The Freelancer’s Dilemma: Which Country Is Best for Freelancers? Estonia vs. Spain
Launching your own business is exciting! But we all know it’s not easy. In addition, you must deal with bureaucracy, paperwork, requirements, etc.
However, the truth is that even within the European Union, some countries make opening a company much more accessible than others.
Estonia is one of them.
We believe that Estonia is the best country to be a freelancer and have a company thanks to the e-Residency program, which allows you to open your company easier, have access to a fairer tax system, and you can do practically everything online.
But what happens if we compare freelancing in Estonia vs. Spain? 🤔
Well, that’s what we’re going to see in this article.
If you are hesitating between launching your online business in Estonia or Spain or have already been a freelancer or autónomo in Spain and want to learn more about other options, this article is for you. 😉
We give you 5 reasons (and we could give more) why we believe Estonia is one of the best countries for freelancing.
Table of contents
Bye, Bye, Paperwork
You can do all your paperwork online if you have a business in Estonia, except for picking up the e-Residency at the nearest pickup location because they take your fingerprints.
For example, imagine that one of your employees gets sick.
If you have an Estonian company, you’ll receive an email from the doctor digitally signed by the doctor and the employee. So you’ll only have to sign it, and that’s it!
On the contrary, Spain has more complex and traditional administrative and bureaucratic procedures that often involve visiting offices.
In addition, you must fill out incomprehensible forms, and that’s the last thing you want to waste time on when you run a business.
Estonia is not a tax haven, but you won’t pay any taxes on your company’s income as long as they are reinvested or are justified expenses. You will only pay taxes in Estonia when you transfer money to your personal accounts as wages or dividends.
In Spain, this is something unbelievable. It has one of the highest tax systems in Europe, which means more obstacles to business.
Freelance Quota: Error 404 Not Found
In Spain, you must pay the freelance quota every to Social Security Office.
It doesn’t matter if you don’t have any income for a month. Although the quota is calculated due on your net income, freelancers and small companies are the most disadvantaged.
This means that it’s much more difficult for small businesses to grow. Freelancers also have to work hard to make a profit, and it’s usual and logical that they quit.
However, this concept of the freelance quota in Estonia doesn’t even exist.
We already discussed in the previous point that the only taxes you’ll pay will be when you distribute salaries or dividends.
An Easy-To-Understand Tax System
It doesn’t matter if you’ve lived so many years in Spain or are from another country. The Spanish tax system is difficult to understand unless you are a tax advisor.
Therefore, when you open your business in Spain, it’s the first thing you have to invest in. If you don’t, the risk is expensive.
On the contrary, Estonia has a much simpler and easier-to-understand tax system for any ordinary citizen who wants to start a business. Of course, you still need a tax advisor, but at least you understand what’s going on with your business money, which is quite important.
Estonia is famous for its transparency and low corruption rate.
For example, you can find all the information of the companies in the e-Business Register (contact details, paid taxes, and members).
But also, the information about taxes or deductible expenses is clear and accessible to everyone.
Suppose you are a freelancer or autónomo in Spain. In that case, one of the first sentences you’ll hear will be, “Find a good advisor,” because you cannot understand the information and laws on taxes and deductible expenses on your own.
Sometimes I think that even the advisors find it hard to understand.
And even with a good advisor, the last word is from Hacienda (the Tax Office).
Frequently Asked Questions
With the European Directive on tax avoidance of January 2020, you can live (and be a tax resident) in any European country and manage your Estonian company online without being a digital nomad, as we explain in this article.
However, you must meet specific requirements, such as demonstrating that your company is carrying out a substantial economic activity with personnel, assets, facilities, etc.
So if you have doubts consulting with a tax advisor is the best option.
If you have a company in Estonia and hire employees outside of the country (in this case, it would be in Spain), this may imply that your company is also registered in Spain or opens an office there. In addition, you’ll have to contribute to social taxes in the country of the Spanish employee.
The simplest option is to register those employees as freelancers in Spain, but it will depend on your specific situation.
Of course! Estonia is part of the European Union, making you a trusted member of the European Union and Estonian business community, famous for companies like Wise or Taxify.
In addition, you’ll become part of an exclusive network of entrepreneur
You must consider the tax and administrative obligations in both countries and the peculiarities of your business to decide if having a company in Estonia is the best option for you.
But first ask a tax advisor.
In this article, you’ve seen the advantages of e-Residency. Still, we have also told you that if you are a tax resident in Spain, you must be well informed about taxes and consider if it’s convenient for your business.
And the Best Country to Be a Freelancer Is…🏆
Well, you already know our opinion. We strongly believe that Estonia is the best country to be a freelancer and wins in Estonia vs. Spain comparison.
As we have already said, be informed and consult a tax advisor before making the decision.
With Companio, opening your company in Estonia and managing it’s easy and fast. And if you have to register your business in Spain, we also help you with Companio One Spain. Do you already have a company in Estonia with Companio? We’ve got you covered with our Global plan.