I’ve been running my software company Sol Inventum (the first product was: MailMerge365 the simplest mail merge plugin for Office365) for almost a year now. So it’s time to share my experiences and hopefully help others decide what’s right for them.

Updated 27.05.2020: New Xolo pricing and information about integrated business account.

Overview of steps to establishing my business

  1. Apply for Estonian e-residency
  2. Collect the chip card (and free card reader) from an Estonian embassy
  3. Sign-up for company provider Xolo (at the time they were called LeapIN)
  4. Sign-up for bank account with Holvi and get debit business credit card
  5. Sign-up for Paddle payment gateway to sell products with credit cards
  6. Sign-up for Transferwise Borderless to get a business credit card that more services will accept (than the Holvi card)

I did the first two steps in Vienna years ago and all the rest from a co-working space in Tenerife. There are different pickup locations around the world where you can get your e-residency documents, which makes the whole process truly remote. I have yet to go to Estonia, but when I do it will be for pleasure and not just for business admin purposes :)


The Estonian e-residency program gives you a digital identity backed by the Estonian government. This let’s you use government services (which are completely digital in Estonia). The identity can be used to sign documents and probably used to sign in to other services that support a digital identity too (but to be honest I’ve only ever had to use it for Estonian processes).

It’s important to note that the naming may convey that you get Estonian citizenship, but that is NOT the case. You simply get access to the digital government. With that you can for example start a company.

But there is such a thing as a Estonian Digital Nomad Visa in the works apparently, which is not the same as the e-residency, but probably a lot easier if you already have e-residency. Not sure about the status, the last information I could find was an older article stating it was coming early 2019. As I’m writing it’s early 2020, so …

And yes, you don’t have to be European to get e-residency. Please check beforehand though if all the other aspects of creating an Estonian business are available to non-Europeans.

Why an Estonian company?

This topic is discussed a lot around the web so I won’t go into too much detail here. There are other country options for creating companies too. My reasons for Estonia were (and are):

  • It’s a European country, therefore the company has a European address and follows European laws
  • Estonia has a track record of digital government and streamlined the processes
  • It’s a limited liability company with a 1 EUR capital requirement
  • Company profits are taxed when they are taken out, not at the time they are created.
    • This basically means if you re-invest your profits, which I assume most will do in the early days of product businesses you have the full amount at your disposal. Compare that to other countries where every year your profits are calculated and you pay e.g. 25% corporate tax rate on Dec 31st even if you’re going  spend that money on business expenses on Jan 1st. In Estonia that corporate tax rate is only deducted when you pay out dividends for example.

The big other option that’s always mentioned is creating a US company (Delaware Corp) with a provider like Stripe Atlas. I don’t have any experiences with that option and have only heard anecdotes (e.g. setting up is more or less automated and friction less, but try changing your business address and you drown in manual legal work) but please do your own research. An LLC is the default for most investors and even good investors like TinySeed require you to have a US company (although I really hope we can get a European option, any European option, in future for TinySeed or any other bootstrapper fund).

Starting an Estonian company with a service provider

You can create an Estonian company by yourself. Most documentation is available in English, but it won’t hurt to have Google translate available. And you’ll need a business address in Estonia.

For most cases you’ll choose a service provider that handles the company formation, provides a business address (an agent) with mail forwarding and possibly even the accounting.

The two I was left with after my some research and referrals from others were Nordic Consult and Xolo (at the time LeapIN). I chatted with both to clarify some questions and ultimately it just came down to Xolo making a better impression in their web presence. Both had similar prices, services and support.

Xolo has two main limitations:

  1. They only accept certain types of businesses. Basically they’ve optimized their processes for consulting, digital services and products (excl. crypto).
  2. You can only be the sole personal shareholder. No holding company or multiple shareholders.

Nordic Consult and others can provide those, albeit at a sometimes higher cost.

When I signed-up for Xolo there was only one type of product which is now called Xolo Leap (refers to their previous name LeapIN) where you pay a fixed monthly fee for their services.

Update May 2020: Xolo recently increased the prices for Xolo Leap for new customers, but it does now include the bank account (powered by Wirecard Bank), so probably all in all just a slight increase (if you take into account what your bank may be charging you monthly) which starts with Xolo’s basic plan at ~119 EUR (per month incl. taxes), which includes:

  • company creation – you basically just sign the documents they send
  • business address and agent (incl. mail forwarding)
  • accounting: once a month you get a reminder and upload invoices and they now have an email address you can send invoices too as well!
    • (Note: the pricing page is confusing and states that “personal accountant” is only included in higher plans. Their support confirmed that there is still “done for you accounting” on the small plan, just that it’s shared work among all accountants, which isn’t an issue really.)
  • taxes and company reports

If you want to use Transferwise, Stripe and Paypal you have to move to a higher plan (starting at ~155 EUR incl. taxes). If you want an account from LHV (an Estonian bank) you should also go through Xolo as they have a 50% discount agreement.

Note: the first three months on each plan are 50% off and you can hibernate your company if you have no revenue for around 35 EUR / month (incl. taxes). All prices with taxes here, because Xolo (an Estonian company) will invoice you (also an Estonian company) with VAT which you can (only) get back if you purchase from another Estonian company.

They also introduced Xolo Go a while ago where you offer and invoice your B2B services through them and pay 5% of outgoing transactions (i.e. salary, expenses etc). This second option is more like a marketplace – you don’t actually own a company if you choose Go, but I think it’s a good option if you’re starting out. Especially if you’re not expecting to pay yourself for the first months. Xolo Support has confirmed you can change from Go to Leap, but you will have to go through the official business establishment process.

Would I do anything different now? Probably I would look at Xolo Go in detail now, but I wouldn’t choose a different provider. Xolo reminds me about once a month to upload invoices, has had terrific and fast support even for tough questions and I’m very pleased.

Getting a bank for your Estonian company

When I started my company there were three options for bank accounts that Xolo supported:

  1. LVH bank – requires a face to face in Estonia
  2. Transferwise Borderless – can be created remotely
  3. Holvi – can be created remotely

Holvi have stopped supporting e-residency bank accounts so Xolo dropped them and now you’re left with one remote option and one non-remote option. (Update May 2020: Xolo now has an integrated bank account, see above.)

I chose Holvi at the time because it seemed to be the bigger more stable bank in the space at the time. Seems like I was wrong and I would go with Transferwise Borderless today. Not only because it is the only remote option left but also their credit card is more accepted online.

A note on Holvi credit cards: they are actually MasterCard debit cards. And I ran into two issues:

  1. Service providers* (like hosting, in my case Azure, but I wouldn’t be surprised if any pay-as-you-go hosting provider like AWS doesn’t have the same problem) won’t accept debit cards if they charge you for services after usage. But there’s also no option to “charge” your hosting account (basically pre-paying) so with a Holvi you’re stuck with no option but to pay with your personal credit card and then let the company reimburse you.
  2. Holvi issues cards only to personal addresses, so my credit card is tied to a personal address no the company address, even though it is linked to the business account. This causes all kinds of problems when the provider in question can’t support a separate credit card address verification and invoice billing address. This is less of Holvi’s fault but more a limitation of some services (yes, I’m looking at you Reddit Ads).

Transferwise credit cards are also debit cards but they must somehow be treated differently by providers. I have up to this day not had a service provider decline the Transferwise credit card for the same reasons and the card is issued to the business address (even though it is delivered to my personal address).

Would I do anything different now? Go with Transferwise Borderless from the start. They can do anything Holvi can and more. Update May 2020: Xolo now has an integrated bank account that can be created remotely powered by the Wirecard Bank, which is probably the best to get you started, but I cannot speak about the usability of that product as I still run my company on Holvi and Transferwise.

*Actually in addition to the above my Holvi card was:

  • blocked for fraud suspicion with Microsoft Office365 (not for the subscription for my company itself, but when I tried recording a screen capture of how “easy” it is to setup a small company with a custom domain there – yes, the irony is not lost on me).
  • rejected my a number of e-commerce stores such as most recently StackCommerce

Selling products and services with Paddle

Just by using your bank account you can already sell products and services if your clients pay via bank transfer (SEPA). But if you’re selling anything as a self-service offering or in general want to support payment by credit card you will need a payment provider.

When I founded Stripe wasn’t available in Estonia and Xolo recommended Paypal or Paddle. Stripe is now available, alongside Paypal too. In the meantime they only recommend Stripe and Paypal on this page, but they do still support Paddle if you check this page. (It’s hard to find and I’ve reported this issue to their support.) (Update: 2020-10-05, h/t to Cory: Paddle is now listed again on the main Xolo page.)

I wouldn’t touch Paypal as a business with a ten foot pole thanks to their track record. (If you have to I seriously recommend leaving as money in a Paypal account for as little time as possible.)

So I started researching into Paddle. There were some red flags about bad support, but they mostly seemed to be in the past and my support experience with them has been good and fast.

Paddle also only support certain types of businesses, but they mostly match what Xolo accepts.

Their platform handles:

  • credit card payments
  • product and subscription management (with a reasonably good API)
  • and coming soon apparently: business invoicing (giving your consulting customers the opportunity to pay invoices by bank transfers and handling the follow-ups)
  • for an extra fee they offer:
    • abandoned cart recovery
    • providing leads via their marketplace
    • affiliate management and payouts

But also because they are a merchant of record**:

  • tax calculation, deduction and handling
  • first level billing support

Would I do anything different now? No***. It comes down to this: Paddle is more expensive than Stripe, but provides more value to me as a business owner which I think makes the additional percentage in transaction fees (see below, but currently 5% of your Suggested Retail Price plus $0.50) worth it.

Also: Refunds in Paddle are free. They pay back both the charged amount and their own fees. Stripe (and many other providers) only pay back the charged amount but keep their fees. Not only do you lose the revenue, you have to pay for that loss on top.

  • This is very important in the early days of any business as you have growing pains and sometimes just have to refund someone because your service is not up to the level yet that you want.

**Merchant of record is a daunting term if you’ve never heard of it. It basically means Paddle is selling your software on your behalf. This is mostly transparent to your customers: they visit your website or app, you include the Paddle checkout just like a Stripe checkout and people start using your app. Just the invoice they get is issued by Paddle, not by your own company. You get a payment once a month from Paddle and issue a single invoice to them for the licenses they sold “on your behalf”. The reason this is done (and many other like Digital River or FastSpring are also built this way) is that they take care of all the complicated tax stuff for you and handle all the security issues like the recent “strong customer authentication” change. All this is possible with Stripe but in my opinion will cost more time and money to get setup correctly.

***Important: I just realized Xolo currently at the moment only supports Stripe and Paypal. I’m not sure why they dropped Paddle because they obviously still support it for existing clients like myself, but I’ve contacted them to clarify.

While I am very happy with Paddle there are two criticism I need to mention:

1. I challenge you to try finding the transaction fees for paddle on their website (without clicking the link obviously). They have not only removed it from their pricing page (it was front and center when I signed-up) but they have deliberately chosen wording (“discount” instead of “fees”) to make it now show up on search engines****.

I really don’t understand the thinking behind this. It’s going to be one of the first question anyone asks and while they say it’s due to volume pricing (which it isn’t when you’re starting out) the whole “hiding of information” leaves a really bad taste – even as an existing customer.

2. Their terms of services state:

4.2 As Merchant of Record, Paddle shall have the right to set the price or licence fee at which the Product is offered for sale to Buyers.

This is in there for legal reasons – after all they are selling at different prices based on the tax situation of the buyer. But just reading this paragraph lets you wonder if they can set a discounted price and then just pay you less. You need to go way further down to 9.1.1 to read:

9.1.1 Upon a valid sale occurring of the Product, Paddle shall add to your Vendor Account an amount equal to the SRP less: any Sales Tax due, the Paddle Discount and charges for Additional Services and all other charges referred to in these Terms of Use.

So no, if you set a SRP (suggested retail price) of 100 EUR and Paddle sells it for less then that you will still get 100 EUR minus tax and minus the Paddle fee, but I wouldn’t want to confuse my customers with Paddle setting those prices at their own discretion. Imagine my pricing page stating one price and the Paddle checkout stating another. You might ask: Why would they do that? Well Amazon does it, but mostly to empty out their Warehouses. It hasn’t happened to me with Paddle and I really don’t assume it will happen for digital services, but just having that in the ToS makes me uneasy. I may be one of the few people on earth who actually reads terms of services though … ;)

****People will generally search for “paddle transaction fees” or “paddle fees” or “paddle cost” or “paddle pricing” but probably not “paddle discount” (which implies they are giving you a rebate), but you can find it under heading 4. Paddle Discount (they removed the direct link to that section for some reason – I cannot fathom why that might be ;)


My first year in business (well first year in THIS business to be exact) has been more or less smooth from an administrative standpoint. The entrepreneurial challenges are a different topic and will get their own blog post soon enough.

I’m surprised that within one year Xolo has dropped both Holvi and Paddle and very curious to why. I agree that Transferwise Borderless is better than Holvi but disagree that Stripe is better than Paddle (at least for my usecase). For now as long as they don’t switch off Paddle support I’m good.

I wish other European countries would make it possible to found like this. Some aspects are there (Austria has super fast company founding as a Sole proprietor, but for a limited liability company you have a 35.000 EUR capital minimum and need notary acts – although they are finally letting providing a digital version for the latter, see Digital GmbH).

After Brexit the UK Ltd. is no longer a European company, so in my opinion Estonia is still your best bet. Let’s see what the future brings …