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    understanding cross-border taxes

    Wondering where e-⁠residents pay corporate taxes? Or how to take advantage of Estonia’s competitive tax system? Both will depend on different tax laws, treaties and how your business activities are structured.

    The world of international taxes

    Running a business across borders involves navigating the world of cross-border taxes. E-resident company owners need to refer to:

    • Estonian tax laws
    • Tax laws in your own country of residence or other countries where you have business activities
    • Any tax treaties between Estonia and these other countries
    • Any regional tax agreements (e.g. European Union VAT Directives)

    Disclaimer: We can only provide general guidance. Where you and your company pay taxes will depend on your individual situation and a number of specific factors. Do not rely on this page as legal advice. Instead, seek the counsel of professional tax experts in both Estonia and the country where you live or are a tax resident.

    Four main tax categories to be aware of

    Each category has general rules of thumb to help figure out where they should be declared.

    • Personal taxes: declared in main country of tax residency
    • Company taxes: declared where company is tax resident and/or has a Permanent Establishment. Can be multiple countries.
    • Payroll taxes & Social contributions: declared where employees are located / registered
    • Value-Added Taxes (VAT): declared in EU country where company is VAT-registered (if VAT liable)

    Where will I pay my company taxes?

    Your Estonian company will automatically be considered a tax resident of Estonia when it is registered. However, your company can also be considered a tax resident or create a Permanent Establishment in another country, thus have tax liabilities there.

    E-Residency does not exempt companies from dual tax residency or foreign tax liabilities. To avoid double taxation Estonia has signed treaties with 60+ countries.

    Find expert help with domestic or international taxes

    You really don’t need to figure out all the nuances of cross-border taxation yourself. You will find 50+ tax experts from around the world in the Marketplace. They have experience helping e-resident founders understand their companies' tax obligations.

    Can I pay my taxes in Estonia?

    E-residents can boost their business presence in Estonia to legally pay corporate taxes here. For example:

    • Holding board meetings and making key strategic management decisions here
    • Opening an office or hiring employees here
    • Registering assets in Estonia

    Tax benefits in Estonia

    • Declare and pay taxes online easily
    • Corporate tax: 0% on reinvested profits, 14-20% on distributed profits
    • A transparent and clear tax system
    • #1 in the Tax Competitiveness index for 9 years running

    Example: No fixed place of business

    Thomas is a digital nomad. He became an e-⁠resident and founded an Estonian company.
    Thomas can manage his company entirely digitally from anywhere in the world, which is very cost-efficient and easy. Since he works in different countries and is not a permanent resident anywhere, he does not need to register a Permanent Establishment.

    Example: Fixed place of business

    Tina is an e-⁠resident and lives in Frankfurt. She is working as a copywriter and founded an Estonian company since it is effortless, fast, and cost-efficient.

    However, since she works from Germany, she needs to register a Permanent Establishment in Germany and profits from business activities would be taxable in Germany. The treaty between Estonia and Germany will ensure that dividends distributed in Estonia will be exempt in full from income tax here.

    Example: Estonian company for international business

    Yolanda is self-employed and lives in Valencia. She is a consultant. Her clients are in Spain, Portugal, and the UK. She is an e-⁠resident of Estonia and has opened an Estonian OÜ. As she has clients in Spain and abroad, she will have part of her activities localized in Spain.
    For her international clients, she uses her Estonian company, the OÜ, with which she invoices directly and has employees and premises in Estonia. Therefore, if she does not distribute dividends from her Estonian company, she will not have to pay any corporate tax. She will declare on her IRPF any income received from her Estonian OÜ.

    Example: Startup with office in Estonia

    Javier is an Argentinian living in Barcelona and the founder of a startup, which sells products all over the world.

    Javier is an e-⁠resident and has his OÜ in Estonia, where he also has an office and employees. His company pays dividends to him and his co-founder. In Spain, as a tax resident, he will have to register as a self-employed person (autonomo) and declare, as a partner of a foreign company, the dividends distributed by his company in Estonia.


    Further resources

    Cross-border taxes for e-⁠resident entrepreneurs

    Finding it difficult to understand the international tax system? Read this guide to get an overview of cross-border taxes for your Estonian business.
    Guide about cross-border taxes

    How do e-⁠residents pay taxes?

    E-⁠Residency enables anyone to conduct business globally so international taxation must be easier for everyone too.
    How e-residents pay taxes

    Double taxation treaties for digital nomads

    For digital nomads who travel a lot, get to know how double taxation treaties work to avoid paying double tax.
    About taxation for digital nomads