4.8 Restrictions on remitting funds out of the jurisdictions (withholdings, etc.) There is no withholding tax on dividends in Estonia (see exceptions in sections 4.3 and 4.6). Full participation exception for dividend income received from EEA- or Switzerland-located subsidiaries, where the company's shareholding is at least 10%. This dividend income is exempt from CIT when distributed further to shareholders. In the case of subsidiaries located outside of the EEA or Switzerland, the "subject to tax" condition applies, i.e., dividends received from subsidiaries are tax-exempt upon further distribution if income tax has been withheld abroad or paid from the underlying profit. The exception does not apply in case the subsidiary is located in a low tax rate territory. 4.9 Foreign investment credibility assessment As of May 1, 2023, a Foreign Investment Credibility Assessment Act is expected to enter into force. The Act will impose an authorization obligation on foreign investments, meaning that it is not permitted to finalize such an investment prior to receiving authorization from the Estonian Consumer Protection and Technical Regulatory Authority (CPTRA). Foreign Direct Investment is defined as follows: i. it is conducted by a foreign investor – a person not from the EU; ii. it is deemed as an investment – either by buying up the property of the target, or by acquiring at least a 10% (direct or indirect) ownership in the target (also applies to existing shareholders of the target who wish to increase their ownership over 10%);

iii. investment involves a target company. The Act also lists industries affected, e.g., electricity, natural gas, liquid fuel suppliers, data transmission service suppliers. To receive an authorization, the foreign investor must apply for a permit from the CPTRA before finalizing the investment. 4.10 Residency and visas Estonia is a member of the European Union and a Schengen country. The basic rules regarding EU and non-EU nationals are as follows. 4.10.1 Citizens of the European Union A citizen of the EU (or of the EEA or Swiss Confederation) has the right to stay and work in Estonia based on a valid travel document or an identity card for a period of up to 3 months without registration of the right of residence. An EU citizen obtains the right of residence upon registration of his or her place of residence located in Estonia with the local government authority nearest to his or her place of residence. EU citizens will obtain a right to reside in Estonia for five years, a term which is extended automatically for the next period of five years if the registered place of residence is continually in Estonia. The document certifying the right of residence of an EU citizen is the Estonian ID-card which must be applied for within 1 month after the registration of residence. A citizen of the EU who has permanently (at least 183 days during a year) resided in Estonia for a period of five consecutive years based on a temporary right of residence is entitled to a permanent right of residence.

ILN Corporate Group – Establishing a Business Entity Series

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