May 25, 2024

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REUTERS/Ints Kalnins (06/09/2019)

UK Brain Drain Estonia Provides Financial Troop – International

Previously, Vicky Brock had difficulty locating Estonia On the map. When he left for the Baltic in December, he carried only his luggage in hopes of a short trip.

Eleven months later, Brock, a British technology entrepreneur, is still out and living as a “refugee” on a former Soviet satellite. Brexit“, It’s worth it.

Brock divided his start on its basis Scotland Founded half of the company in Estonia, which has a population of 1.3 million, it seeks to escape the problem of regulations and financial constraints on doing business. Europe.

Thousands of company directors did the same, some moved physically like Brock, but most stayed there United Kingdom And transfer their business record to Estonia. In doing so, they can take advantage of the integration of the Baltic nation European union And, in this way, take advantage of what the UK has lost: free access to the giant common European market with a population of over 400 million.

Critics say the industrialists’ flight is a blatant example of the negative effects of Brexit, which seals exporters in the mountains of new bureaucracies, imposes new restrictions on trade and restricts the ability to hire workers overseas.

In the case of Estonia, the arrival of British companies, especially technology companies, contributed to the great leap in tax collection and strengthened the country’s reputation as an innovation hub.

After 2004, as in other Baltic states, the situation took a dramatic turn for a country affected by the expulsion of some of its brightest young workers after the EU member granted its citizens the right to live and work in the Kingdom. Member country of the block.

Now the escape is in the opposite direction.

Vistalworks, Brock’s technology company fighting illegal e – commerce, was founded in 2019, three years after the Brexit vote. She was aware that the new trade and tariffs imposed by Brexit could hamper her ability to do business with the European continent, especially if the rules regarding data transfer — something important to her company — were changed.

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Later, British companies began to sideline in support of European research projects and general agreements. So Brock sought out countries to transform his company, prioritizing the rule of law, anti-corruption efforts, financial transparency and lower taxes.

“I don’t even know where Estonia is, but it appeared on one of those lists,” Brock said in a video call from a shared workplace in the city he adopted. Talin, The capital of Estonia.

He said he plans to hire 30 employees over the next nine months. In the future, two-thirds of VistalWorks employees will be in Estonia, and those workers will pay income and employment taxes there, not the UK. Taxes on the European part of the company will also be levied in Estonia.

In late 2020, Brock and her business partner and husband, Stephen Butt, left for Estonia before the Brexit-related deadline to apply for residency in the Baltic. They carried only handkerchiefs with them in the hope that they would soon return to Scotland and think about where to live and how to do business. The program was suspended due to travel restrictions caused by the corona virus infection, which forced them to opt out.

“We learn the Estonian language and manage both the England team and the emerging EU team from here,” he said.

Estonia is one of many countries that offer this type of opportunity to so-called “digital nomads” without the need to live in the country. More than 4,000 British companies have realized the benefits, helping to boost Estonia’s tax collection by 60% compared to 2020, according to the country’s prime minister. Gaja Kallas, To the British business newspaper City AM. He estimated the tax gain at 51 million euros.

Estonia has received applications for e-residency, known as the Estonian Residence for Foreigners, from 176 countries, with the United Kingdom fourth on the list of non-EU countries. Russia, Ukraine e China. Obtaining e-residency does not guarantee citizenship, tax residency or entry into Estonia and other parts of the EU.

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However, it does offer the benefit of a 20% corporate and income tax rate. Corporate tax is levied only when profits (rather than earnings) are distributed that allow companies to grow with less tax burden. In the United Kingdom, the income tax rate for high-income earners is 40%, and for high-wage earners, the rate is even higher.

e-Residency “clearly increased after Brexit, indeed before; Even when the referendum took place, we saw an increase, ”Kallos said City AM.

Hannes Lentsius, director and tax expert at the Estonian accounting firm PwC, said the government’s estimates of increased tax revenue were credible and that the e-Residency program worked well for the country. “Part of this is due to Brexit,” he said.

Another British entrepreneur who found talent in Estonia was David Fortune, who co-founded his company Sahar in 2014. Saher offers its services at European police stations and border checkpoints incorporating the latest technologies to suit your needs.

Fortune worked for the police for 30 years in North Yorkshire, in northern England, where he still lives today, and was surprised to become an Estonian e-resident.

“As a former cop in my late 60s, I don’t think I thought of myself as a digital nomad,” he said. However, becoming one of them is very easy. The Estonians helped him by providing a quality service that included consultation sessions with tax and customs officials, he said.

“They will answer our questions in English within 48 hours,” he said. “I have nothing but praise for those I contact.”

Estonia also has advantages: the growth of the European part of the Sahar is higher than that of the British part and generates tens of thousands of euros in taxes every quarter.

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“It didn’t happen because we had a downturn in the UK, it’s about survival, and we need to expand it if we want our brand to grow,” Fortune said. But he said he had no plans to physically relocate.

Ruth Patterson has been building her company Woolley Wormhead in the UK for over a decade, with Brexit forcing her to make a corporate and personal choice. His website sells designer crochet hats, and there was uncertainty about the change Brexit would bring to e-commerce rules and sales taxes. Patterson divided his time between Italy – where he now lives – and England, so it made sense for him to set up his company in the EU. He became an Estonian e-resident in 2017.

“This is one of the best things I have ever done in my life and my income has doubled in two years,” he said, referring to the amount of money that was in circulation in his business in the pre-epidemic period. She said the Estonian system is digitalized, integrated and she is able to expend more energy on creative work as it requires less time. To date, he has only visited Estonia once.

In contrast, Brexit refugees who live there, such as Brock, often meet in language classes and courses to help them integrate and become residents. According to Brock, in terms of business, Brexit may have helped her, otherwise it would have forced her into an adventure she would never have undertaken; However, he regrets the British decision to leave the EU.

“If I had a magic wand, it would never happen to Brexit; I will swallow my personal happiness and wave that magic wand./ Translation by Augusto Callill