By Richard J. Witismann
Many companies have already chosen Estonia to hold an initial coin offering (ICO) and run their business afterwards. The number of projects that have preferred Estonia over other countries is steadily growing.
Estonia hosts a number of Bitcoin ATMs, cryptocurrency startups, and a global peer-to-peer buying and selling service for virtual currencies.
With one of the highest internet penetration rates in the world, Estonia is well positioned to be a place where cryptocurrency users can certainly feel welcome.
Below are 5 top reasons you may want to incorporate your cryptocurrency business in Estonia.
The new wording of the Money Laundering and Terrorist Financing Prevention Act stipulates that providing services of the exchange of virtual currency or custodial wallet services requires an authorization. In order to obtain a cryptocurrency exchange license in Estonia an application must be filed to the Register of Economic Activities. The application must be supported by required documents and information. As a rule, the Financial Intelligence Unit will provide the authorization within 30 days from receiving all necessary documents.
The quality of a regulator is critically important as you will need to have direct interaction with them on a regular basis. It is very easy to communicate and interact with Estonian regulators (Financial Supervision Authority and Financial Intelligence Unit), which is a great advantage.
In most cases, they are willing to cooperate and assist. The friendly attitude of local regulators seems to be extremely important for blockchain companies.
Estonia is open to entrepreneurs from around the world and is regarded as one of the world’s most advanced digital nation. Anybody who wishes to start a business in Estonia can get a so-called e-residency to access all electronic services offered by the government.
E-residency provides the possibility to establish a company online, manage it remotely and achieve location independence. E-Residency program saves time you would otherwise have spent on bureaucracy, tax authorities, and incorporation.
Estonia has the most competitive tax environment among the OECD. The tax burden isn’t heavy at all, and reinvestment of assets drastically cuts all tax obligations.
Bitcoin and altcoins are not subject to VAT. The Estonian Income Tax Act also does not establish any peculiarities in regard of ICOs compared to carrying out a regular investment round. Thus, the proceeds from an ICO are not taxed with income tax until such proceeds are distributed as dividends.
One may assume that the low tax burden will keep on attracting blockchain-focused companies to Estonia.
It takes only 2,500 euros of charter capital, and up to 5,500 euros to register a limited liability company with a cryptocurrency license in Estonia.
The costs are low compared to other popular jurisdictions like Singapore or Switzerland. Projects seeking to enter the EU or EEA markets that cannot afford to register in Switzerland may find it very appealing.
Although there are obvious benefits to incorporating your cryptocurrency business in Estonia, it is important to consider the legal and compliance obligations. Incorporating your business is a major decision which should be well planned and for which advice should be sought from professionals.
Editor’s Note: This post was originally published on November 3rd, 2017 and has been updated for accuracy.
Disclaimer: This article provides general information, which may or may not be correct, complete or current at the time of reading. No recipients of content from this site should act on the basis of content of the article without seeking appropriate legal advice or other professional counseling.
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Jan 19, 2018