One of the typical questions I get from clients is: where should I set up my company as a digital nomad? How do I arrange my digital nomad company registration?
The answer really depends on your situation. However, we’ll have a look at some guidelines and some examples that will give you a better idea about what to look for.
Benefits of a Digital Nomad Company Registration
There are many benefits in setting up a company. However, they’ll depend on your situation and where you set up your company.
In any case, I mentioned some general benefits which you can expect below:
- Credibility: operating as a company compared to as a freelancer / sole-proprietor will enhance your credibility.
- Limit your liability: by operating through a company you limit your liability to the assets of the company. Hence, your personal estate is not at risk.
- Tax benefits: setting up a company can also help you with lowering your tax burden.
- Funding: easier access to outside funding.
What to Consider Before Incorporating a Remote Business
If you plan to incorporate a remote business, you need to be aware of some things. Let’s have a look at what these are.
Freelancer vs Company
First of all, there is the difference between setting up shop as a company or as a freelancer.
If you register yourself as a freelancer, this means you register the business in your personal name. However, in this article we focus on setting up a company. Which is a separate legal entity from you as an individual.
This distinction is important for many reasons but also for taxes. In the first case, you’ll pay personal income taxes on your income, while a company is subject to corporate income tax.
Easy is Not Always the Best
Setting up a company where it is the easiest is not always the best if you keep a long-term view in mind.
Over the years many nomads decided to setup an e-business in Estonia via their e-residency. The reason is that they can do everything online themselves without the need to visit the country or the help of an advisor.
Yet, from a tax point of view, Estonia is often not a good choice. Definitely, if you don’t have any other connection to Estonia. And they only found out after doing so.
So, maybe that country where you need the assistance of a local lawyer or accountant is worth it after all. In this way, you can prevent surprises.
Only Focus on Corporate Income Tax Rate
When looking for a place to incorporate their company, many nomads limit themselves to google for the places with the lowest corporate tax rate or no corporate income taxes at all.
Of course, the corporate tax rate is important. But it’s only one of the elements you need to keep in mind.
Not Taking Professional Advice
Also, by just going ahead and setting up everything yourself, you might miss things that a professional might point out to you.
This can be obligations that come with a certain decision but also opportunities you might not be aware off. The reason is that many advice you’ll find online is generic and not tailored to your situation.
Ignoring International Tax Rules
Many people forget about international tax rules when they want to improve their tax setup and pay lower taxes.
Unfortunately, it’s not as easy as just setting up a company abroad in a country with low or no corporate taxes.
First of all, if you do a digital nomad company incorporation in one country but you manage the company from the country where you have your personal tax residency, you can still become liable to corporate taxes in that last country.
This is where the concepts of management and control on the one hand and permanent establishments on the other hand come in. This basically could wipe-out any of the benefits of setting up a company abroad.
Apart from that, many digital nomads don’t take into account all taxes when assessing the options.
I already mentioned corporate tax but that’s only one element. If you have a company abroad, you also need to consider the (double) taxes on your dividends. The country where you incorporated your company can levy a withholding tax and in your home country you’ll pay your final dividend tax.
Best Country to Register a Company for Digital Nomads
You have endless options to arrange your digital nomad company registration. Yet, below I’ll give you a list of countries of some of my favorites.
You’ll notice that I didn’t include many of the more exotic options in there. There are the British Virgin Islands, Panama and all these kinds of places. However, due to their recent history with tax evasion, setting up a business in some of those places might cause you more headaches than anything else.
Of course, you could also opt to set up a company in Singapore or Monaco. Unfortunately, these options are not so accessible for the average digital nomad.
Below I included a list of countries which can be interesting for digital nomads to set up their company. As it’s not possible to rank them as everyone’s situation is different, I put them in alphabetical order:
- Bulgaria
- Cyprus
- Estonia
- Hong Kong
- Malta
- Romania
- United Arab Emirates
- United States
Now let’s dive deeper into each of these options.
Bulgaria
The main point why Bulgaria is an interesting option to set up your company is the low tax rates it offers.
The corporate tax rate is set at 10% which is one of the lower corporate tax rates in Europe.
Furthermore, the withholding tax rate on dividends is only 5%. Just like the corporate tax rate, this is rather low for a European country.
Because Bulgaria is part of the European Union and the Schengen Area, the country also offers you access to the whole of Europe.
A minor disadvantage is that getting things done in Bulgaria is not always as easy as in other places. Specifically to manage your digital nomad company registration, I advice to work together with a local advisor to manage things for you.
If you want to learn more about taxes in Bulgaria, you can read my post about tax residency in Bulgaria.
Cyprus
Cyprus is another country in the European which offers low tax rates.
The difference with Bulgaria is that Cyprus is not part of the Schengen Area.
The corporate income tax is 12,5% and Cyprus does not levy withholding tax on dividends. However, if you live in Cyprus, you’ll have to pay a social contribution of 2,5% on your Cypriot dividends.
Cyprus is well-known by nomads to arrange their digital nomad company registration. However, you should make sure to work together with a reputable advisor to help you with your paperwork.
In case you want to dive deeper into the tax rules of Cyprus, you can read my article about tax residency in Cyprus.
Estonia
In general, I’m not a huge fan of Estonia. Or, at least, I’m of the opinion it’s not such a good option as many people think it is.
Let’s start with the good news. Estonia is a very developed and digital country. That’s why you can even incorporate your company fully online without ever needing to go there or the assistance of any local advisor. However, the easiest way is not always the best one…
Corporate income taxes in Estonia currently amount to 20%. And from 2025 they will go up to 22%. At least, Estonia doesn’t levy a withholding tax.
The big benefit with Estonia is that the corporate tax is only due when you decide to pay out a dividend from the company. In other countries, you would pay your corporate income tax at the end of the year and it will be gone. This makes the Estonian company useful in very specific cases. For example, if you want to park your money for a while without taking it out of the company.
I dedicated a specific article to the reasons why I’m not a huge fan of incorporating your company in Estonia. Yet, in very specific circumstances it’s an option worth considering.
Hong Kong
Hong Kong is one of the places in Asia that jumps out for setting up your company.
The interesting point about taxes in Hong Kong is that the country applies a so-called territorial tax regime and doesn’t levy withholding tax on dividends.
This means that you only pay taxes on income from a local source. Of course, it’s a bit more complex than that but that’s the principle.
If you want to learn more about taxes in Hong Kong, you can have a look at the website of the Hong Kong Inland Revenue Department.
Malta
Malta is the European country with the lowest corporate tax rate while their statutory tax rate is 35%.
The statutory tax rate in Malta is 35% which is actually the highest in the whole of Europe. Didn’t I just say they actually have the lowest tax rate?!
The reason for this is that although their statutory rate is 35%, the actual tax rate is 5%. This comes from the fact that if you distribute a dividend from your Maltese company, you can get a refund of 30% of the corporate taxes you paid earlier. Hence, your actual tax rate is only 5% which is the lowest in Europe.
Furthermore, Malta doesn’t levy any withholding tax on dividends.
If you want to have a look how this works in detail and why you should consider you can have a look at my post about tax residency in Malta.
Romania
The main attraction point is that Romania offers a special regime for micro businesses.
Under the micro company regime, you pay 1% or 3% in taxes on your revenue (not profit). So, your actual tax rate on net profit will depend on the amount of expenses you’ll have.
Let’s say your business does €100k in revenue and has €50k in expenses. Then, you’ll pay €3k in taxes (3% of €100k). Compared to your net profit, this means a tax rate of 6% (€3k on €50k of profit). However, you pay the same amount of taxes if your expenses would only be €20k. Nevertheless, in this case your actual tax rate on the net profit would only be 3,75% (€3k on €80k of profit).
Do note that certain conditions and requirements apply if you want to fall under the scope of the regime for micro businesses.
Also apart from the regime for micro companies, Romania offers decent tax rates. You can read the details in my post about tax residency in Romania.
United Arab Emirates
The United Arab Emirates, and specifically Dubai, were long considered the best place to incorporate your business. The reason was simple: there were no income tax rates in the UAE.
However, this changed when they decided to introduce a corporate income tax rate of 9% since 2023. Luckily, this rate only applies if your company has an annual taxable income of more than AED 375k (~€93k).
So, smaller companies can still incorporate in the UAE without incurring any tax liability. Nevertheless, in this case you also need to take into account the associated costs and if it’s worth it to you.
Also note that you only pay corporate tax if your taxable profit surpasses the aforementioned threshold. This means that if you pay yourself a tax deductible wage, you lower the profit of your company. Furthermore, the UAE doesn’t levy any withholding tax on dividends.
Check out my dedicated article if you want to check what it means to set up your business in Dubai.
United States
Many digital nomads have heard about the option to incorporate a US LLC. And it’s a great solution for many digital nomads. However, at the same time, it’s also a terrible option for others. As always, your structure needs to fit your situation.
The interesting part of the story is that a US LLC doesn’t have to pay corporate taxes in the US as the IRS deems it tax transparent. Nevertheless, this also means you need to assess the underlying tax consequences for you as a private individual even more.
Feel free to read my detailed post about how you can benefit from setting up a US LLC as a digital nomad.
How to Pick the Right Country and Save Taxes and Headaches
As set out before, there’s many elements that come into play in order to decide where to set up your company.
If you want to make sure you have a good understanding of all these attention points and the options available to you for your digital nomad company registration, I would suggest to look for professional assistance.
If you want assistance of a digital nomad tax advisor who assisted more than 200 nomads with their setup, you can reach out to me.
