When choosing a jurisdiction for a cryptocurrency license, both Panama and Estonia crypto license offers distinct advantages. However, each country’s regulatory environment, tax benefits, and licensing process differ significantly. Below, we’ll compare the two options to help you decide which is best for your crypto business.
Why Choose Panama Crypto License?
Panama is an attractive jurisdiction for cryptocurrency businesses primarily due to its tax benefits and ease of company setup. Panama offers:
0% Corporate and Dividends Tax: This makes Panama a highly tax-efficient jurisdiction for crypto companies.
Confidentiality: While directors' information is public, shareholders and Ultimate Beneficial Owner (UBO) details remain confidential.
No Physical Presence Required: The entire company setup process can be completed online.
Minimal Accounting Requirements: Only one invoice, contract, or agreement needs to be submitted within four months from the financial year-end, kept for internal records.
Legal Activities Permitted: Panama's licenses allow businesses to engage in exchange services, over-the-counter (OTC) trading, Initial Exchange Offerings (IEO), crypto-to-crypto and crypto-to-fiat transactions, utility token exchanges, crypto fund activities, custodial services, futures, shorts, and NFT minting and trading.
Cost and Process:
Cost: €4000, covering notarization for three individuals. Additional costs apply for extra notarizations.
Timeline: The registration process takes 21-28 days.
Requirements: A minimum of three directors is required, with options to hire directors for €500 per month or €12,000 annually.
Learn more about Panama crypto licenses.
Estonia Crypto License
Why Choose Estonia Crypto license?
Estonia is known for its progressive stance on digital business and is ranked number one in the 2020 Tax Competitiveness Index. It offers a favorable environment for cryptocurrency businesses with the following features:
0% Corporate Tax: Estonia's tax system is highly competitive, attracting many businesses.
Comprehensive License: Estonia offers a single "Virtual Currency Service Provider" license, covering a broad range of crypto activities.
Strong Regulatory Framework: Estonia's robust legal environment provides credibility and security for crypto businesses.
Legal Activities Permitted: Estonia's license allows for ICOs, wallet services, exchange services, OTC trading, IEOs, utility token transactions, crypto-to-crypto and crypto-to-fiat transactions, running utility token exchanges, opening EUR bank accounts, and issuing debit cards.
Cost and Process:
Cost: The total cost for company registration and license application is €25,000.
Timeline: Company registration can be completed in 48 hours, but the licensing process typically takes 6-9 months.
Share Capital Requirement: €100,000 for custodial services and €250,000 for exchange activity.
Additional Requirements: A local office in Tallinn is mandatory for licensing. Hiring a local director and AML officer can add to the cost, with recruitment fees of €4000 each, and monthly costs of €2500.
Tax on Dividends: Estonia imposes a 14% tax on dividends, which is an important consideration for profit distribution.
Feature | Panama | Estonia |
Corporate Tax | 0% | 0% |
Dividends Tax | 0% | 14% |
Confidentiality | Shareholders/UBO info confidential | Publicly available information |
Physical Presence | Not required | Not required (Remote process available) |
Company Setup Timeline | 21-28 days | 48 hours for registration, 6-9 months for licensing |
Licensing Cost | €4000 | €25,000 |
Share Capital Requirement | None | €100,000 - €250,000 |
Legal Activities Permitted | Wide range including OTC, ICO, IEO | Wide range including ICO, IEO, debit cards |
Office Requirement | Not required | Office in Tallinn required |
Additional Requirements | Minimum 3 directors | Local director, AML officer, office in Tallinn |
Learn more about the Lithuania crypto license.
Panama offers a cost-effective and tax-efficient solution with minimal ongoing obligations, making it ideal for startups or businesses seeking confidentiality. In contrast, Estonia provides a well-regulated environment with strong legal frameworks and credibility within the EU, suitable for companies looking to scale with comprehensive services. The choice between Panama and Estonia ultimately depends on your business's specific needs and priorities.
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