HOLDINGS IN ESTONIA
Many jurisdictions are commonly used for registration of holdings, for instance the Netherlands, Luxemburg, Sweden, Cyprus, the United Kingdom, Denmark, etc.
Special regimes for taxation of dividends and capital gains along with financial and political stability make these jurisdictions attractive for establishing holdings.
Since 1 January 2009 Estonia has been considered one of these jurisdictions.
Special provisions of the Income Tax Act make the Republic of Estonia an attractive place for registration of a holding.
According to these provisions, both corporate tax and withholding taxes are not payable in case if the income is received in form of dividends from a tax resident company of a Contracting State or the Swiss Confederation (except for companies located within a low tax rate territory) and at least 10 per cent of such company’s shares or votes belonged to the company at the time of deriving the dividend;
Exemption condition also exists for income received from permanent establishments of Estonian companies in foreign jurisdictions in case if the income tax has been charged on such profit in foreign jurisdiction.
Income tax is also not payable by the natural persons – tax residents in Estonia if income tax has been paid on the share of profit on the basis of which the dividends are paid or if income tax on the dividends has been withheld in a foreign state.
Above condition makes Estonia attractive as a place for tax residency for natural persons in some certain cases.
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