Advisory services

We advise you on the following matters:

• tax planning in case of trade transactions between the residents of different countries;
• planning of taxable proprietary income resulting from specific needs and possibilities;
• structuring a holding company;
• devising holding companies and financial solutions;
• changing residency in Europe ;
• protection of ownership by using foundations;
• opening bank accounts in Switzerland, Luxembourg, Liechtenstein;
• assessment and updating (if necessary) of current tax structures;

We help to find the most suitable solution by taking into account the client’s needs and possibilities. We analyze and assess the currently used structure and outline the potential risks involved.

International trade transactions

Companies involved in export-import services are usually aware of the possibilities of reducing the tax burden. Today, ‘transfer pricing’ is the most widely used procedure allowing the profits to remain with the company whose income is not taxed or is taxed at a lower rate than that of a country’s exporting-importing company. In order to reduce the tax burden, the low-tax company assumes the role of an intermediary between two or more companies collecting most of the profits generated.

Export transactions

E.g. an Estonian company is delivering goods outside the EU for a unit price of 500 EEK. The company earns 100 EEK for exporting one unit, but if such profit was to be distributed among the shareholders it would be taxed with 21/79 income tax. In order to avoid paying income tax it is possible to place between the exporter and the actual receiver of goods a foreign company whose profit is not taxed. If the Estonian company would reduce the selling price and the foreign company would obtain the goods for 430 EEK, the Estonian company would be left with a marginal profit to cover the running expenses and the foreign company would profit 70 EEK from the sale of each unit. It is possible to open an account in a Swiss bank in the name of the mediation-company and the newly accumulated profit can be channeled into the development of new projects.

Import transactions

In case of import transactions the above-given structure works vice versa. An Estonian company acquires the goods in a customs warehouse and imports the goods for internal use. Increasing the prices will in turn increase the income tax rate to be paid on imports, but in the end, the income tax will be paid by the final customer and the importer can deduct the paid income tax from the received income tax.

Proprietary income

There are various forms of proprietary income. The most common form is payment of dividends or of liquidation proceeds to the shareholder by the company. In the first case the company has to pay 26/74 income tax on the amount of dividends paid out, in the second case the beneficiary of the proceeds has the obligation to declare the received amount and pay 26% of income tax on the gains. Depending on the client’s needs and possibilities the solution can be seen in the companies of the EU member states, tax incentives applied in those states and using the tax agreements concluded between Estonia and other EU member states for the benefit of tax planning. Just recently some European countries were included on the list of offshore companies, but today Estonia has found equal partners in the EU. Estonia ’s accession to the EU and the peculiarities of tax laws in other member states have created new ways for reducing the tax burden.

Holding companies

In case of holding companies we are dealing with companies mainly founded to simplify the company structures. In addition to getting a better overview of things the holding companies enable to reduce the tax burden. When making payments to the parent company many EU countries apply Directive 90/435/EEC, which exempts dividend payments between the member states from income tax provided that certain requirements are met. Keeping in mind the desired outcome, it is possible to found a holding company in the state offering the biggest advantages to our client.