Anyone here have experience with have a Estonian company?

incorporation
europe
estonia
tax
(Thomas K. Running) #41

Yes, you are right that that statement is at best inaccurate.

There hasn’t been any changes in the law. I think what @Jgool is referring to is that LeapIN have changed their interpretation of the rules.

I have asked them this in the past, and they said there’s no requirement to pay any board member salary to persons who are both employed in the company and as board members.

I will see if I can dig up the exact exchange soon.

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(Otto Kampa) #42

You cant withdraw cash directly from the business account.

You can deduct cash expenses with proper documentation.

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(Otto Kampa) #43

I think this depends on the country where you pay the salary?

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(Thomas K. Running) #44

Not really, since under most (probably all) treaties, board member fees are taxable in Estonia. So where the work is performed isn’t all that relevant.

In general you are quite safe to pay employee salary for any work done in the business. If someone does a lot of work for the business (as defined by their board member contract) it makes sense to compensate them for this. This compensation should be classified as board member salary.

For most people reading this (who are mostly working in the business, rather than being a primarily passive owner with some board member duties), that portion of the work (and hence compensation) is usually negligible.

On a question on whether you’re “legally required to pay a board member salary, as a sole owner and board member” of an Estonian company (when also working as a regular employee), the EMTA replied this:

There is no such strict or clear rule about obligation to pay salary.
If payment is made finally, the taxation must be in accordance with the type of income.

So there’s no strict rule about a need to pay salary for board member duties. But if you do pay a board member salary (for duties covered by the board member contract), it will be taxed as such. If you only pay employee salary (for work covered by the employment contract), it will be taxed as such.

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(Paweł Krok) #45

Before you incorporate Estonian company you should define your
country of residence and study bilateral agreement , especially
section concerning “COMPANY RESIDENCE” .

There is high risks treat “Estonian OU” as legal person resident
in your home country depending on provisions set forth in bilateral agreements.

Please read model articles , comparing bilateral agreement between Estonia and: POLAND and UK.

POLAND

Article 4 “RESIDENT”
3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, then it shall be deemed to be a resident of the Contracting State under the laws of which it derives its status as such.

UK

Article 4 “RESIDENCE”

(3) Where by reason of the provisions of paragraph (1) of this Article a person other than an
individual is a resident of both Contracting States, the competent authorities of the
Contracting States shall endeavour to settle the question by mutual agreement. In the absence
of such agreement, for the purposes of the Convention, the person shall not be entitled to
claim any relief or exemption from tax provided by this Convention

In the event if you run with new startup - you should register trademark in the name of Natural Person. After registration trademark is treated as Asset and you can grant a license to Estonian OU company ( be aware of Withholding tax ) or sell copyrights and taxation will be in your country of residence.

I have a lot of idea for legal transfers from Estonian OU company to your home country - I use mindmap and share my ideas to client.

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