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The new 2% tax in Estonia even for not distributed profits (No more 0%?)

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I think it depends on how you merge⁠ etc. In the worst case, your company is merged and then resident in Estonia. And⁤ in the better case, you will then pay more tax than you would pay in⁣ Estonia elsewhere.

I think that's why @Don does not recommend doing this. Better to off-ramp⁢ now.
 
If as a result of the merger or⁠ redomiciliation the assets remain in the PE of Estonia then no tax is paid on⁤ the merger.

However, the foreign company PE in Estonia pays tax on its profits (the⁣ 2% defence tax on Estonian sourced profits).

Estonian PE-s of foreign companies don't have to⁢ follow Estonian accounting rules.
The assets can also be taken out of the PE temporarily︀ (for up to 1 year) without triggering tax.

I imagine the defence tax paid in︁ Estonia can potentially be used as tax credit in some other jurisdictions to reduce CIT.︂
With that in mind on a group level the net effect might be zero extra︃ tax.
(Yet to be confirmed as the law is not implemented.)
 
What I meant is you set up a new company in e.g. Cyprus, then merge‌ the Estonian company into the Cyprus company, nothing remains in Estonia.
As far as I‍ have understood, this should not trigger tax in Estonia.
 
It will. If only it was so simple.
Otherwise noone would pay dividends and everyone would⁠ "withdraw profits" by just relocating the company.

However the cool thing about it is that⁤ you can defer paying the exit income tax over 5 years in certain cases.
 
Hi Don, would using an SE help? IIRC in such⁤ a case national goverments have no right to tax the SE if the other party⁣ is registered, managed and controlled by the other EU merging company
 
Guys please stick to topic. I don't want to have to keep zapping posts....thx.

P.S Happy new year to everyone thu&¤#
 
Once you have merged⁠ the company or relocated to another (EU) jurisdiction, then only the local PE can be⁤ taxed, doesn't matter if SE or not.
 
Exactly! New︃ taxes or tax increases are never temporary. There might be some exceptions, but it is︄ rare.
 
After becoming an SE, why would there be a PE in Estonia? Especially if⁠ you will do in the non-Estonian registered new SE
 
It depends‍ on the situation. Changing the legal form and headquarters only might not bring about any⁠ tax events.
Its more important what happens in substance than form.
 
Yup. Here is Spain’s "Temporary" Wealth tax:‍

And no one⁣ is surprised
 
Now, they have announced that this tax is expected to be cancelled since the socialists‌ were thrown out of the government.
 
EE could still be used as holding location and/or to receive profits derived through foreign‌ PEs as those profits will be exempt from corporate income tax.
 
This is actually horrible. Many‍ EU countries will be much better now. Looks like they have no interest in becoming⁠ an interesting country for entrepreneurs anymore
 
I’d have to‌ say I personally prefer Malta over Estonia as well. It just seems like things are‍ run a lot more smoothly in Malta, and the tax rules are still some of⁠ the most favorable within the EU.
 
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