A country many people don’t think of when they hear the words “tax haven” is Estonia. The Baltic country offers… 0% corporate tax. That’s very difficult to beat. It’s in other words completely tax free to reinvest profit. Basically as long as you don’t take out money(undistributed profits) you pay nothing. The income tax is set at 20% flat. Effectively, if you make €100 profit, you will get €80 in your hand. The tax system is simple and very generous to business owners. And what’s interesting to know is that Estonia is one of the best performing USSR countries in terms of economy. Basically, they are ultimate poster boy for the low tax right wing parties to point to. It’s also not expensive to acquire real estate in Tallinn(the capital). UK also offers a pretty decent tax rate for business generating less than 80K pounds in profit per year but if you have to be in London the real estate costs and living costs in general will make you struggle unless you’re running a six figure business. Tallinn doesn’t pose those problems, rents are low and it’s surpringsly cheap to property.
But taxes aren’t everything, the ease of setting up and doing business is equally as important maybe even more important when you’re a small business owner. The estonian government is very keen on attracting foreign investments so they have information on how to set up business all in english. Estonia’s ease of doing business ranking stands at 12th out of 190 which makes it a very strong candidate for being called eastern europe’s best country to do business in. Also, Estonia is very well developed. If you never traveled to EE you might lump Estonia in to the rest of the poorer EE countries but EE is actually very well developed, arguably the most developed/westernized EE country. The salaries has already surpassed Italy, Spain and Greece. It ranks somewhere in the middle of EU in terms of GDP and salaries.
The catch is, like most other countries, you actually need to live in Estonia in order to benefit from their corporate tax laws. For most people, life in a small baltic country(biggest city Tallinn only has 300k inhabitants) isn’t for them.
If you’re reading this and running a simple online business then don’t worry. Estonia is a high speed internet country and they also offer free wifi throughout Tallinn. You definitely won’t run into to same problems as you run into in South asia. For now Estonia has the rare combination of having good infrastructure with low tax rates and relatively low living costs with a first western type of effieciency and mentality.
So far this post has sounded like an ad for Estonia but there are some other decent alternatives. You have Latvia, the baltic neighbour however they have sligthly effective higher tax rate but for whatever reason you might prefer to live there instead. If you want warmer weather you have Gibraltar, Cyprus and Malta. I can’t go in to detail for each country as that would take forever but it should give you an idea where to head if Estonia isn’t your cup of tea.