#WallessTaxCookies | Ecquity moves in Enstonia: Do’s & Don’ts for companies

Estonian Tax Authority is increasingly scrutinizing equity contributions and distributions by Estonian companies. Since equity contributions may create a tax asset and distributions may create tax liability, it’s essential to review them carefully before declaration.

Do:

• properly value non-cash contributions.
• check whether planned equity distributions (e.g., via share capital reductions) create a tax liability.
• familiarize yourself with form TSD Annex 7 – all equity contributions and distributions must be reported there.

Don’t:

• use indefinite upstream loans to shareholders to avoid profit distributions.
• assume cross-border mergers or restructurings are always tax-neutral.
• forget that share buy-backs can trigger tax liabilities for both the company and shareholders.

Watch your equity moves and declare wisely!