Estonia is included in the list of European countries where it is enough for a crypto business to obtain a work permit. This country is actively developing the IT industry and is loyal to the blockchain, so many crypto companies seek to obtain a crypto license in Estonia. It makes it possible to work in this territory and throughout the European Union legally.
Why is a License Needed?
Many crypto business owners are in no hurry to get a license because they don’t want the extra hassle and expense. However, this opinion is erroneous because there are no chores until the state authorities are interested in you.
So why do you need a license? Most countries are concerned about the safety of their citizens, so they are developing a legislative framework to prevent fraud and money laundering. In addition, the government is interested in ensuring that all companies on the country’s territory work legally and pay taxes.
If you decide to enter this market but do not apply for a license, you risk getting severe problems with the law. It often results in a hefty fine. In addition, it is usually widely discussed among crypto enthusiasts so that you will notice a sharp decrease in the number of clients, and the value of your shares may go down.
However, these problems can be avoided by obtaining a license in advance.
The benefits of obtaining a license do not end there. So, if you are not afraid to attract the attention of regulatory authorities, then you can actively advertise on various information platforms to attract additional customers.
In addition, many clients are more interested in working with companies that have a crypto license in Estonia, as they can be sure that there is no fraud here and any disputes can be resolved in the legal field. Most crypto exchanges value their reputation, so they strive to solve all problems in favor of customers.
As you can see, a licensed crypto business has the opportunity to develop harmoniously, not be afraid of problems from the law, and also attract even more customers.
Why Estonia?
Of course, Estonia is not the only country that issues a license to operate a crypto business in the EU. Nevertheless, the most simple rules are created here, with no bureaucracy and problems.
Earlier in Estonia, you could get 2 types of licenses (for crypto exchanges and wallets). The choice depends on what kind of activity you conduct. If you are engaged in exchanging currencies from crypto to fiat or crypto to crypto, you need a license for the exchange. But if you own an electronic wallet that allows you to store crypto assets, then the second type was right for you. It extended to both cold and hot wallets. However, if you own a more complex platform, it makes sense to get both types of licenses at once. It was very inconvenient, and obtaining two licenses at once was quite expensive and took a lot of time, so in March 2022, it was decided to combine them into one. It simplifies the work of both crypto companies and regulators as much as possible.
Another point is that there is no corporate tax. Instead, only distributed profits are typically subject to 20% corporate income tax at 20/80 of the net profit distribution. In simple words, following such a taxation scheme, a crypto business gets the opportunity to reinvest its profits without paying taxes. Various companies generate more than 1 billion euros of economic activity through Estonian branches.
How To Get a License?
Practice shows that obtaining a license in this country is not difficult. The first thing you need to do is create a company with at least 2 people (one must be a security specialist).
An application and other documents for obtaining a crypto license can be submitted electronically or in Tallinn. In this case, you must immediately pay a state fee of 10 thousand Euros.
Further, the state authorities have 60 days to consider your application, during which you will receive a response. This process usually takes a little less than two months.
The license is granted perpetual. However, if the regulators suspect you of fraud, then there is a high probability that they will withdraw it.
Before applying for a permit, you need to collect several documents in advance. It includes all information about the owner and members of the company’s board:
- resume,
- contact details,
- photocopies of passports, etc.
The list of documents should also include companies charter papers, where the capital is listed, business fees, and bank account numbers.
If you doubt whether all the documents are filled out correctly, you can contact the appropriate agency specializing in such services. Specialists will check how your company meets the basic requirements and how correctly assembled, and all paperwork is completed.
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