Estonia, first of all, attracts foreigners with small taxes. And in addition to all the advantages that we wrote about in the last article "Start business in Europe 100% online", it is worth mentioning that Estonia has signed more than 65 agreements to avoid double taxation.

What is double taxation?

This term is called the simultaneous taxation of income of the same type in different countries.

Double taxation arises in relation to companies registered in Estonia and non-resident citizens who are founders of such Estonian companies and conduct their business outside the country of their citizenship and tax residence.

How can a double taxation treaty be applied?

This agreement is an agreement between the two countries that sets out the rules according to which taxes are levied on companies and non-resident founders in cases where income is received outside the country of residence of the recipient of the income.

If all countries entered into such an agreement, then the tax burden could be greatly simplified.

But all states differ greatly in the level of development, legislation and tax rates, which leads to international double taxation - the collection of taxes in two countries from one taxpayer in relation to the same income and for one period.

With the help of an Estonian company, it is possible to avoid such a situation by examining the list of countries that have signed an agreement with Estonia.

Consider an example when paying dividends to a non-resident.

The founder of the Estonian company is a resident of Germany. Estonia and Germany have concluded and ratified an agreement on the avoidance of double taxation.

A German citizen at the end of the financial year and upon submitting a tax return in Estonia, wants to distribute dividends to himself personally by paying them from his Estonian company.

Article 10 of the Agreement for the avoidance of double taxation regulates the conditions for the payment of taxes on the full or partially distributed amount of dividends.

The bottom line is whether taxes are withheld at the source of payment, or partially paid in one or another of the treaty countries of the agreement.

Here are some of the countries that have entered into an Agreement for the avoidance of double taxation with Estonia:

Azerbaijan, Austria, Belarus, Belgium, Bulgaria, Canada, Croatia, Czech Republic, Denmark, Finland, France, Georgia, Germany, Greece, Ireland, Isle of Man, Israel, Italy, Kazakhstan, Korea, Latvia, Lithuania, Luxembourg, Moldova, Malta , Netherlands, Norway, Poland, Portugal, Romania, Singapore, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, UK, USA and others.

In the Tax Department, an Estonian company can be issued with a residency certificate, confirming its legal status with this document and that this agreement can be applied to it.

Our company provides a service for obtaining a certificate of residence for an Estonian company, leave your application on the website and our consultant will contact you!