Opening an LLC in either Estonia or Latvia and living there. Please help me decide.

[EliasIT]

If you have crypto and are moving to Estonia, you can inject crypto as capital to the company. When you do that, you evaluate how much the crypto is worth.

Similar to what was possible in Switzerland before they paused it. I don't know if it is possible today. Great that Latvia has the same possibility.

 

[Revoltec]

If you have crypto and are moving to Estonia, you can inject crypto as capital to the company. When you do that, you evaluate how much the crypto is worth.

Indeed this is very interesting. However, for someone that is heavily exposed to crypto, keeping in mind how fast the tax laws are changing right now, one might want to consider to actually leave it for the next crypto cycle, not to risk locking in capital and them changing the taxation laws(?)

 

[Don]

Similar to what was possible in Switzerland before they paused it. I don't know if it is possible today. Great that Latvia has the same possibility.

Yes, Georgia should as well.

 

[Revoltec]

One thing I do not understand is, why is this legal to do under "substance over form" law? Obviously you are creating a structure (company) to avoid paying income tax as an individual, if trading is the only thing the company will do. If this would be legal, all citizens in Estonia would do this in order to avoid paying income tax on invesments(?)

The only way I see this can work is if you indeed are NOT a tax resident of Estonia. But then your home country can use the Substance over form law.

 

[cuno]

One thing I do not understand is, why is this legal to do under "substance over form" law? Obviously you are creating a structure (company) to avoid paying income tax as an individual, if trading is the only thing the company will do. If this would be legal, all citizens in Estonia would do this in order to avoid paying income tax on invesments(?)

The only way I see this can work is if you indeed are NOT a tax resident of Estonia. But then your home country can use the Substance over form law.

you should only post a question once not in all various threads!

R

Thread 'Substance over form law and structures'

Oct 17, 2024

I mentioned this in another thread so I thought about creating a new one.

I see a lot of examples of structures where the only benefit is achieving lower tax. But, there is also a 'substance over form' law in many countries. How can it be legal to structure companies in these ways?

For instance, Estonia doesn't tax undistributed profits but taxes individuals on investments immediately. How can it be legal to create a company that only invest and trade stocks in order to lower taxes?

• Revoltec
• Replies: 6
• Forum: Offshore Company

 

[BarleyMalt]

Corporations get taxed when they distribute profits.

If you have crypto and are moving to Estonia, you can inject crypto as capital to the company. When you do that, you evaluate how much the crypto is worth.
Say its worth 1m. Then you can later withdraw the same amount from company tax free, while at the corporate level when the crypto is sold its not taxed either as the tax is generally paid only on distribution of dividends, and not on payback of contributed capital.

Beware when doing this in Estonia, I asked a few people there and the answer was that you'll likely get a tax audit if you capitalize your company with large amounts of crypto.

 

[cuno]

Beware when doing this in Estonia, I asked a few people there and the answer was that you'll likely get a tax audit if you capitalize your company with large amounts of crypto.

who did you asked there, company owners or professionals ?

 

[Don]

Beware when doing this in Estonia, I asked a few people there and the answer was that you'll likely get a tax audit if you capitalize your company with large amounts of crypto.

Thats correct, and the same applies to other similar tax systems like Latvia and Georgia.
Such transactions are closely monitored and double checked by tax authorities. And it applies to most capital contributions, because you're effectively applying for a tax exemption.

 

[JohnnyDoe]

Stay (Physically) away from the so called Baltic countries. They are hellish s..tholes, long time abandoned by the smart locals who flew abroad, and only useful for (mainly illegal) operations managed from abroad.

Unfortunately violent crime is rampant. Lithuania is a major hub of trafficking (drugs and cigarettes), Latvia is just a U.S. colony (Check the huge U.S. embassy there, as I posted some time ago here), Estonia plays the role of the smartest kid but it’s the same.

Long are gone the good times when you could walk in Rietumu with cash in plastic bags.

 

[Don]

Stay (Physically) away from the so called Baltic countries. They are hellish s..tholes, long time abandoned by the smart locals who flew abroad, and only useful for (mainly illegal) operations managed from abroad.

Unfortunately violent crime is rampant. Lithuania is a major hub of trafficking (drugs and cigarettes), Latvia is just a U.S. colony (Check the huge U.S. embassy there, as I posted some time ago here), Estonia plays the role of the smartest kid but it’s the same.

Long are gone the good times when you could walk in Rietumu with cash in plastic bags.

Your knowledge must be outdated, as Tallinn is actually currently considered vastly superior to its neighbours in the region, including Riga, Vilnius, Stockholm, Oslo, Berlin, ranking 17th amongst 195 capital cities globally.

https://news.postimees.ee/7955309/tallinn-ranks-17th-in-global-quality-of-life-index

Btw which countries you consider better where you can walk around with your cash in plastic bags?

 

[JohnnyDoe]

Your knowledge must be outdated, as Tallinn is actually currently considered vastly superior to its neighbours in the region, including Riga, Vilnius, Stockholm, Oslo, Berlin, ranking 17th amongst 195 capital cities globally.

https://news.postimees.ee/7955309/tallinn-ranks-17th-in-global-quality-of-life-index

So Postimees.ee said
I’m currently an Estonia e-resident and I continue to deal with the 3 little rabid countries.

Btw which countries you consider better where you can walk around with your cash in plastic bags?

Any non Western country, where cash is still considered legal. Some might remember the times when not accepting cash was illegal

 

[JohnnyDoe]

Look, what a coincidence, certain products are always shipped from the Baltics:

 

[Don]

Any non Western country, where cash is still considered legal. Some might remember the times when not accepting cash was illegal

True...marxists have largely taken over the world.

Hard to hammer all that nto head sometimes though due to cognitive dissonance, emotional protection, and bias for hope and optimism. Times are grim.

Having multiple residencies is the key.

 

[kilor]

Stay (Physically) away from the so called Baltic countries. They are hellish s..tholes, long time abandoned by the smart locals who flew abroad, and only useful for (mainly illegal) operations managed from abroad.

Unfortunately violent crime is rampant. Lithuania is a major hub of trafficking (drugs and cigarettes), Latvia is just a U.S. colony (Check the huge U.S. embassy there, as I posted some time ago here), Estonia plays the role of the smartest kid but it’s the same.

Long are gone the good times when you could walk in Rietumu with cash in plastic bags.

very well explained. Like in many other situations, be resident at one place and have the company in another country and if possible to business out side of that country.

 

[Don]

very well explained. Like in many other situations, be resident at one place and have the company in another country and if possible to business out side of that country.

Even better would be to be legal resident in multiple countries, while not necessarily being tax resident in the same.
Having residence helps to open and maintain local bank accounts, and obtain credit.

 

[BarleyMalt]

Your knowledge must be outdated, as Tallinn is actually currently considered vastly superior to its neighbours in the region, including Riga, Vilnius, Stockholm, Oslo, Berlin, ranking 17th amongst 195 capital cities globally.

https://news.postimees.ee/7955309/tallinn-ranks-17th-in-global-quality-of-life-index

Btw which countries you consider better where you can walk around with your cash in plastic bags?

Tallinn is immensely boring. And unpracticable during winter time, as they do not remove ice and snow from the sidewalk. Estonians are very good at marketing themselves, and at “arranging” statistics, but when you live there, you realize that Estonia is very much an empty ex-soviet country with big SUVs (there is nothing else to buy anyway).

Helsinki, which is 50km away, is much more interesting, and welcoming than Tallinn. If you forget about the taxes!

Baltic countries are shitholes, but you can stay there anonymously, no one cares about you, they usually respect a lot your privacy. There isn't much non-European immigration (Russians not included), and real estate is very cheap (especially in Latvia). Locals have mainly abandoned the idea of making near enough babies for their country to survive, many have left, so cities are never very crowded, and you have room to think and live. If you want to hide, this is a very good place. A lot of Russians live there undocumented. Everyone knows this, cash is widely accepted, it won't raise any eyebrows.

Since they are ex-soviet countries that haven't turned the page, most people there have no idea how to run businesses efficiently. It's a major pain, things like customer service or marketing are completely ignored, workers to do the minimum whatever the wage level. They often don't maintain their properties, which are often derelict, because they don't understand the capitalist game at play with real estate. This is part of the reason they're still poor, and it's very complex to do business there.

 

[kilor]

A very good review about Tallinn and Helsinki; one might consider swapping summer surroundings for snow and ice and a snowmobile. Personally, it's not for me either, even though the taxes are very low, and you can live there anonymously.