad Visa or Startup Visa. Getting to be able to check live community concentrated in a science park Tehnopol (150+ companies) and Garage48 Hub co-working.

There are plenty of accelerator programs for start-ups, for example, Startup Wiseguys and Gamefounders which are based in Tallinn. Although the Estonian market suffers a shortage of IT specialists, it’s a focal point for many entrepreneurs to build a software engineering team.

A founder of ZeroTurnaround, an Estonian software start-up that provides tools for Java programmers, Jevgeni Kabanov recognizes companies move to other places looking for ΙΤ talents as their businesses grow. But still, they keep a connection with the company’s birthplace due to its entrepreneurial culture.

Whether it’s needed for business development, or for personal reasons - being location independent entrepreneur is a very special advantage. With Estonian e-Residency, you can manage your company remotely online.

This feature was first appreciated by global entrepreneurs. A man cannot get all at once, thus entrepreneurs start companies in Estonia where the tax regime is quite liberal and government e-services are highly developed. Hereafter they go to countries with bigger labor supply or riskier investments as Jevgeni says.

Digital nomads tasted the feature several years later. Enty user and founder of software company DataStake which provides information management for African countries opened his first company in Estonia in 2019.

Now, after the pandemic, as we have become even more digitalized, the number of people who share an idea to travel around the world while running their own businesses grow. DataStake founder was not satisfied with the bureaucracy and location boundaries in Spain and looked for a better place.

When Estonia entered the stage, he didn’t consider alternative jurisdictions anymore. The incorporation process has been smooth. And the most important thing, there were no requirements for physical presence in Estonia - no paper letters, no office visits, no 60 days spent rule, etc.

The possibility to manage a company online from any place remains Estonia’s advantage as we compare jurisdictions for company incorporation now. Entrepreneurs are not required to live in Estonia for any period of time or become tax residents as private persons.

Even if you’re already based in the EU, incorporating a software development company in Estonia still may be your case. The story of Enty user and entrepreneur Nikhil Ranjan begins in India, but basically, he came to Enty from Germany.

Nikhil, a full-stack developer, had worked for an open-source company in Berlin and then succeeded to receive a grant for one software development project. He needed a legal person in Europe for the project and initially considered Germany.

However, there were some restrictions on foreigners to incorporate a company in Germany. Besides, in comparison with Estonia, you could not find such an easy incorporation service.

Bearing in mind that the EU has several good jurisdictions for doing business like above mentioned Germany or Cyprus, Ireland, Switzerland, or Hungary, Estonia stands out.

Basically, company incorporation in Estonia is much cheaper and easier than in most European residences. It doesn't require big financial investments. A share capital contribution of € 2.500 can be considerably postponed and it’s planned to remove it at all in 2023.

Therefore, it’s affordable to open a company even in case you’re a solo software developer now. Estonia issues licenses for crypto payment systems and has a favorable climate for crypto businesses.

Given that offers 0% corporate tax on reinvested profits Estonia cannot be considered a ‘tax heaven’. However, entrepreneurs from Spain and Italy note that flexibility of administration that lacking in their home countries.

In any case, forming a company in Estonia is a great step to streamline your solo/ startup/ fastgrowing business that you actually can take literally this week.