By the decision of the EU Council, published on February 14, 2023, the list of non – cooperative jurisdictions for tax purposes was filled with four newcomers:
British Virgin Islands, Costa Rica, Marshall Islands and Russia.
Full list : https://www.consilium.europa.eu/…/taxation-british…/
For the Estonian taxpayer, it has not only informative, but also fiscal importance in case if Estonian legal entity makes the payments for the services provided by the legal entities of these jurisdictions, and for natural persons, who hold shares in the legal persons of these jurisdictions.
In the first case, income tax should be withheld from payments made to the listed legal persons for provision of services to Estonian residents.
Natural persons now have an obligation to declare their participation in the legal person located in such non cooperative jurisdiction.
Income tax will be charged on the income of such legal person on the level of Estonian shareholder irrespective of whether the profits were distributed, or not in case if such legal person is considered to be “under the control” of an Estonian resident (§ 22 of the Income Tax Law).
Taxation will be imposed to the part of the income which is proportional to participation in such legal person.
It is furthermore essential that dividends received by Estonian companies from the legal persons of those jurisdictions are not exempt from tax.