Indeed, the current state of affairs is rather sad.

To employ a regular (non-management) employee in Spain (and it applies anywhere else in Europe), an Estonian company would to at least have a local address, then register and maintain regular contact with several authorities there (chamber of commerce, social administration, tax office). The bureaucratic overhead makes it practically impossible to have employees across several countries (definitely as a small company), the only practical option is to pay an employer of record ~600 EUR/month extra (significant salary difference) only for the joy of maintaining the employment paperwork.

The really fun part happens if a managing director moves. Then the company is considered to have a permanent establishment in Spain, needs now to maintain ALL administration like a Spanish company, and to comply with Spanish corporate law, in parallel to what it was already doing at home. Both countries' laws apply, both expect taxes, and it is not even clear cut how much of the company activity and profits should be taxed by the company's home country and how much by the director's country! And having multiple managing directors in several countries is probably an exercise in frustration.

Then, if the director has enough and moves somewhere else, it all starts again in the new country (and you also have the headache, costs, and risks of closing the Spanish entity).

The EU may have free travel, but you can basically forget actually freely moving around as a small business owner, the company administration is prohibitively complicated.

It’s somewhat similar in Finland.

This is why I don’t get what the EU brings to the table at all. I’ve considered starting something, never quite yet pulled the trigger, but I may as well do it in the UK because it’s extremely cheap, gives access to a great number of services, and I can do it all in English there.

It’s not like the company itself is going to be queuing at an airport or whatever.

I’ll have to file in Finland for the company anyway then, but I can skip all the stuff about starting an organisation here.

> the only practical option

The actual practical option people end up using in practice (speaking as someone who've moved around in Europe, working for various other European companies) is that you ask them to self-employ in the country they live, then you treat them as contractors, offset any extra costs that'd come with compared to full-time, and do the best you can with that.

It's not ideal, and not a real solution by wide margin, and there is plenty of stuff that can get better, but I think it's the most "practical" and pragmatic option you can make use of today.

Now move to an actual border area. Thanks to Schengen you can travel freely back and forth, sure, but your headaches compound.