- Physical presence in Cyprus
- Physical presence in the United Arab Emirates
- Physical presence in the United Kingdom
- Physical presence in Estonia
- Physical presence in Malta
- Physical presence in the British Virgin Islands
- Pysical presence in Belize
Estonia is a popular European jurisdiction for company formation that is especially renowned for the e-residency programme that it offers. The system is advertised as an easy and accessible system for any individual to set up a European company online without the need to visit the country or undergo any complicated screening procedures. Though this may be true to a certain extent, it can also be quite misleading. The programme may allow you to easily incorporate a company but it does not properly inform or warn you about the importance of building a solid substance and physical presence in the country where key operations take place and thus exposes your enterprise to challenges from foreign authorities as well as a number of legal liabilities.
Although Estonia, like many other jurisdictions, does not have a standard set of regulations for substance requirements in the country, it does not mean that they do not apply or are not given adequate importance. On the contrary with the absence of precise guidelines, it is even more crucial to excise caution and make sure that your company has a failproof and solid base for tax residency purposes. If you already have an existing Estonian company or intend to incorporate one in the near future, we highly suggest that you carefully consider if this jurisdiction is really the country from which you intend to run your business. If it is, then it is important to note that the management and control of the company must be exercised strictly from Estonia, which means that the majority of the Board of Directors should be qualified Estonian residents with experience and knowledge in your field of business activity. Moreover, as the country has its own language and reporting standards, it is wise to make sure that at least the company secretary speaks the language and is well informed about the annual requirements and reporting particularities of the company. Certainly, our firm can provide you with the proper administrational and managerial services as well as assist you with compliance and annual fillings, however, in order to make sure that the tax residency of the company is not questioned, additional steps will need to be taken to form an unassailable physical presence in the country. This may mean that depending on the size and type of business, you may need to hire additional employees in the country, lease or buy office space in Estonia which will be equipped with all the necessary organizational facilities such as furniture, computers, company servers or field specific equipment. Furthermore, the company will be required to indicate sufficient expenditure in the country such as payment of utilities, office supplies among other essential expenses when running an active business. It is also advisable that at least one of the bank accounts of the company is located in its country of physical presence. The general idea behind the requirement for solid substance is to demonstrate to the tax authorities that the enterprise has a valid and influential reason to be formed and run from a particular country other than for tax benefit purposes.
The subject and relevance of substance in today’s strict regulatory framework is of key importance and thus should be approached with careful and professional consideration. You can read more on the topic on our website or contact our corporate team for a detailed consultation. Our experts are well acquainted with the complexities and regulations imposed in a number of different jurisdictions and can provide you with a simple and cost-effective solution designed for your specific business structure.
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