If you are a tax resident in a country with CFC rules (like most European countries, US, Canada, UK, Australia, etc), there might be situations in which the local authorities may claim that your company needs to pay taxes there instead of in Estonia.
How can that happen? According to the low, for entities that:
- Have been constituted in accordance with the local laws.
- Have their registered office in local territory.
- Or that they have their effective management headquarters in local territory.
The first situation will never happen if you founded your company in Estonia.
The second one means you cannot have your permanent headquarters, like an office, outside of Estonia. You cannot rent or buy an office for your company in Germany, the US, or Australia, for example.
The third one varies from country to country, but generally means that the majority of the board cannot reside (i.e: be tax resident) of a country with CFC rules. If you are the only board member, for example, and live in Germany, The German authorities will conclude that your effective management headquarters are in the country and, as such, ask your company to adhere to the German fiscal laws and pay taxes in Germany.
In that scenario, you will lose the benefits of taxation on profit distribution only, and we would not be able to continue offering you our services.