Can someone suggest a tax advisor who can help me pay German taxes for my future Estonian company? I'm a German resident and am considering to open a company in Estonia, if the services end up cheaper and more convenient for me.
In this case, Priolaunch would be of help to you, whose founder is also one of the webinar guests, Andra Larin, 19:02. You can find their services' overview and how to contact them here: marketplace.e-resident.gov.ee/company/priolaunch/
Overall very useful informations from Andra Larin but she created a confusion for me when she said that for PEs in Germany taxation would work as 20% in estonia and later in 25% in Germany and in total it will become 45%. On the other hand, so far according to my research and according to DTT b/w Estonia and Germany based on Germany based PEs taxation would be in Germany and Estonia won't tax on it. Can resolve this new confusion?
We have asked for advice from the panelists in the webinar: taxation of a PE relates to taxation of a company’s profits. If the PE is registered in Germany, this PE’s profits are not taxed in Estonia in accordance with the double taxation avoidance treaty between Germany and Estonia. The situation that you refer to is related to the taxation of dividends and only in cases where there is no PE in Germany (or related to this part of profit, that runs through Estonian activities/PE of the company). Estonia has a deferred taxation, ie the profit is taxed at the time it is distributed. During the first year, distributed netto dividend is taxed with income tax of 20/80% - this is in nature a corporate income tax. If the dividend is paid regularly then by the 3rd year, the corporate tax part falls to 14/86% of netto dividend, and in addition, 7% is withheld from the brutto amount of dividend paid. If the shareholder is a private person, the dividend received shall be declared in the person’s German income tax declaration as a capital gain. Capital gains are subject to 25% income tax in Germany. The withheld tax (7%) part is deductible from the income tax paid in Germany according to the double taxation avoidance treaty (as that tax was paid by a private person). The so-called corporate tax part of Estonian income tax cannot be deducted from the private person’s income tax due in Germany as it is not possible to deduct the company’s taxes from private persons’ taxes. In conclusion, it is recommended to pay dividends regularly, in order to reduce the overall tax burden considering both private and corporate taxes due.
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God bless you
Can someone suggest a tax advisor who can help me pay German taxes for my future Estonian company?
I'm a German resident and am considering to open a company in Estonia, if the services end up cheaper and more convenient for me.
In this case, Priolaunch would be of help to you, whose founder is also one of the webinar guests, Andra Larin, 19:02. You can find their services' overview and how to contact them here: marketplace.e-resident.gov.ee/company/priolaunch/
@@eResidency I must have missed her offering services in the video, thank you!
Overall very useful informations from Andra Larin but she created a confusion for me when she said that for PEs in Germany taxation would work as 20% in estonia and later in 25% in Germany and in total it will become 45%.
On the other hand, so far according to my research and according to DTT b/w Estonia and Germany based on Germany based PEs taxation would be in Germany and Estonia won't tax on it.
Can resolve this new confusion?
We have asked for advice from the panelists in the webinar: taxation of a PE relates to taxation of a company’s profits. If the PE is registered in Germany, this PE’s profits are not taxed in Estonia in accordance with the double taxation avoidance treaty between Germany and Estonia.
The situation that you refer to is related to the taxation of dividends and only in cases where there is no PE in Germany (or related to this part of profit, that runs through Estonian activities/PE of the company). Estonia has a deferred taxation, ie the profit is taxed at the time it is distributed. During the first year, distributed netto dividend is taxed with income tax of 20/80% - this is in nature a corporate income tax. If the dividend is paid regularly then by the 3rd year, the corporate tax part falls to 14/86% of netto dividend, and in addition, 7% is withheld from the brutto amount of dividend paid. If the shareholder is a private person, the dividend received shall be declared in the person’s German income tax declaration as a capital gain. Capital gains are subject to 25% income tax in Germany. The withheld tax (7%) part is deductible from the income tax paid in Germany according to the double taxation avoidance treaty (as that tax was paid by a private person). The so-called corporate tax part of Estonian income tax cannot be deducted from the private person’s income tax due in Germany as it is not possible to deduct the company’s taxes from private persons’ taxes. In conclusion, it is recommended to pay dividends regularly, in order to reduce the overall tax burden considering both private and corporate taxes due.