New loan declaring obligation in Estonia = new headache for your company
Are you an entity in Estonia that is part of a group? Or are you a branch of a foreign entity in Estonia? Do not forget the obligation to declare all intra-group loans next year!
While the rest of the world is focused on the OECD Base Erosion and Profit Shifting (“BEPS“) Action Plans, Estonia decided to create a retroactive addition to its Income Tax Act, imposing additional obligations to companies that provide intra-group loans.
If you have given a loan to a parent company, or if loans are given horizontally within group, the repayment deadline is of importance: if the loan is longer than 48 months the lender is under an obligation to prove to the tax authorities that the borrower has the ability and intention to repay the loan. Even more, the declaration obligation covers loans retroactively from 1 July 2017, including loans older if the loan terms and conditions have been subject to changes since 1 July 2017.
There appears to be a visible misalignment between BEPS Action Plans and Estonia’s legislative amendments, as BEPS has focused its intra-group loan approach on the economic substance and interest rates of the loans, which the companies can assess and justify. The new legislative amendment in Estonia rather vests the right of risk assessment to the tax authorities.
In order to assure your appropriate intra-group financing, a comprehensive business structure is required. Bearing in mind domestic laws in Estonia, as well as international requirements, NJORD partner Anne Veerpalu and lawyer Anne-Lii Kask will be happy to assist you.
During the first half of every year, all companies are working hard to submit their annual reports. Annual reports must be submitted within six months after the fiscal year has ended. The submission deadline is usually June 30. Since the management board of a company must assemble all shareholders or stockholders at least once a year to approve the annual report, the following topics should be considered under the Estonian law.
For a long time, the legal position for combined carriage of goods by road has been more or less unclear. The Danish Transport, Building and Housing Authority has however recently issued an executive order implementing the rules of the so-called 'Combi Directive' (EU Directive 92/106). The executive order will come into force on July 1, 2018. In addition to implementing the directive, the executive order contains some 'new' rules that will clarify to what extent it is possible for foreign carriers to perform combined transport to and from Denmark.
Travelling in Nordic countries during summer time might trigger your Estonian entrepreneurial mind to start thinking about how to reach these neighbouring markets with your products and services. Great! But, before you start, make sure to do your homework and do not expect anything to happen during the period starting from Midsummer until mid-August, as summer is long and lazy for our dear neighbours.