Starting a company takes time, energy, and decision-making. One of the most crucial company startup considerations is where to register. Let’s compare Estonia and Hong Kong, two of the most common company registration countries, to see whether you’d be better off establishing your business.
In order to create a company in Estonia, a non-resident does not need to overcome many bureaucratic barriers: it is enough to follow simple rules.
But in Estonia, the main advantage of starting a business is not having to pay taxes on earnings that are retained. This legislation makes it possible for capital to grow and be reinvested, opening up new opportunities for lowering tax liabilities and growing the business.
Benefits of registering a company in Estonia:
- Process for easily and quickly registering a business. It is a fact that a corporation may typically be registered within less than 3 hours.
- In Estonia, starting a business does not obligate one to share in the profits.
- Among the main advantages of founding a corporation in Estonia is the absence of income tax. An Estonian company is exempt from paying income tax if it invests its profits. Income tax is owed if you withdraw cash from the firm or spend them on non-business purposes.
- Low costs for company registration. Zero-euro-approved capital may register a firm. 2500 euros is typically the permitted capital. This payment might be postponed. Start a corporation with $0 and pay 2500 euros when you can.
- A non-resident of any country (individual or legal entity) can become the owner of the company.
- In Estonia, a person may own and run a business simultaneously.
- Establishing a company in Estonia is to guarantee minimal expenses for the maintenance of the enterprise.
- Clear algorithm and simple reporting for providing documentation.
- Non-residents may receive EORI and VAT numbers by forming a business in Estonia.
- By establishing a corporation in Estonia and getting an e-residence (resident card), non-citizens can “become an electronic citizen” and operate their business remotely, use an electronic signature to sign papers and have access to all state facilities and records in Estonia.
- Estonia lets non-residents create companies and bank accounts with famous European banks and payment systems. Estonian banks provide remote Internet banking.
Foreign businesses prefer the incorporation of Hong Kong company for several reasons. Investors register companies in Hong Kong for its strategic location. Since it is an autonomous administrative entity in China, the market base is enormous. The fast-growing economy attracts enterprises worldwide. Other advantages:
- Ease of Company Formation: Foreigners are allowed to own wholly owned incorporated entities in Hong Kong. Hong Kong’s company registration process may be completed online in 24 hours.
- Open Market: Being one of the freest economies, the country has a wide range of activities.
- Competitive tax system: Hong Kong’s corporate tax rates are competitive as they follow a territorial principle system that exempts all income earned outside of Hong Kong from tax. Hong Kong’s income is taxed from 8.25% to 16.5% in 2018/19. In addition, capital gains, dividends, VAT, sales, and withholding tax are not payable.
- With a simplified incorporation process and requirements, applicants can register a Hong Kong company without a visit and quickly receive ready-made corporate documents within 24 hours to start their business
Forming a company in Estonia or Hong Kong, like any other jurisdiction, has its particular challenges. Before making any final choices, consult experienced lawyers and business consultants and do significant market research.