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I am a freelance software developer from France. I lead a few others which I hire as contractors to work for companies. I am thinking about opening a company in Estonia as it seems I would be less taxed according to this French article thanks to the e-resident program.

Mr. Filippe is a software developer. He wishes to develop a business of purchase/resale of sound equipment.

In 2020, he creates a company in Estonia and makes a profit of 100.000 euros per year. In 2025, he decides to stop his activity and to sell his business in order to obtain capital and to start real estate investment.

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By locating his company in Estonia, Mr. Filippe saves 250,000 euros in taxes. By investing these savings at 10% per year, he could get an additional return of 25,000 euros per year.

Indeed, there are 0% tax on reinvested profits. That looks appealing however when I will close the company, I don't know if I would get taxed on the capital we would have made from the contract earnings.

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What capital?

You are comparing a company that buys and resells sound equipment with a single-person software house. One is a business that a third-party might be interested in buying. The other is you wrapped up inside a company structure which has no capital value.

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  • Thanks for pointing that out. I've added the details but the capital will be mainly from the earnings we will make.
    – Revolucion for Monica
    Commented Sep 2, 2022 at 8:35
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    That’s not capital - that’s revenue
    – Dale M
    Commented Sep 2, 2022 at 9:41
  • Sure, which goes to the capital at the end of the year if it's reinvested, isn' it ?
    – Revolucion for Monica
    Commented Sep 2, 2022 at 9:43
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    You're using capital in an accounting sense, not a tax sense. Tax on revenue and capital gain is usually different - both become capital of the company if retained.
    – Dale M
    Commented Sep 3, 2022 at 0:17

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