Estonia OU asset protection

[newtechnology]

Hi everyone,

I'm a citizen/resident of Estonia and I have a business incorporated as an OU (limited company). I'm the sole shareholder and director of the company.

What would be the best way to protect my ownership from i.e. divorce/creditors/etc.? Should I transfer the ownership to a foundation and if yes, which jurisdiction would be the best?

Last edited: Aug 8, 2020

 

[Tax Cow]

Where the official language is not spoken by the one coming after your assets. Additional‍ crap to cut through always acts as a demotivator.

Panama Foundation could be a⁤ fit, but only if you can keep the trouble at bay for 3 years. Before⁣ then, the protection is rather cosmetic. Similar "kick-in" rules often apply to foundations and trusts⁢ in other nations. Simply means that a trust or a foundation will not offer much︀ help if you want to shelter hot money under active prosecution.

And assets.

I do not know which rules︂ apply in Estonia, but shaking out funds from a domestic company shouldn't be too difficult︃ or contentious once there's a judgment against you. Your parent foundation, and the Panamanian legal︄ system will be bypassed and ignored completely if your funds are exposed domestically.

 

[newtech2]

OK let's say I go with‍ Panama. 3 years is fine, I'm not under active prosecution.

So as soon as I'm in trouble I should (in theory) pay out the dividends(profit) to⁣ the foundation?

How will Estonian tax authorities look at a Panama foundation? as transparent?

 

[Tax Cow]

Yes. And ideally through an intermediary non-Panamanian‍ bank, to keep the destination of money less obvious. Estonia's a little poodle, but bigger⁠ nations could pressure and bully the recieving financial institution, one way or another.

The relevant⁣ part is that the presence of a parent Panama Foundation is irrelevant if crimes are⁢ committed through an Estonian company. Following a judgment, they'll shake up the local Estonian company︀ for all its assets to cover outstanding liabilities. Why would they seek approval from Panama?︁ The same rhetorical question can be asked if we replace Estonia with any other country.︂

Now, once the funds are moved to the books of a Panama Foundation, the judgements︃ in Estonia become irrelevant. The case must re-start and reach the same conclusion in Panama︄ before any funds can be shaken out of a Panama foundation. In practice, however, Panama︅ Foundations haven't been shaken for a penny by any EU nations in recent history. At︆ least that's what the lawyers who sell Panama Foundations say.

 

[newtech2]

Sounds good, thanks a lot. I just read that the withholding tax on dividends in‌ Estonia is 0% so I guess the tax question is settled thu&¤# This is what I‍ was worried about.

I've seen that Panamian foundations are usually combined with a Panamian holding⁠ company. Should I do it like that (not sure if there's any benefits to this)⁤ or should the foundation itself directly own the OU company?

 

[Tax Cow]

What are you looking to accomplish? VAT fraud, tax evasion, investment scams, bank or emi‌ scams, borrowing and not paying back, protecting assets from a gold digger?

Note that despite‍ my colorful past, some of the above are not within my threshold of tolerance. You⁠ do not owe me an answer, but I'm curious to know.

As for including a⁤ holding company in the structure, consult with a lawyer who knows the fine print. My⁣ basic knowledge won't carry you any further.

 

[newtech2]

I provide hosting for‌ some politically incorrect websites/platforms and want to protect my privacy and assets as much as‍ possible. So no scams or anything.

 

[JustAnotherNomad]

Even if there is no withholding tax, there will most likely be Estonian corporate income‌ tax to be paid.

Check if you can use a Panama holding company and use‍ the Estonian company as a payment provider only. I know some people who claimed to⁠ have used such a setup successfully. The Estonian company has to keep a 1% payment⁤ processing fee or so, the remaining funds are transferred to the Panamanian parent company tax⁣ free.

 

[newtech2]

Will do, thanks.

Can I pay out the dividends from the OU company⁤ directly to my personal account after transferring the ownership or do I need a bank⁣ account for the foundation? Same questions stands for Panama holding dividends.

 

[JustAnotherNomad]

I don’t think you’d need a foundation with that setup. But be aware that with‌ that setup, the Panama company will be the operative business, the Estonian company would only‍ be processing payments. So you would have to do business as the Panama company.
Unless you can somehow hide that through a LLP or something similar.

 

[newtech2]

I know, yes, but my question was related to the 'simple' structure (Panama foundation owns‌ Estonian limited company). Can I simply pay out the dividends directly to myself in that‍ case or do I have to pay it out to the foundation first?

 

[CaptK]

Panama company and Estonian company are 2 separate entities for the purposes⁤ of Tax and safety. Estonian company simply has a marketing agreement with the Panama company.⁣ Just like @JustAnotherNomad said the Estonian company collects and processes the payment on behalf of⁢ the Panamanian company.

That's is the simple way to do it.

 

[JustAnotherNomad]

In the case I mentioned, the Estonian company processes payments on behalf of the Panamanian‌ parent company and only retains a 1% processing fee (or similar). It’s basically your own‍ PayPal.
I don’t know if there would be other rules if it was a marketing⁠ agreement. I guess it would work as well, but you would probably have take a⁤ higher cut to meet transfer pricing requirements. However, the advantage would be that your customers⁣ wouldn’t see the Panamanian company.

 

[oldblueeyes]

OP, look into a Belize Trust. They've always been recommended to me for the purposes‌ of asset protection from legal action inclusive of divorces.