Estonian Company, German Tax Resident : Worth it?

Tax and legal
1

I’ve been in Germany since 5 years working full time and was considering going into Freelance (Web developer). I rent an apartment here, I am registered (angemeldet)

I am working remotely almost exclusively, and I spend half of my time in Greece, half in Germany (exact time durations to be decided later…). But so far in Greece, I am invisible. (I don’t rent something and I guess the authorities have no idea I am there)

I made my e-residency application and I am doing some research on Taxation which is proving to be a nightmare. (I’m questioning whether it’s a good idea to make an Estonian business)

I’ve understood well the employee-director (80/20) salary split and the Estonian taxation scheme for dividends. (20%). Frankly I don’t care so much about that, I have money to live off, I can pile the money there provided they’re safe (Transferwise doesnt have deposit guarantee though…).

What I have no clue about is my obligations towards Germany. Do I have to be registered as a freelancer here to be able to declare my income from my Estonian company? (usually salaries from companies are taxed in the source here - but this is for German companies and mine is Estonian…)

Several articles, blogs, as well as the Double Taxation Treaty between Estonia and Germany, always talk about “PE” - Permanent Establishment. :

The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein. If the enterprise carries on business as aforesaid, the profits of the enterprise may be taxed in the other State but only so much of them as is attributable to that permanent establishment

It appears that since I’m registered in Germany, there’s high risk my Company will be asked to pay taxes in Germany (which sucks.)

Can I just wire the salary to my Greek bank account and get this over with? (who will know?)

Will I be taxed for possible Dividends TWICE?

I’m not a German speaker so I would really try to avoid any interaction with the German Fiscal Authorities.

I also want to stay registered here in Germany. I have a child, and my German private health care and apartment that I rent together with my girlfriend are here as well. I also own a car with german plates.

2

Take a look at setting up a company in Bulgaria while you reside in Germany

3

I want to avoid having to travel to Bulgaria back and forth for that and to be honest a Bulgarian VAT isn’t really credible to the eyes of the customers/clients…

4

Not suitable for you, because of CFC and strong ties to Germany (house, wife/children, car)

Estonia may work for a while, at least initially, but as soon as you start distributing profits as dividends, the German tax office will know about it and assuming you own more than >= 20% of the Estonian company, you may get into trouble soon or later, and you are strongly tied to Germany according to the existing laws, so chances you can win the battle are quite limited. Even if you can prove you live 183+ outside of Germany, having a house, car, and children resident there would make it hard to prove the opposite.

If you are exposed to high taxes with your potential current or future business operating in a high-tax jurisdiction like Germany, I would suggest hiring a tax planning expert. If you are lucky, possibly the best investment for your business’s economic long-term health.

Estonia is great for digital businesses that can be operated in countries with no CFC strong laws , by nomads or people from development countries.

5

Sorry but what you are asking for is impossible. Each of the points you have mentioned alone already make you fully taxable (unbeschraenkt steuerpflichtig) in Germany : wife, child, home
You are not even allowed to own an empty appartment or have your own room in your parents house, in both cases they will FULLY tax you. The only way with Germany is to completely move away and have no more ties whatsoever.