There is a difference between CIT and PIT and, different taxes apply to dividends and profits from a company and salaries.
Your Company and You are separate entities:
You pay PIT on all income + social contributions from salary, usually where you live.
Your Company pays CIT, usually wherever itโs registered.
CFC will only affect companies moving out (at least thatโs the requirement, i.e. Poland hits everyone and everything with CFC regulations, which are nothing else than anti-competition laws in the end.).
If you stay in Germany you will pay PIT in Germany, however you will pay your CIT in Estonia. Estonia only charges CIT on the profits you pay out as dividends. And this is tricky to understand. Think of it, the other way around: Estonia charges the company 0% tax on profit that stays in the company, but the company pays 20% tax on profit payed out to shareholders. Itโs not you that is subject of that tax, itโs your company.
After that youโre subjected to tax of dividends as part of your PIT in Germany. Dividends are usually taxed more preferentially than salaries. Still, Estonia is very tax expensive if you pay out most of your profit.
Alternative is to pay out salary from Estonian Company. However if youโre only beneficial owner of the company - a big chunk of your salary has to be a bard member salary (30% I have been told) which is subject to Estonian tax 20% + 30% Estonian Social Contribution, unless you pay social contributions in another EU Country (in your case Germany). Rest can be payed as salary for any services you provide to the Company, and taxed as salary in Germany.
As you can see it does add a lot to complexity, but might save you few EUR.
Saying that if you do business in Germany for German Clients your company might be deemed a shell company which is real tax avoidance scheme, and charged CIT in Germany.
I was looking into that, I even got the e-residency, but I recalculated and itโs cheaper to incorporate in Romania, Bulgaria, or other. For me Gibraltar is the best option, but I travel and I will aim for tax residency in Portugal.
Th real benefit of Estonia is that you can do most signature requiring activities online, and it is supposedly easy to run things from legal perspective.
I heard that German Revenue office is becoming more and more aggressive as taxpayers flee the system, actually over-taxation of Germany and France is the main reason EU is introducing exit tax. They are afraid that Britain will introduce preferential rates.
PS> Iโm not a consultant, all of the above is my opinion based on some research I did. I might be wrong ![:slight_smile:]( ":slight_smile:")
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