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Last Updated on March 16, 2023 by Work In My Pajamas
NFT stands for “non-fudgeable token” and it’s a term that describes a unique digital asset. The asset’s ownership can be tracked via blockchain technology. There exist several kinds of assets that can be “converted” into “tokens” or NFTs, including but not limited to: digital properties or rights to physical goods, cryptocurrencies, digital securities, stock shares, derivatives, and many other things. While most NFT-related activity occurs on ETH (Ethereum), there are other platforms as well.
Entrepreneurs, freelancers, startups, or businesses looking to launch a project using NFTs should seriously consider company registration in Estonia. The country provides a unique administrative system in which the conditions are every bit as advantageous as they are lax. There are no limitations when it comes to the creation and sale of non-fudgeable tokens. Revenue generated from such tokens is taxed in the same fashion as revenue generated in fiat.
How Long Will It Take to Register an NFT Project in Estonia?
The time it will take to fully register a project depends on its complexity and the circumstances surrounding the person(s) looking to register such projects. Businesses registered in Estonia often experience minimal to no administrative difficulties because the government works proactively to streamline the entire process. For example, there are many instances in which the projects were fully compiled and registered within several business days. It’s always a good idea to stay in touch with a company that specializes in providing NFT- and/or company registration-related services to make sure that your venture doesn’t face any unnecessary setbacks.
How to Open a Bank Account in Estonia for the NFT Company?
The process of opening a bank account in Estonia is very simple. A company must take care of all the required documentation before they send in an application. Some of the banks do not require a face-to-face meeting with a founder or a representative, so that shouldn’t be an issue. It is not mandatory for a company to open a bank account in Estonia whilst working on NFT projects, but it will simplify matters for the business. Remember that your application CAN be rejected but there exist certain workarounds so no rejection is truly final unless a company gives up and chooses not to proceed with the creation of a bank account for their NFT project.
What Organizational / Legal Things to Consider Before Even Starting the NFT Project?
There are several legal issues that surround NFTs. Some of the most prevalent ones include:
- Lack of IP rights.
- Many existing marketplaces with NFTs are facing fractionalization.
- AML regulations can have a big impact on NFTs.
- Lingering uncertainty regarding royalties.
- Data security.
Of course, if your NFT-related project actually revolves around launching a marketplace, there’s a different set of subjects to take into consideration, including community guidelines, privacy policy, terms of use, corporate entity formation, and beyond.
Why Is It So Easy to Launch an NFT Project in Estonia?
Historically, Estonia has been one of the most open-minded countries when it comes to adopting new technological advancements. The “e-Residency” project is a great example of that. As of right now, NFTs are shaping up to be one of the hottest categories of businesses in Estonia. It has been estimated that over 70% of the new crypto businesses registered in Estonia are related to NFTs. It is entirely possible that this statistic might not be as high if Estonia had a less-friendly immigration and business environment. A good jurisdiction is perfect for the creation of a good NFT project with a robust community behind it. After all, projects with the highest levels of engagement are usually the ones that have the best chances of succeeding.
Why Do People Choose Estonia to Start an NFT Business?
Is Estonia a tax haven for foreigners or is it a genuine hub for an incredible ecosystem of digital products and services? These are questions that constantly plague potential newcomers to the Estonian jurisdiction. Before you answer the question, it would be wise to examine the details of Estonian economic and tax laws. When it comes to NFT specifically, the service of selling the tokens is subject to VAT. The VAT rate is either 20% or 0%, depending on certain conditions. VAT-exempt companies can carry out NFT-linked services with no taxes being applicable.
Aside from the good taxation policies, Estonia has a friendly environment that allows people to focus on their NFT projects, rather than focusing on bureaucracy or ways to work around some needlessly harsh regulations. Lax taxation, a friendly business environment, and several other factors all help Estonia in being an attractive place for a cryptocurrency company. Yes, it’s important to note that these advantages are not only for NFT related companies, but the e-money ecosystem as a whole.