There are two main objectives of the use of Estonian companies:

:

Estonian company as a holding company

Estonian company, which receives dividend income from its subsidiaries (excluding off-shore ones), the share of which is over 10%, and distributes this income in the form of dividends to its owners, doesn’t pay income tax. Subsidiaries should be residents in their jurisdictions, the tax on dividends should be paid, or the profit from which dividends are paid, is subject to income tax.

Estonian company as an agent in international trade activities

Estonian company may act as a mediator in import transactions from the EU to Russia, Ukraine, Belarus, Kazakhstan or any other country. In order to optimize the taxation, the value of imported goods is artificially overvalued, by that an income tax reduction of a resident company in Russia / Ukraine / Belarus / Kazakhstan and the accumulation of funds in Estonia is achieved. The profit of the Estonian company, thus obtained, isn’t subject to taxes until its distribution.

Estonian company can also act as a sales agent of a foreign company, acting on its own behalf, but at the expense of the principal, and it can receive commission fees.

The main advantages of the Estonian company

  • Undistributed profit tax rate — 0%
  • Dividends received tax rate — 0%
  • Dividend withholding tax rate — 0%
    (excluding dividends received from offshore companies)
  • Real estate tax rate — 0%
  • The land tax rate 0.1-2.5% per annum of the value of the land
  • No local resident — Director
  • No need to provide authorized capital of the company during the registration if the founders are individuals
  • The possibility of remote company management through the Internet, when you have become the e-resident of Estonia
  • The possibility to obtain a residence permit
  • No transaction passports and currency control
  • No capital gains tax
  • More than 50 treaties on avoidance of double taxation http://www.emta.ee/index.php?id=1830
  • No thin capitalization rules

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