What is Double Taxation and Can It Be Avoided?

As the name says, double taxation stands for paying the same taxes in different countries. Double taxation can be avoided, if the country where your company is established, and where you as a private person live, have signed a double tax treaty agreement. See the list of the countries that have double tax treaty agreements with Estonia.

If the countries have not signed the treaty, then the double taxation can’t be avoided. For example, Estonia doesn’t have a double tax treaty with Russia, which means that the company may need to pay corporate income tax in Estonia as well as in Russia.

In the previous section, we already mentioned that income taxes for a natural person and a company are two separate things. If a company pays out dividends, then this is taxed with the corporate income tax. However, in most of the countries, private persons have to pay personal income tax from the received dividends. This is not considered as double taxation, because these are two separate taxes.