International Tax Structures & Estonia

Many US business owners and entrepreneurs have found ways to avoid paying America’s whopping 35% corporate tax on undistributed earnings. Countries like Estonia provide savvy businessmen and businesswomen with a way to escape that steep tax and reinvest their income into their business.

Estonian corporations pay zero corporate income tax on reinvested earnings. Meaning, you can reinvest any profits you make and not have to pay any taxes to the Estonian government. You do have to pay taxes on dividends (and payments considered equivalent to dividends like gifts, donations, and fringe benefits to employees) but Estonia operates on a flat tax basis of 21%.

This allows for profits to be moved tax-free within a corporation via interest, royalties and other non-dividend payments; which can lead to further deductions for non-Estonian foreign companies while also creating untaxed inclusions for Estonia. Also important to note is that the corporation itself is taxed and not the shareholders. Meaning the tax cannot be reduced pursuant to the EU parent-subsidiary directive or an income tax treaty that Estonia is party to.

Additionally, non-residents of Estonia are not required to pay withholding tax to the government, meaning you could structure your Estonian corporation like a holding company and save more money. Couple that with Estonia’s dual tax treaties with countries like the US and you could end up with very reasonable tax rates.

We Can Help Reduce Your Tax Bill

Creating international tax structures like we mentioned above can result in a great deal of tax savings but they are not easy to set up, manage and maintain. Our firm has extensive knowledge handling international tax law. We are deeply invested in providing top-notch legal and tax planning services for private companies and entrepreneurs.

With offices in Miami, Dallas, Orlando and DC as well as partner firms in more than 130 countries around the globe, you can rest assured we’ll always have an attorney ready to advise you.

Call today to schedule a consultation.

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