By Richard J. Witismann
Several important amendments in regulations will come into force in 2018. Here are five amendments that businesspeople should be aware in the new business year.
Until this year it was not allowed to manage Estonian companies from abroad. Starting from January 15th, 2018 the location of an Estonian company may be also in a foreign country.
In case the management board is located in a foreign country a reliable contact person must be appointed and entered into the commercial register to whom the procedural documents may be delivered in Estonia. Contact person is a passive representative of the company and does not have the right to make any declarations of intent on behalf of the company.
According to the law a notary’s office, a law or audit firm, or a licensed trust and company service provider may be designated as a contact person. The address of the contact person shall be considered the address of the company in such case.
If you have any questions concerning the aforementioned or if you wish to use the Estonian contact person’s service provided by us, please contact us at email@example.com
Starting from January 1st, 2018?—?the corporate income tax rate on regular profit distributions will be lowered from 20% to 14%, but only in cases where dividends are paid to legal entities.
Lower corporate income tax rate is made available to Estonian companies who pay regular dividends. If the profit distributed as dividends in a calendar year is equal or less than the average of the profit distributed as dividends of the last 3 calendar years, it is subject to 14% income tax rate. Profit distribution that exceeds this amount will continue to be subject to 20% income tax rate.
There is no corporate income tax on retained and reinvested profits. Taxes can be declared fully online.
Beginning from September 1st, 2018 companies in Estonia shall be obliged to report to the commercial register about the ultimate beneficial owners (UBO) of the company. The purpose of the regulation is to increase the transparency of business operations.
The Money Laundering and Terrorist Financing Prevention Act determines that UBO is a natural person who owns and exercises his or her authority over another person for whose benefit or account the action is performed. The data of beneficial owners of companies includes the person’s name, personal identification code (upon absence of a personal identification code, the date and place of birth), and the country of residence and nature of the beneficial interest held.
The data shall be publicly available after the entry into the commercial register. Legal entities must register their UBOs within 60 days starting from September 1st, 2018.
From the 1st of January, 2018 the VAT registration threshold for Estonian companies will increase from EUR 16,000 to EUR 40,000. The increase has been proposed to lift many of the smallest companies outside of the VAT compliance obligation.
The threshold only applies to resident businesses. Foreign companies providing taxable supplies in Estonia that triggers the obligation to register must do so from the first supply irrespective of the values.
Estonian resident companies with a turnover below this threshold can still voluntarily register.
The taxable supply is calculated from the beginning of the calendar year and does not include transfer of fixed assets and distance selling to a person of Estonia.
Till now cryptocurrency trading was regulated in Estonian as the activity of providing services of alternative means of payment. The new wording of the Money Laundering and Terrorist Financing Prevention Act stipulates that providing services of the exchange of virtual currency or custodial wallet services requires an authorization.
In order to obtain a cryptocurrency exchange license an application must be filed to the Register of Economic Activities. The application must be supported by required documents and information. As a rule, the Financial Intelligence Unit will provide the authorization within 30 days from receiving all necessary documents.
Do you have any questions or do you wish to obtain a cryptocurrency exchange license? Please contact us at firstname.lastname@example.org and together we will find the best solution for your business.
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Jan 19, 2018