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Question about double taxation Estonia-Germany.

February 28, 2018 | 35,00 EUR | answered by

Dear tax advisor,

We have a question regarding the double taxation agreement between Estonia and Germany. We are two entrepreneurs who are fully subject to taxation in Germany, and we have established a Private Company Limited (OÜ) in Estonia at the beginning of the year. When withdrawing profits from the company, for example in the form of employee salaries or dividends, a 20% tax is levied by the Estonian government. Even though in Estonia these withdrawals are referred to as dividends, the tax authorities seem to consider them not as dividends (subject to capital gains tax), but rather as corporate tax/profit distribution tax, as indicated here: http://www.bzst.de/DE/Steuern_International/Auslaendische_Quellensteuer/Anrechenbare_Ausl_Quellensteuer_2017.pdf;jsessionid=B101116A539B07C6F1E1500FDC83EE7C.live6831?__blob=publicationFile

Is this correct?

Furthermore, we would like to know how and to what extent our remuneration through the three options of:

1. Director's salary
2. Employee salary
3. Dividends

should be taxed according to the double taxation agreement, and what considerations should be taken into account.

We would also appreciate any further suggestions or optimization possibilities.

Thank you in advance!