"Fascinated of Estonia makes a mistake: opportunities in Lithuania are even better" Comments for Delfi.lt publication

2017-08-16 20:45
Tax news

Laimonas Marcinkevičius, attorney at law and tax consultant of Juridicon gave comments for  Vytenio Miškinio publication Delfi.lt "Fascinated of Estonia is making a mistake: Lithuania opportunity even better." The publication compares the conditions for small businesses in Estonia and Lithuania, discussed about tax system of Estonian and Estonia E- Nationality.

Entrepreneur U. Armalis said that Estonian tax system for small business are better than in Lithuania. "Assessing the current opportunities, they can pick up Estonian E- Nationality and move to Estonia," he said.

An international tax expert and law firm Marcinkevicius and partners Juridicon lawyer Laimonas Marcinkevičius considers differently: "If the business is carried out only in Lithuania and it is not planned to actually move to Estonia, E- Nationality is not the right way to solve it, it can even be dangerous. Since transferring only the address of the company to Estonia, and continuing its activities in Lithuania, it would be necessary to register a home in Lithuania and still pay taxes in accordance with the laws of our country."

Entrepreneurs who do not know the Estonian tax system often give way to the illusion that there is no profit tax in Estonia. "They set up Estonian companies, start business, and often only later realize what onus of tax they make, delaying tax payments. The business in Lithuania has better opportunities to survive, grow, because the tax rate is lower, businessmen have more freedom to choose to reinvest their profits or pay their own dividends, "said a lawyer.

The lawyer also noted that in Estonia the profit tax is almost twice as high as in Lithuania. (25.32 % in Estonia, while in Lithuania it is 15 % (for small companies, 5 %)). " In Estonia, the corporate income tax is payable when the profits are distributing , all profits earned by a company are not taxed until they are paid to shareholders.. In my practice, I had a number of clients who sought advice on how to "squeeze out" the profits of their own firm, avoiding huge taxes. From a dividend payable by an Estonian company, a natural person in Lithuania, as well as a shareholder, must still deduct 15% Income tax in Lithuania. The total tax amount on a shareholder, a natural person who receives dividends from an Estonian company, amounts to 36.52 percent ", explained lawyer L. Marcinkevičius.