Discover how setting up a simple EU business can save your company thousands in tariffs and taxes.
A Growing Tariff War: What’s at Stake?
American entrepreneurs selling products to Europe are facing huge costs from Trump’s tough 25% tariffs on EU imports. The EU isn’t backing down—it’s preparing its own tariffs targeting U.S. goods worth up to €26 billion. This growing trade battle means significant losses for American businesses. But here’s the good news: many savvy entrepreneurs are finding a clever way around these tariffs by setting up companies in Estonia, a smart solution to protect profits and simplify trade.
Why Estonia?
Estonia, a member of the EU and the Eurozone, offers unique advantages for U.S. businesses seeking entry into European markets. Setting up an Estonian company can provide significant tariff relief, as goods shipped within the EU benefit from the free movement of products without internal tariffs or cumbersome customs processes. Once American exporters have established an Estonian-based entity, they can leverage Estonia’s favorable business environment, digital-first governance, and clear regulatory framework.
Moreover, Estonia offers the innovative e-Residency program, allowing entrepreneurs to register and manage their EU-based business entirely online, from anywhere globally. By exporting products first to their Estonian company, American businesses can subsequently distribute goods across the EU market tariff-free, effectively bypassing the punitive tariffs directly imposed on U.S. imports.
Specifically, by using an Estonian entity, American entrepreneurs can invoice their European customers directly through the EU-based business, meaning tariffs are calculated on lower initial transfer prices rather than on final sales prices. Profits from final sales accrue within the Estonian company and can then be reinvested or managed strategically to defer corporate income tax obligations, as Estonia’s taxation applies only upon profit distribution.
This strategic approach is further strengthened by Estonia’s corporate tax structure, where corporate income tax is only applied upon profit distribution, providing entrepreneurs with an additional compelling incentive to reinvest earnings, optimize cash flow, and maximize business growth.
Need Expert Guidance?
Whether you’re already exporting to Europe or planning to expand your business overseas, navigating tariffs and compliance doesn’t have to be daunting. At Magrat, we specialize in supporting entrepreneurs with tailored services to set up and manage Estonian businesses effectively. Contact us today to learn how we can help you safeguard your profits and smoothly navigate the complexities of international trade.