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Estonian Company vs UK Ltd

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ilpablo

Active Member
Hi guys, I know already about the UK Ltd.

I just started this thread to discuss about the PROS and CONS between these choices.

And if anyone have a good knowledge how can you legally reduce taxes in both countries residing in a different country (Ex: Malta, Portugal, Cyprus, Dubai, etc...)?

thanks!
 

Sols

Staff member
Mentor Group Gold
You can't legally reduce taxes just by incorporating, so it's a bit of a moot point. Are you planning to move to UK or Estonia?
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
I just started this thread to discuss about the PROS and CONS between these choices.

Ones an EU company and the over is not. One is increasing the tax rate to 25% and the other is not conf/(%.


 

ilpablo

Active Member
Ones an EU company and the over is not. One is increasing the tax rate to 25% and the other is not conf/(%.


Yeah that's the problem of UK.

I don't really understand them... it was a good country for business!
 

Sols

Staff member
Mentor Group Gold
I wrote above what will be the setup...
Maybe I missed it. If you're thinking about relocation, then the other places you mentioned offer far greater tax advantages than both Estonia and UK.

Both are similar in most of the meaningful ways and primarily deviate in tax (UK going to 25%, Estonia at 20% on distribution), language (everything is in English in UK, everything in Estonian and sometimes English in Estonia), and the fact that UK is no longer in EU. They have nearly identical accounting and filing requirements.
 

ilpablo

Active Member
Maybe I missed it. If you're thinking about relocation, then the other places you mentioned offer far greater tax advantages than both Estonia and UK.

Both are similar in most of the meaningful ways and primarily deviate in tax (UK going to 25%, Estonia at 20% on distribution), language (everything is in English in UK, everything in Estonian and sometimes English in Estonia), and the fact that UK is no longer in EU. They have nearly identical accounting and filing requirements.
yeah, but UK is still a reputable country for setup a company... better than Malta, Romania, Bulgaria, etc
 

marzio

Entrepreneur
Well, if you move your residency to Dubai then you can use UK LLP or US LLC since are tax transparent. If you move to Malta you can use the Estonian OU to delay taxation until you distribute dividends (which could never happen). To use NHR you need a UK director plus the CIT it will soon rise to 25%.
 

ilpablo

Active Member
Well, if you move your residency to Dubai then you can use UK LLP or US LLC since are tax transparent. If you move to Malta you can use the Estonian OU to delay taxation until you distribute dividends (which could never happen). To use NHR you need a UK director plus the CIT it will soon rise to 25%.
If you don't distribute the dividends, how would you use/get your money from the Estonian company?

And in your opinion which is the best setup in term of low taxation, low costs and less troubles?

Considering the classic options...

These ones mentioned here, Romania, Cyprus, etc...
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
Elite Member
I don't really understand them... it was a good country for business!

I don't think UK do themselves either sadly conf/(%.

If you don't distribute the dividends, how would you use/get your money from the Estonian company?

Just keep the money in the company and pay yourself a salary tax free if you live in Dubai. Not many people need access to 100% of the money their company earns right away. Leave in parked in Estonia company of re-invest it within the company and it will grow much quicker than if you had to pay tax on profit. Tax on distribution is a much fairer model.
 

marzio

Entrepreneur
Just keep the money in the company and pay yourself a salary tax free if you live in Dubai.
Yes.

If you reside in Malta just calculate how much money do you need for your day to day expenses and pay some taxes on the salary.

Maybe you could even make the estonian company to pay for your aparment as a business expense?
Not many people need access to 100% of the money their company earns right away.
Nobody really needs to extract all the profits from the company if you want the company to grow.
 

ilpablo

Active Member
Yes.

If you reside in Malta just calculate how much money do you need for your day to day expenses and pay some taxes on the salary.

Maybe you could even make the estonian company to pay for your aparment as a business expense?

Nobody really needs to extract all the profits from the company if you want the company to grow.
Yes I don't need to get all the profits right away, but rather reinvest most of the money, but anyway at the end of the game you would get those money somehow.

if you live in Malta or Cyprus, do you need a local director or you will be fine without it? Btw if you get a salary in Malta you will pay not very cheap taxes, maybe under 15k it's a small amount.
 

marzio

Entrepreneur
With the estonian company you are the director residing in Malta, that's the whole point of this setup.

Btw if you get a salary in Malta you will pay not very cheap taxes, maybe under 15k it's a small amount.

That's why you have the other option which is Dubai but at the end of the day you will have to shell out some money.

Let's say you made 100K with your company.

Option 1 UK LTD: you will have to pay 25K as corporate tax (and i'm not taking into consideration the director salary that you will have to pay for that UK LTD to make it work with NHR).

Option 2 Estonian OU + Malta residency: You pay 0% corporate tax and you are taxed 25% up to 60K remitted to Malta. If you pay yourself 60K then you will end up paying 15K income tax.

Option 3 LLC/LLP + Dubai: you pay 0% corporate tax and 0% income tax but aren't you going to pay at least 15K/year to live there?

Is it really up to you who you want to give money to.
 

ilpablo

Active Member
With the estonian company you are the director residing in Malta, that's the whole point of this setup.



That's why you have the other option which is Dubai but at the end of the day you will have to shell out some money.

Let's say you made 100K with your company.

Option 1 UK LTD: you will have to pay 25K as corporate tax (and i'm not taking into consideration the director salary that you will have to pay for that UK LTD to make it work with NHR).

Option 2 Estonian OU + Malta residency: You pay 0% corporate tax and you are taxed 25% up to 60K remitted to Malta. If you pay yourself 60K then you will end up paying 15K income tax.

Option 3 LLC/LLP + Dubai: you pay 0% corporate tax and 0% income tax but aren't you going to pay at least 15K/year to live there?

Is it really up to you who you want to give money to.
The director can have 12k pounds of salary tax free with the ltd uk.

Btw in your opinion, between these 3 options, Romania and Cyprus which is the best?
 

JustAnotherNomad

Mentor Group Gold
If you pay out a salary, you can reduce the company profits. So if you live in Dubai, it wouldn't really matter where you incorporate if most of the profits are paid out through the salary anyway. Just beware that the tax authorities may say that not 100% can be paid out as a salary and that some has to be paid as a dividend instead - so the company would have to pay tax.
You may be able to avoid that by registering a branch in Dubai, but you should talk to a tax advisor from the UK/Estonia about that.
Estonia might be a bit easier to deal with as there definitely is no tax due on profits that are kept in the company.

Portugal only exempts dividend income from tax, so you would always have to pay 25%/20% corporate income tax. You would be better off using a Maltese company where the corporate tax rate is only 5%.
I'm not 100% sure about the rules for Cyprus/Malta.

Anyway, in the case of all the countries you mentioned (except the UAE), there's always a risk that they will tax your company like a local company. You can't simply avoid taxation by incorporating somewhere else. It could even be considered tax evasion if you don't declare that, so you should talk to an advisor from that country as well.

If I were you, I would first try to decide where I want to live. Once you've decided that, I would talk to an advisor from that country about what kind of setup they recommend.
E.g. if you like Portugal, there are dozens of companies that will register a company for you (typically in Malta/Cyprus), accounting will be done by their partners, and you just get a complete, hassle-free solution.
The only downside with Portugal is that there is some risk, like I explained above. But at least you will be one of thousands with such a setup, not a lone guy with some weird structure nobody else uses. It's well-tested.
 

uplana

Corporate Services
Mentor Group Gold
There are so many threads about Estonia here already so I would do a Google search for even better research!
 

saintjohnny

New member
If you pay out a salary, you can reduce the company profits. So if you live in Dubai, it wouldn't really matter where you incorporate if most of the profits are paid out through the salary anyway. Just beware that the tax authorities may say that not 100% can be paid out as a salary and that some has to be paid as a dividend instead - so the company would have to pay tax.
You may be able to avoid that by registering a branch in Dubai, but you should talk to a tax advisor from the UK/Estonia about that.
Estonia might be a bit easier to deal with as there definitely is no tax due on profits that are kept in the company.

Portugal only exempts dividend income from tax, so you would always have to pay 25%/20% corporate income tax. You would be better off using a Maltese company where the corporate tax rate is only 5%.
I'm not 100% sure about the rules for Cyprus/Malta.

Anyway, in the case of all the countries you mentioned (except the UAE), there's always a risk that they will tax your company like a local company. You can't simply avoid taxation by incorporating somewhere else. It could even be considered tax evasion if you don't declare that, so you should talk to an advisor from that country as well.

If I were you, I would first try to decide where I want to live. Once you've decided that, I would talk to an advisor from that country about what kind of setup they recommend.
E.g. if you like Portugal, there are dozens of companies that will register a company for you (typically in Malta/Cyprus), accounting will be done by their partners, and you just get a complete, hassle-free solution.
The only downside with Portugal is that there is some risk, like I explained above. But at least you will be one of thousands with such a setup, not a lone guy with some weird structure nobody else uses. It's well-tested.

Can you recommend me someone in Portugal?
 

CyprusLaw

Mentor Group Gold
The director can have 12k pounds of salary tax free with the ltd uk.

Btw in your opinion, between these 3 options, Romania and Cyprus which is the best?
For Cyprus: 12.5% corporate tax on net profit of the company. As a non dom you only pay 2.65% for GHS on dividend, so your effective tax rate is around 15%
 

JustAnotherNomad

Mentor Group Gold
Can't recommend anyone, but maybe try
Etc.
 

uplana

Corporate Services
Mentor Group Gold
For Cyprus: 12.5% corporate tax on net profit of the company. As a non dom you only pay 2.65% for GHS on dividend, so your effective tax rate is around 15%
I would at any time go for a UK or Cyprus Ltd over anything else. The administrative burden for both entities is less and almost hassle free if you have an good accounting firm in the country where the company is registered.
 
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