Xolo currently assumes that your Estonian Xolo Leap company will be an Estonian tax resident and will provide you with the necessary tax compliance and reporting in Estonia.
Typically the tax residency of a legal entity is determined by taking into account the incorporation address, the location of actual business processes, customers, and value creation, and the location of its management. The final decision then depends on the local tax rules in all the locations mentioned.
The motivation to change the tax residency of the company can only come from external parties (your country of residence in your case). In case this issue arises, the external party has to prove their point during negotiations with Estonian authorities, taking into account the double taxation avoidance agreements in place. As a result, the company could also become a tax resident in both locations.
To facilitate the process, in many cases countries have agreed on double taxation avoidance agreements, which specify mutually respected rules on how to classify a legal entity from a tax perspective. The countries that Estonia has contracts with for avoiding double taxation are listed on the Ministry of Finance website.
If during the lifetime of the company, it turns out that your company will be a tax resident in your home country (e.g. Germany), then the tax reporting and compliance in your home country will be your responsibility. Unfortunately, at this time, Xolo Leap is not able to support you with tax compliance and reporting in your home country. You need to consult a tax expert in your country for that.
As a disclaimer, Xolo does not provide professional tax advice and the above is based on public information only.
What about the company's tax-residency and double taxation?
Last updated: March 10, 2023
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