09.10.2017

News

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.

Latest news

Are compensations for your former employees taxable in Estonia?

What tax liabilities are created, when an employer terminates their work relationship with the employee e.g. due to layoffs?  Often when the working relationship ends, the parties agree that the employer will pay a compensation to the former employee during a certain period. There are several reasons for paying compensations, perhaps most common of them is the restriction of competition clause.

NJORD Estonia explains: Reckless license agreement can wreck your brand!

As Estonia is gaining recognition for its successful increase of creativity, more and more brands are spreading beyond our borders. When noticing Estonian design in foreign airports or department stores, many of us Estonians feel impressed. But, be sure to register your brand as a trademark to ensure legal protection for your idea. Copyrights, trademarks, designs and patents can be registered both domestically and on a more or less global scale, and it gives the registered author the exclusive right to use his or her own creation in any way and to permit or prohibit the use of the work by other persons. In other words, no-one should earn money on your creativity without a license!

Get the latest legal news

We gladly share our knowledge with you. Subscribe to our newsletters.

Subscribe here