(Digital Nomad) Estonia e-residency + LLC - Taxes question

Taxes
1

Hi,

Currently, I work for a Company in Switzerland, and they accepted that I spend the next year as a Digital nomad. For that, I´m considering to change my local employment contract for a Service provider contract (I´m an EU national, BTW).

My Plan is to bill the Swiss company using my Estonian LLC and provide the full revenue as my Payroll, consultant. Like that, I will be liable to 0% corporate taxes. (Will maybe use www.xolo.io/ to handle all the legal, bureaucratic details)

Then I will be liable to Personal taxes in the countries I spend my time in. But if I’m moving around Europe, I´m not yet sure how to handle that…

I would prefer to stay registered in CH but it seems I can´t according to the regulation(minimum 180 days of time spent in CH).

Is the plan even possible. Any ideas or experiences?

Thank you in advance.

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2

For such setup, I would definitely get in touch with a Swiss and Estonian tax advisors to review and validate the various tax impacts upfront,

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3

Switzerland (or rather the federal court, as this is an edge case) does not accept the digital nomad status. As long as you do not have a tax residence in another country, you need to pay taxes in Switzerland (see for instance Wie werden Digitale Nomaden in der Schweiz besteuert? – Silvan Amberg).

But I do not get why you want to create an Estonian LLC? If you anyway spend the full revenue as your payroll and are still taxed in Switzerland, you will just pay income taxes on your whole revenue in Switzerland (so the same situation as now I guess). And if you create a Swiss LLC, you will also pay no taxes, as long as you spend your full revenue as your payroll.

4

Thanks for the reply,

So what is really my main problem: I don’t want to do anything out of conformity in CH (wife and children are Swiss Nationals);

If I Open a Swiss LLC and I´m the main Payroll I´m not really solving my problem, As I am anyway going to be more than 180 days out of the country and According to the regulation, action that is enough to lose the residency permit.

Why Estonia LLC? (According to my research)

  • Cheap, fast, remote way opening of LLC;
  • Geared to Digital Nomads(Thousands of DN´s doing that);
  • 0% Corporate Tax.
  • Some SaaS that offer all the Legal, Accounting services for an acceptable fee.
  • Invoice for a Service sent to CH company by Estonia LLC(CH could not care less where I do pay my taxes). Estonia becomes the legal enforcer.
  • If still registered in Switzerland, have to pay a Health insurance that might not cover anything in case of accident while Nomading (Rather pay out of pocket a global one).
5

From what I‘ve read on various sites (e.g. here) you’re still subject to the Swiss health insurance requirement, even after having deregistered from Switzerland. Same reasoning as regarding taxes: until you take up a new residency somewhere else.

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I believe that is the case if I would be a Swiss National. Not clear if that applies for EU nationals.

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Where will you be when you are doing the work?

Your Estonian LLC would almost certainly be liable to pay corporate taxes in that country because it is active there and as an employee you would be liable to pay income taxes and social security there too.

Otherwise all corporations could move their their HQ to Estonia

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The plan is to be a Digital nomad. Spend a Maximum of 2-3 Months in One location.

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The issue is that nowadays, tax laws (national and international) are not made for digital nomads. Theoretically, and especially if you are working, you are supposed to register as a resident each time you move. Not really practical I now, and a lot of paperwork, hassle etc.

What I could recommend, is to do your nomadic year over two years and make sure that you stay at least 180 (or close to it) in Switzerland (basically start in June next year and then come back in May in two years).

Just a side note, health insurances for nomads have often a small print saying that they will only insure you if you are eligible for an automatic insurance in your home country (basically, they ill ship you home and then it is on you to organise the rest).

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The best for taxes is also to rent a permanent home in your main residential country like Estonia and to move all your official paperwork their to justify it as main residence.
It will be useful to provide proof and defend your move.
Negociate a contract where you can still sub rent your place when moving to your other nomadic destination to lower the cost of your Primary residence.
Winter most be horrendous in Estonia !

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11

This play you propose will quite certainly lead to the salary you pay yourself being taxed at Estonian rates: 33% of the gross will be surcharged as social tax (pension+health insurance) and then the income itself will be taxed at 20%.

The EMTA (Eesti Maksu ja Tolliamet / tax+customs agency) is quite rigorous with that: either be able to provide proof of non-Estonian tax residency (Switzerland or some such) or file tax declarations in Estonia. Source: have had to deal with just that last year :wink:

If you want to go full-time nomading, there’s better jurisdictions for a corporate entity - Channel Islands, Gibraltar/Malta/Cyprus, Panama, etc. People like Christoph Heuermann / staatenlos.ch or Andrew Henderson / nomadcapitalist.com make their living advising on these setups :wink:

12

What did you end up doing?

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