Estonia eresidency tax questions for an almost dormant company

Tax and legal
1

Hi all, I have a couple of questions concerning tax on my estonian company:

  1. My company is registered and I have an account with Wise. From time to time, I make deposits to this account under the title of Loan (to my business). (These deposits are always from outside of Estonia i.e. not earned in Estonia). At the same time, this business can have expenses that I pay for using the company’s Wise business account card. I’m wondering if this activity will be captured somewhere for tax purposes and/or needs to be declared later?

  2. When are tax returns due in Estonia and can a person prepare these on their own without need of a service provider? My total income will very unlikely exceed 50K euro per year.

  3. I would like to open a bank account to invest in index funds. Am I correct in assuming that once I do that, the dividends I earn from the investment are what will be subject to tax in Estonia - the principal remains tax-exempt?

Lastly, what if the value of my shares grow until such a point when I want to withdraw their entire value. What will be taxable and at what rate?

Many thanks!

1 Like
2

Hey, Chiko!

  1. To my understanding, as loans are not considered revenue, it cannot be taxed and it will be considered a liability on the balance sheet if your business must submit a balance sheet along with the P&L account in the annual report. Furthermore, if your company is VAT registered, then you should talk to an accountant to see if you can deduct VAT from a certain expense which is related to your business operations as the deduction cannot apply to everything.
  2. Yes, it is possible for you to submit your business’ annual report on your own. You can get a lot of good and reliable information about annual reports from the Estonian registry’s homepage - Filing of annual reports | Abiinfo
  3. Yes, only profits are taxed.

If you reinvest your business operation profits into your company, no tax will be applied. Once you pay yourself dividends, 20% CIT will be applied most likely.

Here I suggest you consult a professional advisor where you can explain your situation better for the advisor to have a clear understanding and where you can get accurate and reliable answers.

Cheers!