Estonian company - why it is interesting.

I am happy to talk about my situation in a private group now !

So, as i said in public forum i am the owner of a Estonian e residency card which allow to create a company online. I had a problem with the Estonian banks but that was because i chose the wrong bank, so now i can try again with SEB or swedbank

Here are why i want to push hard. There are many benefits for us with the Estonian company:

• You don't need an accountant, you submit your bookkeeping yourself on their website thanks to your E residency card from all over the world. You don't need a local accountant who would have access to all your tax planning techniques in your bookkeeping. This reduces safety risks.
• You don't need a power of attorney because you can do everything online from the website.
• Audit are mandatory starting at 2,000,000 euros.

In other words, after 1 year, no-one will take a look at your bookkeeping. Only the Estonian tax authorities will see your financial statements. You keep control of everything and you have full anonymity. As i used to say, in all the luxleaks, panama papers stories, the whistleblowers were NOT tax authorities but there were IT consultants, interns, employees of agent companies.

Now, there is a 20% of distributed profits & 0% on corporate tax. It means that as long as you don't distribute money to shareholders you don't pay ANYTHING and have to pay nothing.

Interest ”“ Estonia does not levy withholding tax on interest other than interest derived by a nonresident investor from an Estonian contractual fund or other pools of assets. This exception applies to contractual funds or other pools of assets if more than 50% of the assets at the time the interest is paid or at any time during the previous two years, consist, directly or indirectly, of Estonian-situs real property and the nonresident held at least 10% in the fund/pool at the time of payment.

Despite the exemption from withholding tax, interest payments may be subject to corporate taxation at the level of the company making the payments under transfer pricing rules.

Royalties ”“ A 10% withholding tax applies to royalties paid to nonresidents. Royalty payments to qualifying EU or Swiss-resident companies may be exempt if they meet the requirements for application of the EU interest and royalties directive. The withholding tax exemption will not apply to any part of the royalties that exceeds the value of similar transactions carried out between unrelated persons. yes it is not a cyprus, but if you pay 10% to an offshore company that should be interesting. Nevertheless, i don't know if it would not be too obvious for the tax authorities in this case. Once again, you do everything yourself through their portal you don't need anyone to do it for you.

Technical service fees ”“ A 10% withholding tax applies if technical services are rendered in Estonia. Withholding tax is not applicable if the services are performed outside Estonia or if there is a tax treaty between Estonia and the service provider's country of tax residence that provides for an exemption.

what do you think?

Next week, i will meet an attorney in Estonia who said that it is possible to build up an Estonian IBC.
So it means 0% corporate tax. Taking into account that the virtual office cost 250 euros... that sounds interesting.

suzy said:

I have read all your threads with great pleasure it's good to have you here man! Now I was wondering what's the outcome?

Ok i will add a last message about Estonia. Unfortunately, i have seen many scams in Estonia just as in Latvia.
Agents companies wanted to sell me unnecessary administrative tasks like Accounting (i have my own software and invoices are generated on the fly), one wanted to sell vat registration (i can do it myself from the Estonian portal) while it is not necessary before reaching the threshold.

Furthermore, they were overpriced. Their fees were the same at in my western European rich country.
The cheapest was 150 euros per hour, i have seen up to 180 euros per hour. One asked me 1000 euros for doing a research in the Estonian law, while it costs maximum 350 euros in my own country.

I can't trust local estonian people there are too many scammers here. Suzy, you remind me i should write a thread about it.

Personally for this business i opted for Ireland.
I have opted for ireland because there is no need for Tax audit (as for Cyprus) from 1 euros. I want to launch a business with micropayments. My system generates automatically invoices i may have 200 invoices per month. In this case, The tax audit in Cyprus would cost me a lot of money so i have chosen Ireland since Tax audit does not hit before 8,000,000 euros i think.

I know the Irish culture pretty well, everything is clear and squared.

suzy said:

Is it in English?

What is the total cost per year for your Ireland setup?

In Estonia, Everything is translated in English including the law. You only need to translate the management reports in Estonia (4 sentences), it can be done online by asking a translator.

Total cost of the Irish company maintenance is only 1500 euros (registered address, virtual office, power of attorney) without company formation because i do all the bookkeeping myself with Xero.com. Also, i write myself everything in english like the management report. There are examples online. No need for attorneys, no need for translators. That is so cool. Also as compared to Cyprus there is no need for tax audit. I guess people in Cyprus like consultant pay 1000 euros more perhaps 2500 euros. When i talk about Cyprus vs Ireland, i always like to remind that in Ireland in order to receive dividends without withholding a stamp from your local tax authorities or a certificate of residency is necessary. In Cyprus, there is no DWT at all.

In Ireland, dividends, corporate tax, annual returns is done on a website too & it is very clear and intuitive.