[memnips]

Is there a tax advantage here? Estonia's tax system is supposed to be very simple, and allows for a 0% corporate income tax on all profits that are re-invested into the corporation (source: http://www.incorporate.ee/why-estonia/low-tax-jurisdiction).

Does this mean I can form a corporate entity in Estonia and gain all the tax benefits without any physical presence?

[markvdb]

You will have to be very very careful about making Estonia the real physical center of the commercial activities deployed by your company.

If you don't - let's say you're Dutch, living in Holland and consulting mostly for Dutch clients, then forget it.

But let's say you're Dutch, you have a girlfriend in Estonia, you work from there a week every month, and you have clients in several EU countries, with NL only one of them... Maybe you even have a local employee in Estonia. That will work no problem.

[agilebyte]

Or you and your girlfriend are both directors and you meet at least 4 times (from what I've read) there to discuss company business. Hey, the company can pay for the trip from Netherlands too.

[ricardobeat]

Can you elaborate on why exactly that would be a problem?

[jkaljundi]

Yes, you can keep the corporate profits in the corporate entity until their distribution. There is a 21% tax though on distributed profits like dividends. Until you keep the money in the company or re-invest to subsidiaries, it's ot taxed. http://www.investinestonia.com/en/investment-guide/tax-syste...

The rest depends on various double-taxation treaties which affect more individuals.

[xmr]

TL;DR No.

You're likely to run into domestic Controlled Foreign Corporation rules. Basically if you or your family own a large portion of a foreign registered company and that company is taxed less than domestic tax rates, it'll be classed as actually residing in your home country for corporate tax purposes.

[agilebyte]

If you want to pay taxes only in Estonia, consult a Double Tax Treaty between Estonia and your country of physical residence. Usually you would be able to employ a person in Estonia to close deals/contracts to qualify. But read the document.

As soon as you distribute the profits, 10% tax applies from the Estonian end.

[alvarosm]

Usually, if your country has a DTA with estonia you'll have to pay whatever your country takes for dividend distributions anyway. The DTA means you can pay 10% to Estonia and the rest to your country but in total you're still paying whatever your country wants, in total. There might be other advantages, however, but repatriating dividends is not going to be one of them.