French expatriate in Estonia: Heaven for digital nomads
Flavien Delhaye, a French entrepreneur, moved to Tallinn in January to create his private limited company, known in Estonia as an osaühing. The young digital nomad came with one aim: being free of French administrative and fiscal constraints.
At 23 years old, Flavien, who comes from the southeast of France, decided to move to Tallinn at the beginning of the year. "I was previously in a microenterprise in France, and approaching the annual thresholds made me think about expatriation, mainly because of the disadvantages of other forms of enterprise in France," Flavien explains. After inquiring about Estonia, he chose this country. "I am working in e-commerce so my geographical freedom allowed me to work remotely, I was not limited in my choice of residence."
Another feature that governed his choice is Estonia's integration into Europe. "Estonia is a European country where employees speak English, which helps build cooperation and integration. Cooperation with partners in fields such as payment processing is easier. For example, it is much more complicated for advertising platforms to trust you when your company is in Dubai, Malta or Hong Kong," Flavien said. He could also enjoy a rich French-speaking entrepreneurial network when he arrived in Estonia.
According to the young man, launching his own company in France and in Estonia is completely different. "If we do not consider microenterprises (which don't last), France has unfavorable taxation that limits the development of business owners. Oppositely, Estonia has an interesting tax system that allows you to maximize your profitability and save a lot of time. I had myself estimated that it would take me about three years longer in France than in Estonia to achieve my goal."
Geoffroy Berson, former head of digital society issues at the French Embassy, explains why the Estonian fiscal approach provides incentives. "One interesting thing in the Estonian tax system is that you don't pay taxes for what you reinvest in the company. It is important for a young start-up in its period of growth."
The administrative part is also beneficial. "In France, all the administrative procedures are extremely long and complex, while they are fast and intuitive in Estonia. And I say that as someone who is far from good in English," Flavien added.
The entrepreneur gives a practical example he has been struggling with. "I've been fighting for two months with the French tax authorities to obtain a French VTA number for foreign companies. I've been sending emails, calling them with lots of patience, multiple times, to finally get an element allowing me to pay them a part of my turnover. Compared to this, becoming legal in Estonia is a breeze. The same process took me two minutes and after a few clicks online, I obtained my local VAT number."
Estonia has attracted 90,000 digital residents since 2014 with its concept of e-residency. Using an identity card, an e-resident can access more than 3,000 e-services offered by the Estonian administration. In terms of business, Estonia is a dream because with the e-residency program, people outside of Estonia can benefit from Estonian infrastructure. Digital nomads are the key targets of this program. They can incorporate their business in Estonia and benefit from the digital facility since everything can be managed online. Twenty thousand new businesses have been created through this process.
According to Geoffroy Berson, the digital signature saves the equivalent of five working days per year, compared to signing by hand. For example, one can also file one's tax return digitally.
However, it should be noted that Estonia cannot be considered a tax haven. "Taxes and cooperation agreements with many European countries on taxation exist. Also, if the main activity remains in the foreign country, the entrepreneur is taxed by the foreign state, this does not automatically allow tax evasion from one's country of origin," Geoffroy Berson explains. According to him, Estonia has the most transparent business environment in the world with this system. "Estonia is in this sense not a tax haven where you pay nothing, but rather an administrative one, since e-residents get rid of the paperwork," he concluded.
Flavien particularly appreciated the ease and speed with which he became an e-resident. "There were few online procedures at the beginning. Afterwards, I had to go once to the police, once to my local government office and then once to a bank. In less than 15 days, I was an Estonian resident, I got my resident card as well as my residence certificate. I was able to start my operational company and open my personal and professional bank accounts.
The benefit is the simplicity of starting a business in Estonia with unbureaucratic and uncomplicated administrative procedures. Using a single digital ID card, e-residents can sign, encrypt and send documents electronically. "The card acts as an identity card and allows me to access all the administrative procedures online with the help of a card reader that I bought for €15. As a resident of Tallinn, this card also gives me the possibility to use public transport for free," describes Flavien.
Overall, the digitalization offered by Estonia made Flavien realize how France should draw its inspiration from Estonia. "There are several reasons why Estonia is so far ahead in its digital development in comparison to France. It's not just a race for development, there are examples that really make life easier for people who live here. First of all, delivery robots are driving on the sidewalks, waiting for the green light at pedestrian crossings and making home deliveries without any human intervention. Secondly, transport solutions company Bolt comes from Estonia, although it also has customers in France. It allows you to rent a car in just a few minutes using your smartphone at a ridiculously low price, and in pure autonomy too. Finally, in most of the residences I know, we don't have keys to get into the house. I only have a digital code that prevents me from losing my keys," he explained.
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Editor: Marcus Turovski