Estonia Corporate Tax: to pay or not to pay?
- Thread starter HeinzKetchup69
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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?
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 registered︀ and treated as a PE. CIT applies, but its only paid when the profits are︁ withdrawn from the PE. Not for example when profits are reinvested to Gold plates and︂ kept safely in the Estonian office.
3) a foreign entities PE can also be registered︃ if the foreign entity is purely passive in Estonia, for example as a passive partner/investor︄ of an unincorporated partnership, managed by a 3rd party. In such case the unincorporated partnership︅ obtains a tax number in Estonia, which technically is a PE. Estonia only taxes the︆ local profits of the partnership, while this partnership might operate in other jurisdictions too.
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 registered︀ and treated as a PE. CIT applies, but its only paid when the profits are︁ withdrawn from the PE. Not for example when profits are reinvested to Gold plates and︂ kept safely in the Estonian office.
3) a foreign entities PE can also be registered︃ if the foreign entity is purely passive in Estonia, for example as a passive partner/investor︄ of an unincorporated partnership, managed by a 3rd party. In such case the unincorporated partnership︅ obtains a tax number in Estonia, which technically is a PE. Estonia only taxes the︆ local profits of the partnership, while this partnership might operate in other jurisdictions too.
If you only have passive income / capital gains, there are enough choices where you don't post to much tax.
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