What is the tax implication if i establish a company in estonia while being in india

[emperordoom]

I am thinking about establishing a company in estonia, while being an indian resident. what taxes would i have to pay in india and estonia? what if the company has only one employee being me will the place of effective managment be india. can i circumvent by hiring a nominee director. most of the business operation will be ecomercee, freelanceing, blogging in nature. What would be the ideal solution. after reaching a ideal revenue i want to become digital nomad. until then how should the taxes be handeled

 

[JustAnotherNomad]

I can't speak to the Indian rules specifically, but most countries would require you to at least disclose to the tax office that you are the UBO of the Estonian company.
And yes, if it's just you, then it will usually be seen as a local company from a tax perspective.
If you're only a passive owner (you have hired a CEO outside India to manage the business), then they may accept it - but they may ask for more documentation, and if the CEO is paid a $100 salary generating $1M in profit per year for the company, they will soon conclude that he's just a nominee and that it's really you who is running the company from India.
And even if they do accept everything, the company might still be a CFC - but I don't know the Indian CFC rules. If it's actually an operative business, it probably wouldn't be a CFC.

Anyway, long story short: You can't be involved in the business from India. You can only be a passive owner, and you have to be able to prove that.
I also wouldn't necessarily recommend Estonia, but that's a different story.

 

[providenceventurer]

I can't speak to the Indian rules specifically, but most countries would require you to at least disclose to the tax office that you are the UBO of the Estonian company.
And yes, if it's just you, then it will usually be seen as a local company from a tax perspective.
If you're only a passive owner (you have hired a CEO outside India to manage the business), then they may accept it - but they may ask for more documentation, and if the CEO is paid a $100 salary generating $1M in profit per year for the company, they will soon conclude that he's just a nominee and that it's really you who is running the company from India.
And even if they do accept everything, the company might still be a CFC - but I don't know the Indian CFC rules. If it's actually an operative business, it probably wouldn't be a CFC.

Anyway, long story short: You can't be involved in the business from India. You can only be a passive owner, and you have to be able to prove that.
I also wouldn't necessarily recommend Estonia, but that's a different story.

India doesnt have CFC laws but they put it from another angle as place of effective management so unless there is a CEO who is paid well and in a different jurisdiction or the Indian Director stays 6 months outside India to maintain its Non resident India status this company will get fucked with Indian Taxes.

 

[JustAnotherNomad]

CFC rules have nothing to do with PE/PoEM rules. They are completely separate concepts.
Even if you don't have the PoEM in India, you could still have a PE in India.
But good to know that India doesn't have CFC rules, at least that part won't be an issue then.