How does a SERVICE COMPANY work?
- Bill your customers from an Estonian company;
- Charge work completed in your home country or other jurisdictions (e.g. programming from India) at an arm's length margin to the Estonian company;
- Accumulate profits in the Estonian company;
- The profit of an Estonian company is not taxed until distributed. If distributed to shareholders, corporate income tax at the rate of 20/80 shall be paid. If distributed as interest, no income tax is due;
- Several exemptions are available for corporate income tax on distribution;