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Updated on 21.03.2024
Congratulations! You’ve come up with a brilliant idea for a new start-up, received a start-up visa, and relocated to Estonia! All you need now is a devoted team of developers to translate your idea into something tangible.
In this blog post, we will explore different methods for acquiring the services of software developers in order to make the next tech revolution happen.
Option 1: Remote work based on service agreements
The easiest way to obtain the services of software developers is to discuss service agreements with each developer individually. One upside to this approach is that you have complete autonomy over your choice of developers if you allow your developers to work remotely.
In this case, there are no legal limitations stemming from the nationality or citizenship of the developers you employ. The legal obligation to register as an employer abroad may arise in certain cases, but overall, this is a straightforward and painless approach to hiring your ideal team.
However, receiving work remotely can mean that you have little control over your people. It requires you to enforce strict deadlines and set clear objectives to ensure that everything goes according to plan.
Furthermore, should you require the physical presence of your team members in Estonia, there may be a need for visas.
Option 2: Intra-EU hires
If you wish to have your team present in Estonia yet have no desire to deal with bureaucratic hassles or logistical stressors, you can instead opt for employees within Estonia or the EU.
Thanks to one of the EU’s fundamental economic freedoms – the free movement of persons – there is, from a legal standpoint, little difference between hiring a citizen of the EU and hiring an Estonian.
The EU citizen merely has to register their address in Estonia with the population register to receive their Estonian personal identification code.
Depending on the nature of the work and the company’s approach, the agreement between the start-up and the EU citizen can either be an employment agreement or a service agreement; the differences between the two lie in the degree of control the company has over the developer and the protection the employee is awarded by law.
Option 3: Start-up visa or growth company visa
If the aforementioned options are unappealing for one reason or another and you are currently running a start-up in Estonia, there is a special type of visa available for hiring foreign workers: the start-up visa.
Established in 2017, the start-up visa has recently garnered positive reactions and widespread use within the start-up community.
The process behind hiring workers under the start-up visa scheme is substantially easier than applying for the visa on general grounds. This is because workers who are granted the start-up visa are exempt from the annual immigration quota for visas that are granted for working and residing in Estonia.
To receive this particular visa, the employer must apply for the start-up status by sending an application to the Start-up Committee. Once the employer has received the status, the employee can apply for the visa or a residence permit, depending on their duration of stay in Estonia.
If a start-up has operated in Estonia for at least ten years and it meets the conditions concerning employees and labor taxes, then such start-up is considered a growth company and the employee can apply for a visa to work in a growth company.
Option 4: Short-term work
If you are certain that you need non-EU developers present in Estonia and that the project will be completed in a matter of months, it is possible to utilize a more simplified process for short-term workers.
In this case, the worker must have a legal basis to stay in Estonia (e.g. a short-term or long-term visa) and the work being performed must be registered with the Police and Border Guard Board. The work period must not exceed 365 days in 455 consecutive days. Furthermore, there are specific salary requirements to consider whilst making use of this option.
Option 5: The (general) residence permit
If the options above are not right for your company, you can always assemble your team through a more traditional route. You can start employing people to work in Estonia and have these incoming employees apply for a residence permit for employment.
Unfortunately, this is by far the most complex and costly route, simply because there are multiple requirements and the immigration quota is applicable.
The immigration quota for 2024 was 1303 permits. When considering this option, keep in mind that the quota fills up quite fast, generally within the first few months.
Option 6: Residence permit for short-term work
If a foreigner has worked in Estonia for at least 9 months on the basis of short-term employment registration immediately before applying for a residence permit, they can apply for a temporary residence permit for short-term employment. Such a residence permit is granted to a foreigner for up to two years.
This residence permit for work is exempted from the immigration quota and can be applied for at any time if the conditions are met. However, this residence permit is not extended, and after the residence permit expires, a person cannot work in Estonia for a year.
As you can see, there are various approaches to hiring a development team while running your business from Estonia – you simply need to pick the option that is most suitable for you.
When deciding between the different options, please keep in mind that the methods presented may be taxed differently; therefore, your final decision should be made only after researching the tax implications for each.
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