Many countries are interested in attracting IT companies to their jurisdictions, as it significantly stimulates economic growth within the country.
A certain list of countries has always been a priority for founders due to tax benefits and ease of doing business.
We offer services for registration and conducting IT business in the main ones.
Estonia attracts IT business with its tax system and the possibility of fully remote company management through e-residency.
Of course, the main factor that foreign investors pay attention to in the first place is the corporate tax rate, which is charged exclusively on the amount of distributed profits (when paying out dividends).
The most popular form of company registration in Estonia is OÜ (osaühing) or limited liability company, whose owners have their share in the capital and are liable only to the extent of their share. OÜ is suitable for small and medium-sized businesses.
Company registration in Estonia is carried out by power of attorney or through e-residency.
Registration of a company in Estonia requires a share capital of at least 2,500 EUR. The authorized capital must be paid within 10 years from the date of company registration or at the time of payment of the first dividends. In 2023, it is planned to abolish the requirement to contribute the authorized capital.
Estonian tax legislation is very favorable and, what is very important, transparent.
Estonia levies corporate income tax on distributed profits of the company (instead of annual corporate tax).
In simple words: 0% income tax (if you do not withdraw dividends and do not buy back company shares).
A company registered in Estonia is subject to mandatory VAT registration when it reaches an annual turnover of 40,000 EUR.
As long as the company does not have a VAT number or employees, only an annual report is required to be submitted to the Estonian authorities. However, this does not mean that there are no accounting requirements in Estonia.
After the company has obtained a VAT number or employed staff – it is necessary to submit reports to the Estonian tax department twice a month.
In the UK you can register a company in the form of LTD (limited liability company) or LP/LLP (partnership).
We do not recommend choosing LP or LLP forms for doing business. From the available forms it is better to choose a company in the form of LTD.
What will be the difference in cost between companies of different forms? The difference in costs is as follows: registering an LTD adds the costs of submitting financial statements once a year. At the same time, the first financial statements are submitted after 1.5 years of the company’s operation.
The advantages of choosing an LTD company are obvious: it is easier to open a bank account for LTD, the bank will have fewer questions than for LLP, LP companies; transparency and openness of doing business.
UK companies are used as holding companies that can receive dividends from a foreign subsidiary and also pay dividends to an offshore beneficiary without the need to pay any form of tax in the UK.
Nominee companies that serve as asset protection vehicles, i.e. a holding company to protect property or other assets on behalf of a third party.
The UK is often used to attract investment in the company, as English law and transparency give full confidence to the investors.
Royalty payment companies, which can receive royalty payments related to copyrights outside the UK without paying income tax in the UK.
In the UK there is no minimum amount of share capital for UK limited companies. In most cases, the authorized capital of an English company is declarative.
Usually, a limited liability company in England declares a capital of EUR 100, which is divided into 100 shares of EUR 1 each.
There are also no strict deadlines for payment of the share capital of limited liability companies registered in the UK.
The tax rate of 19% is quite reasonable compared to other European countries. In case of competent tax planning, the tax rate can be optimized.
In the case of LLP, the tax on profits earned by partners outside the UK is 0%.
The obligation to obtain a VAT number for the company comes from the moment of reaching a turnover of £85,000 per year.
The reputational advantages of doing business in Cyprus are obvious: the country is part of the EU, so companies registered there are of European origin, at the same time they are not offshore, and therefore they are excluded from the black list.
Registration of a company in Cyprus allows you to conduct business and investment activities with more than 50 countries in Europe, Asia and Africa, with which the Republic of Cyprus has concluded double taxation treaties, including Ukraine.
Due to the fact that Cyprus companies operate under English law, nominee service is officially allowed.
Registration of a company in Cyprus requires the authorized capital of at least 1 000 EUR (the authorized capital is declared, so there is no need to pay it).
Cyprus is most often chosen due to the low tax rate and ease of relocation for the employees.
If a number of conditions are met, taxes in Cyprus can be optimized and the income tax rate can be reduced by 2.5% if the Cypriot company makes a profit from the ownership of intellectual property (IP-box regime). This percentage rate is achieved due to the fact that 80% of the income derived from the ownership of intellectual property can be exempt from income tax, while 20% of the income from intellectual property is subject to income tax at the standard rate of 12.5%.
The benefits are available provided that the Cyprus company participated in the creation of such intellectual property rights and its main activity is related to such intellectual property.
|Country||Income tax||VAT||Income tax on individuals|
|Estonia||0% (20% on distributed capital)||20% (0% on export)||20%|
|Cyprus||12.5% (special IP-Box mode allows to receive deductions and reduce the rate to 2.5-5%)||19% (0% on export)||0% (income up to 19 500 EUR per year)
20% (19 501- 28 000 EUR)
25% (28 001 -36 300 EUR)
30% (36,301-60,000 EUR)
35% (over 60,000 EUR)
|United Kingdom||19%||20% (0% on export)||0% (income up to 12,570 GBP)
20% (income 12 571- 50 270 GBP)
40% (income 50 271 – 150 000 GBP)
45% (income from 150 001 GBP)
Choice of jurisdiction
We determine the company's activities and main markets, analyze the possibility of applying special tax regimes
Registration of the company
We support company registration, draft partnership and investment agreements, obtain tax numbers
Opening a corporate account
We assist with opening an account in a suitable bank or alternative financial institution
We formalize relations with employees and contractors
We conclude civil or employment contracts, draw up a package of contracts for operating with clients
Accounting and reporting
Ongoing legal services, reporting on a monthly and annual basis
✔️ What documents are required to register an IT company?
Registration of an IT company requires a memorandum or articles of association, an application for state registration, copies of the passports of the founders, a certificate of payment of state duty, etc.
✔️ What type of taxation applies to IT companies?
IT companies can choose different tax regimes, such as a simplified taxation system, a unified tax on imputed income, or a general taxation system.
✔️ Is it possible to register an IT company remotely or do I have to visit the offices of state authorities?
In most cases it is possible to register an IT company remotely through the state services portal or electronic services of tax authorities, but in some cases personal presence may be required.
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Estonia, due to its attractive legal regulation, favorable tax conditions and ease of administration, is popular among investors. Many entrepreneurs choose this particular jurisdiction to register their business. However, after registering the company, shareholders always face the question of how to distribute dividends in the company. Therefore, this article is…
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