I have this e-residency. Careful with India's taxation laws. If the company is foreign, but "place of effective management" is in india, you will be taxed at 40%. Compared to that, indian startups get taxed at 17%.
11/06/2019, 2:48 PM
Got it. Thats a good point.
11/06/2019, 3:25 PM
@acceptable-flag-71699 Is 40% tax to be paid in Estonia? Or Estonian tax + indian tax. Double taxation agreement between india and Estonia is mentioned in e-residency site. Not sure if the agreement helps to prevent double taxation for e-residents.
11/07/2019, 4:32 PM
It's got to do with tax residency of the entity. For people, it is simple. You are an Indian tax resident if you work from india atleast 180 days a year you are Indian tax resident. Other countries may claim taxes on whichever portion of work/income is directly attributable to the time spent in their country, usually for stays over a month.
For companies your physical presence doesn't matter. Place of effective management can be estonia for simple reasons such as having the primary bank account and primary listed contact info being there. Talk to a professional.
There is DTAA but it only prevents both countries from adding up their taxes for same entity. You may end up paying 40% to estonia and claiming an exemption via DTAA on India. Estonian taxes for companies is on amount withdrawn from the company as salary, dividend etc. Money kept invested is not taxed if I remember it correctly. India may claim that the 40% tax is for the company there, and what you got is income which is independently taxable, getting you into a double whammy. DTAA doesn't help you in this case. Always talk to a professional.