Estonia Corporate Tax: to pay or not to pay?
- Thread starter HeinzKetchup69
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Im just assuming that the US LLC disregarded for tax purposes is controlled by an individual (it doesn't have parent entity that is a Estonian company).
You are completely right! Thanks!
I also read this:
"In Estonia, resident companies are taxed on profits distributed from their worldwide income, while PEs of non-residents are taxed only on profits distributed from income derived from Estonian sources."
Is it really true that PEs are never taxed on their foreign sourced income in Estonia?
Yes, the very meaning of PE is that only locally sourced profits might be taxed.
Having a registered PE of a foreign company could lead to following scenarios:
1) PE is registered but not treated as a PE for tax purposes. This can be the case when PE registration is done only because for example when you a hire an assistant, who doesn't do sales. No Corporate taxes apply, only payroll taxes are withheld because hiring the person in Estonia.
2) PE is registered and treated as a PE. CIT applies, but its only paid when the profits are withdrawn from the PE. Not for example when profits are reinvested to Gold plates and kept safely in the Estonian office.
3) a foreign entities PE can also be registered if the foreign entity is purely passive in Estonia, for example as a passive partner/investor of an unincorporated partnership, managed by a 3rd party. In such case the unincorporated partnership obtains a tax number in Estonia, which technically is a PE. Estonia only taxes the local profits of the partnership, while this partnership might operate in other jurisdictions too.
In 2026 this will no longer be tax free undistributed profits instead 2% charged on yearly undistributed profits temporarily it seems till 2028 but it may continue permanently too
I only invest in crypto/ stocks. I wouldn't have enough of substance to set up a corporation and benefit from this tax scheme
If you only have passive income / capital gains, there are enough choices where you don't post to much tax.
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