Estonian Company for Spanish Residents: 0% Tax on Retained Profit, the Cuota and Hacienda

Spain ranks third in the world by number of e-residents, with about 7,500, and Spanish citizens have founded more Estonian companies than any other nationality.

Any freelancer or small business owner who has been self-employed in Spain knows why so many open a company in Estonia. Tax is due on profit you have not even taken out, and it is advanced during the year. An autónomo, Spain’s sole trader, answers for business debts with personal assets, and the step up to a sociedad limitada (SL) means a notary, the Registro Mercantil and a gestoría on retainer. An Estonian company (empresa en Estonia, as most people here search for it) changes the first item on that list most of all.

The Core Idea: Spain Taxes Profit When It Is Earned, Estonia When It Is Paid Out

In Spain the tax bill follows the profit, wherever it sits. An autónomo pays IRPF on the whole result of the year, reinvested or not. An SL pays corporate tax on it in three instalments during the year, 19% on the first €50,000 and 21% above for a small company, and the owner pays again on dividends.

In Estonia the tax bill follows the payout. An OÜ (osaühing, Estonia’s counterpart of the SL) pays 0% corporate income tax on retained earnings, and 22% of the gross amount only when profit leaves the company as a dividend. This tax deferral is the whole point of an Estonian company for someone living in Spain. While the money stays inside, spent on the business or held as a reserve, there is nothing to pay and nothing to advance.

The founder who wins most is easy to describe: the business earns more than its owner needs to live on, and the surplus stays in the company, with no salary and no dividends paid out of it.

Autónomo vs SL vs Estonian OÜ: Tax on €60,000 of Profit

The model: one owner, turnover under €1 million, and €60,000 of annual profit after costs and the cuota. All rates are current. IRPF uses the general scale for a single person with the standard 5% expense allowance, without regional differences.

Each year the OÜ leaves €11,600 more than an SL and about €16,000 more than an autónomo for marketing, stock, software or a first hire. After five years the gap is €58,000 to €80,000, before counting what that extra capital earns.

When the OÜ does distribute, it pays 22%, and Spain taxes your dividend at 19% on the first €6,000 and 21% up to €50,000. Paid out in full, the two companies end up within about €1,300 of each other, so the Estonian route costs next to nothing even then. The advantage is the first table: tax later, only on the part you take, and at a moment you choose, for example once the business no longer needs the money.

How to Keep the 0% Tax on Retained Profit While Living in Spain

Three practical points make the first table real for a Spanish tax resident.

Live on something else, or on a modest part. The model suits founders with another income, such as a job, a partner’s salary or an existing autónomo activity, which you can keep for Spanish clients while paying one cuota, not two. It also suits founders whose business earns clearly more than they spend. Whatever you do take out, as salary or dividends, is taxed in Spain like any other income. If you work in the business yourself, Spain expects that work to be paid at a market rate. So the more the business outgrows your own hours, with a product, a shop, a team or stock, the more profit stays inside.

Keep the profit in the business. Spend it on growth or hold it as a reserve. Private expenses paid by the company are taxed in Estonia like a distribution, and Estonian company law does not allow an OÜ to lend money to its shareholders or board members at all, so the reserve stays a reserve.

Have the company managed outside Spain. Owning an Estonian company while living in Spain is legal, and nobody needs to keep a “low profile”. Hacienda looks at one fact, the place of effective management (sede de dirección efectiva), meaning where the company’s decisions are really taken. The three set-ups below show what that means in practice.

Three Ways to Run an Estonian Company from Spain: What Hacienda Looks At

With partners abroad. A managing partner lives in Estonia or another country, and you work on the business from Spain. Management is outside Spain, and as long as Spanish residents and their relatives hold less than half of the shares, Spain’s controlled foreign company rules (transparencia fiscal internacional) do not apply. The full 0% applies. It is a common set-up for international teams and startups with a co-founder in Spain.

As a mobile founder. Perhaps you spend most of the year abroad, or you are about to move. Once you are not a Spanish tax resident, Spain has no claim on the company, and a company run online goes wherever a digital nomad goes. Spain’s exit tax concerns only shareholdings worth more than €4 million, or more than €1 million for a stake above 25%, and only after ten years of Spanish residency, so a young company is unaffected.

On your own, from Spain. This works too, with a smaller but real gain. A company managed from Spain is treated as tax resident there, or as having a permanent establishment (establecimiento permanente) in Spain. The OÜ registers with Hacienda, obtains a NIF and pays Spanish company tax on its profit, at the SL rates above, and Estonia does not tax that profit again when it is distributed. You still swap IRPF that climbs to 47% for company tax of 19% to 21% on retained profit, and you gain limited liability and an administration you run online. A Spanish adviser handles the Spanish filings.

None of the three is permanent. Founders start alone from Spain, then bring in a partner abroad, hire, launch a product or move country, and the company changes set-up with them. An OÜ is easy to reshape, and the founders who get the most out of it treat the structure as something to adjust, not a box to fit into.

What Else an Estonian OÜ Gives a Freelancer or Founder Living in Spain

• Limited liability from day one. Your home and savings are separate from the business.
• A company you run from your laptop. Formation, contracts and the annual report are signed online, in English, with a signature valid across the EU. It suits any online business, from consulting and software to e-commerce.
• No notary, no Registro Mercantil, and share capital from one cent.
• No advance payments. Estonia has no equivalent of Modelo 130 or Modelo 202.
• Room to grow. A foreign partner or investor joins without first applying for a Spanish NIE, which an SL would require. For a startup planning to raise money, that matters.

Does an Estonian Company Replace the Cuota de Autónomos?

It does not replace the cuota, and that has a good side: inside the EU you are insured where you physically work, so you keep Spanish healthcare and your pension record without a gap. Some Spanish-language websites promise invoicing without being autónomo (facturar sin ser autónomo). In practice, Spanish advisers register the owner-manager of a foreign company in RETA, like the owner of an SL.

Current figures:

• an ordinary autónomo pays from about €206 to €607 a month on the minimum bases, and €80 a month in the first year under the tarifa plana;
• an owner-manager of a company (autónomo societario), Spanish or Estonian, has a minimum base of €1,424.40, which means about €450 a month.

Social contributions are not paid twice: an A1 certificate from the Spanish Social Security treasury (TGSS) keeps Estonian social tax off any board member fee.

Moving to Spain with an Estonian Company: Expats and Digital Nomads

Many readers of this page are expats and remote workers who already own an OÜ and are moving to Barcelona, Málaga or the Canary Islands. You can keep the company, and profit left inside it stays untaxed as before. After 183 days a year in Spain you become a Spanish tax resident, declare there what the OÜ pays you and join Spanish social security. If you are the only director, the company’s management arrives with you, which is the third set-up above, so many owners add a co-director abroad before the move. The digital nomad visa and the Beckham law have their own conditions for people who own the company they work for; raise them with a Spanish adviser before you apply.

Modelo 720, Dividends and Your Spanish Tax Return

Two Spanish forms come with the company, and neither is heavy. Dividends go into your annual Renta as savings income; nothing is withheld in Estonia, so you declare them yourself.

Modelo 720 is an information return on assets abroad, filed by 31 March. It applies per category once that category exceeds €50,000 on 31 December, so a new company with a small share capital is far below the line. After the first filing you report again only when the value grows by more than €20,000. The OÜ’s bank account goes on the form too once it holds more than €50,000 and you have signing rights. The EU Court of Justice struck down the old penalties years ago, and filed on time it is just a form.

Questions e-Residents in Spain Ask Most

Will Spanish clients accept invoices from an Estonian company?

Yes, Spanish businesses buy from EU suppliers every day. An OÜ run from Estonia or by partners abroad invoices Spanish businesses without VAT under the reverse-charge rule (inversión del sujeto pasivo). An OÜ run from Spain registers with Hacienda and charges IVA like a local company. Estonia issues VAT numbers to companies with a real link to the country, see our guide to VAT registration for e-resident companies.

How do I open an Estonian company from Spain with e-Residency?

The usual route is Estonian e-Residency: a €150 state fee, and you collect the card at the Estonian embassy in Madrid or at the periodic mobile pick-up point in Barcelona. Without the card, you can sign at a notary in Tallinn or send a power of attorney certified by a Spanish notary with an apostille; our guide to founding a company without e-Residency covers both. The state fee to register a company in Estonia is €265. For the account, see our comparison of banking options for non-resident companies.

Set Up Your Estonian OÜ from Spain with Eesti Firma

Eesti Firma holds an Estonian licence for company services. Our lawyers set up the OÜ through e-Residency or a power of attorney, and our accountants keep its books, file its VAT returns and prepare the A1 paperwork on the Estonian side. Before we start, we ask who is going to run the business and from which country. Then you know which of the three set-ups is yours, and your gestor knows what to expect. Details: company formation in Estonia and accounting.

Send a Request

Frequently Asked Questions