A summary of the top questions and answers from the recent e-Residency AMA session for entrepreneurs in Germany
Recently, e-Residency held a live AMA session for German citizens and residents via the e-resident-built Stand app, which we helped to test in beta mode. 62 people attended the AMA and asked 36 questions on various topics, including the costs of becoming an e-resident, how to start a company in Estonia, business banking, and double taxation in Germany vs Estonia.
This article summarises the top 10 topics asked about and some of our answers, which we gave by video or in writing on 7-8 March. Questions were answered by:
- Susanne Möhring (S.T.B.) , business consultant, IT expert and e-resident from Germany, who has run her own business and supported other solopreneurs and small entrepreneurs with consulting services for over 25 years.
- Mats Kuuskemaa, Country Manager – Germany, Austria, Switzerland, e-Residency
- Maren Krimmer, Business Analyst, e-Residency
- Hannah Brown, Head of Content, e-Residency
Table of Contents
- Top 10 questions about e-Residency
- Benefits of e-Residency for German entrepreneurs
- Costs of e-Residency
- Electronic Signatures
- Contact person & legal address:
- How to start a company
- Business banking options
- Permanent Establishment and double taxation in Germany vs Estonia
- Where to find a tax consultant
- Hiring employees
- Insurance and social taxes
Top 10 questions about e-Residency
1. Benefits of e-Residency for German entrepreneurs
To kick off the AMA, participant Tina asked a great question about the benefits of e-Residency for entrepreneurs in Germany.
Starting a company in Germany can be kompliziert. Estonian e-Residency makes it easy, safe, and accessible to be a founder. Here are the top four benefits of becoming an Estonian e-resident:
- Business is easy at every stage
- Get access to unrivalled growth opportunities
- Do business securely in the world's most digital country
- Connect with the world's entrepreneurs.
Sick of German business bureaucracy? There is a much easier way to incorporate in Europe... Read more about e-Residency and find out the benefits of incorporating in Estonia.
You can also watch Maren's video response to Tina's question in the following thread:
2. Costs of e-Residency
Kalvis asked "How much will the whole process cost me, if I apply for an E-Residency?"
For a detailed breakdown of costs and fees, read this article on the e-Residency Knowledge Base. Hannah briefly summarises the main costs to be aware of in her video answer below, which include:
- e-Residency application fee of €100-130
- one-off company registration state fee of €265
- average fees for contact person and legal address services of €200-400
- accounting fees start at €50 per month in Estonia
- Plus, think about other fees and make a budget before starting. For example, travel costs to pick up digital ID, fees for business or tax consulting, any business banking setup or transaction fees, etc.
3. Electronic Signatures
Heinz asked "What is the possibility of using a digital signature obtained through e-residency and its validity in Germany?"
Indeed, the e-Residency digital ID allows its owner to make Qualified Electronic Signatures, which are the highest trust level of digital signatures under the relevant European regulation (known as the eIDAS). These are valid across the EU.
Watch the video answer:
And here's a link to the blog post on qualified electronic signatures mentioned in the video.
4. Contact person & legal address:
Mehmet asked "Is there any company provide address in Estonia for e-residence company ? Is it common to receive post mail in Estonia for company?"
Under Estonian law, companies whose management team is located outside of Estonia require a local contact person. A contact person acts as a messenger for companies to ensure that the communication works between the local authorities and the company’s management. Only licensed persons or certain professionals can provide contact person services. They are not granted rights to act on behalf of the companies they serve. Paper mail is not that common in Estonia as the vast majority of business is done digitally, but when it is necessary, your contact person can be the receiver of the mail for your company.
Maren provides some suggestions about where to find such service providers in this video:
As Maren mentioned in the video, e-residents can easily find and compare companies providing contact person and legal address services in Estonia on the e-Residency Marketplace.
5. How to start a company
E-resident Konrad asked a question about the process of setting up a company in Estonia. E-residents can register a private limited company in Estonia (known as an OÜ) as soon as they are in possession of their digital ID. The steps are relatively straightforward and 100% online:
- Pick a unique name
- Find a service provider to be your company's contact person in Estonia
- Register the company on the e-Business Register
- Open a business bank account
Read more about the company formation process on our website.
Maren and Susanne also responded to Konrad's question in German in the video below.
6. Business banking options
Salim asked a question the e-Residency Team hears on a regular basis: "Why do banks in Estonia refuse to open a bank account for e-residency holders, whether it's for personal use or for their company, and what alternatives are available?"
To clarify, e-Residency of Estonia doesn't enable e-residents to set up a PERSONAL bank account with an Estonian bank. Estonian banks may open a BUSINESS bank account for e-residents subject to their own eligibility criteria and onboarding procedures. E-residents also have the option to set up a business account with a fintech (also known as an online payment institution or neobank) or a traditional bank from any country within the European Economic Area.
Watch Mats' video response:
Read more about business banking options for e-residents on the blog:
7. Permanent Establishment and double taxation in Germany vs Estonia
Unsurprisingly, the majority of questions asked in the AMA were about taxation. Cross-border taxes are complicated, no matter where you live or which country your business is registered in. In this article, we highlight two topics that came up several times in the AMA - permanent establishment and double taxation.
On Permanent Establishment, several participants, including Sebastian and Ralph asked about what constitutes a "Betriebsstätte" (permanent establishment) for a company operating between Germany and Estonia.
A permanent establishment is created by business activity that is sufficient for a corporation to be viewed as having a stable and ongoing presence in a foreign country. If an Estonian company registers a PE in Germany, then it will generally be taxed similarly to comparable domestic companies in Germany. Activities that may sufficiently suggest a permanent establishment include for example: the place of business management, the location of any branches, offices or other property, where the employees reside, or where the company keeps or registers its assets, including intellectual property..
Watch Susanne's video response:
On a related note, Rayenne asked "How does double taxation work for an expat residing in Germany?"
Cross-border taxation is handled according to tax treaties, domestic legislation, and in some cases regional tax agreements. Germany and Estonia have signed a treaty to avoid double taxation.
See our responses to Rayenne's question in this thread:
And for more information, read this guide to taxation between Germany and Estonia for entrepreneurs.
8. Where to find a tax consultant
Emmeline inquired: "TERE, I'm looking for a tax advisor who is familiar with both countries' tax laws. Do you have any recommendations?"
We have curated a vetted list of tax consulting service providers for e-residents in Germany on our e-Residency Marketplace.
9. Hiring employees
Marco asked about hiring e-residents and the tax and social security considerations. When hiring staff, the most important thing that will affect how your company employs or contracts them is the country where they live.
Watch Hannah's video response for an overview:
Visit our Knowledge Base for more information about hiring employees.
Zelda's question was "What are the insurance and retirement options available for an e-resident with a company in Estonia, selling products in Germany?"
Mats provided an overview and options in his video response:
We hope you found this round-up of the main topics covered in the AMA helpful.
There were plenty more interesting topics covered and questions answered. Visit the AMA archive over at the Stand app to read all 36 questions and in-depth answers.
As mentioned above, e-Residency partnered with the e-resident-built Stand app to help test their AMA product. They'd love to hear from anyone who participated in the AMA to provide feedback on your user experience on their exciting new app. Visit their feedback form here.
And if you're looking for a way to deliver AMAs for your own business or brand, contact the Stand app team to discuss possibilities by email: email@example.com!