November 30, 2021

Wire Service Canada

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Thousands of British companies have moved their headquarters to Estonia

Over the past five years, thousands of British companies They moved their registered office to Estonia To gain access to the European market and avoid the regulatory and financial hurdles caused by Brexit. They can do this thanks to the Estonian government program e-residency, which has been around since 2014 and allows, among other things, to open businesses in Estonia with particularly convenient tax exemptions, while not actually residing in the territory. Compared to digital visas offered by other European countries, it is very beneficial, and therefore it is very successful.

– Read also: How to become a little Estonian

The consequences of Britain’s exit from the European Union on the British economy they are many And it caused serious damage to British companies operating in the European Union. It is due to the constant rise in import and export prices, and also due to new controls and bureaucratic practices, as well as the impossibility of hiring many European workers (work permits for Europeans were reduced to a few categories of super workers). specialized). All this led to a decline in trade and economic damage to many British companies.

This is why in the last five years (since the Brexit referendum) many British companies operating in the European Union – a market of 27 countries and more than 400 million people – have left the UK, opening offices elsewhere. guardian In January it was determinedDramatic exodus»From the investments caused by Britain’s exit from the European Union.

– Read also: The consequences of Britain’s exit from the European Union so far

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among these, about 4.000 They have chosen Estonia as their new home. There is a lot, especially considering the fact that before Brexit (and especially after Estonia’s entry into the EU in 2004) it was Estonian citizens who leave the country To go to work in the UK.

British companies moved to Estonia by exploiting them e-residency, the “Digital Residency” program introduced by the Estonian government since 2014, which gives the right to use all digital services enjoyed by Estonian citizens, to sign contracts and documents online, to manage a bank account and above all to open businesses in Estonia with significant tax benefits (however It does not give the right to citizenship or physical and tax residency).

e-residency It is only the latest in a very wide series of digital projects that Estonia has created in recent years. Although it is a fairly small country (population around 1.3 million), Estonia is very advanced in terms of technological innovation and digitization, which it has been working on for years. In Estonia, among other things, it can Online voting, Public Administration Large-scale digitizationAnd you can work remotely with a digital visa – temporary work permit for foreigners – Among the most comprehensive located in Europe.

Estonia is not the only country that offers a digital visa – in recent years it has been defineddigital nomads“, among which Europe is considered one among others Favorite destination – But his is for many Considered The best, which is why it has been used by 176 countries (the UK is the fourth country to use it the most after Russia, Ukraine and China).

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The companies that have chosen to use them are above all those that are not specifically linked to a physical location, such as technology companies or companies associated with e-commerce. The The New York Times Tell The different ways in which owners and owners of English companies have used the program: some went to Estonia only once or twice, while others decided to go and live there and completely change their lives.

To make it especially attractive e-residency It is the tax policy applicable to companies that provide it rates For companies from 14 to 20 per cent (in the UK this can be as high as 40 per cent), and only on the profits the company decides to distribute to its shareholders, allowing companies to grow with a very low tax burden.

Estonian Prime Minister Kaja Kallas (Kay Nietfeld / DPA via AP, Pool)

This is also the reason why, like Ireland, Estonia did not want to joinGlobal agreement for taxation of multinational corporations (which imposes a minimum tax of 15 percent). And also One of the reasons the Estonian tax program is considered risky in part by the country’s own government: how Observed By the Ministry of Finance, if the company decides to constantly reinvest its profits, it is not subject to taxation, which defers the payment of taxes on Estonian territory at will.

However, the massive relocation of British companies to Estonia has so far brought mainly economic benefits to Estonia. Likes Tell By Estonian Prime Minister Kaja Klas in an interview with the British newspaper morning cityMoving British companies to Estonia has led to a 60 per cent increase in tax revenue in the last year alone, with gains estimated at €51 million, as well as cementing Estonia’s reputation as a highly developed country from this point on. From the point of view of digital innovation.

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