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11.2. Tax Consequence of Business Emigration, Corporate Inversions and the Cessation of Business

Tax Consequences of Emigration of Businesses

As the tax residence of Estonian companies is determined on the basis of their place of incorporation, Estonian companies cannot effectively transfer their tax residence abroad.

An exception may apply to European Companies (Societas Europaea, SE), where the registered office may be transferred to another EU Member State. Under the Income Tax Act, a resident company which is deleted from the Estonian register without liquidation is obliged to pay the corporate tax on the share of the equity which exceeds the monetary and non-monetary contributions paid into the equity. Taxation will not apply provided the assets of the company deleted from the register are continuously used in economic activities in Estonia (e.g. through a permanent establishment remaining in Estonia).

Corporate Inversions

No specific provisions regulate the case of corporate inversion.

Cessation of Business

Under Article 50(2) of the Income Tax Act, a resident company shall pay income tax on the portion of the paid liquidation distributions which exceed the monetary and non-monetary contributions paid into the equity of the company.