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Using possibilities

Using possibilities of Estonian companies

A company, registered in Estonia, provides an excellent opportunity to freely, avoiding middlemen, enter the market of EU countries and also to purchase real estate in Europe thanks to the effective contract system of avoiding double taxation settled by Estonia with such countries as Finland, Denmark, Norway, Sweden, Lithuania, Latvia, Poland, United Kingdom, Ukraine, Germany, Belarus, Moldova and others.       

A rather attractive option for a foreign investor is to establish or purchase an Estonian company with a minimal charter capital, when a company is financed primarily by means of loans from foreign parent company (for example, an offshore company). The income received then in future may be used to repay the loan from the parent company. In this case such payments will not be subject to taxation as the allocation of profit does not take place. In other words, the money flow moves as initial investments from an offshore company through the Estonian company and returns without taxation as the return of means until complete loan repayment. By the way, the return of the loan to  Estonian companies can easily be done to a third account – for example belonging to a physical person (upon a tripartite agreement of receivables assignment). In most cases the interest paid from the loan will be subject to taxation at the rate of 21/79.  However, in case of a favorable (in terms of bilateral tax agreements) choice of a holding company the tax rate can be reduced by 10%. 

Estonian companies can receive European VAT-number and EORI-number.

One of the most effective schemes with participation of Estonian companies are the internatioanl trading structures when an Estonian company is used as a trading agent for an offshore principal. The obligations of Estonian companies include making contracts and issuing invoices for a compensation, amounting to a certain turnover percentage or a fixed yearly amount upon the agreement of the parties. As all invoices and contracts are signed by an Estonian company, the participation of an offshore company in the transaction is not evident to trading partners. Therefore, an Estonian company is going to act as an offshore company’s trading agent and declare as an income only the commission fee that will not be subject to taxation as long as means are not distributed and remain within the company.

There are many possibilities of using an Estonian company. Contact us via e-mail and we will find the best possibility that will suit You!