Subject: withholding tax
From: "Daryna Babych" <[email-masked]>
To: "Info - RAM" <[email-masked]>
Date: Tue, 13 May 2025 15:53:47 +0300

Tähelepanu! Tegemist on välisvõrgust saabunud kirjaga.
Tundmatu saatja korral palume linke ja faile mitte avada.

Dear Sir/Madam,

We have a company in Estonia and we are currently considering entering into 
royalty or SaaS agreements with a foreign partner company registered in 
Belize.

Please kindly clarify the following:

1. If our Estonian entity pays royalty fees or SaaS-related compensation to 
a company in Belize (which does not own intellectual property rights but 
acts as a distributor), what would be the tax treatment of such payments 
under Estonian law?

2. Would such payments be subject to withholding tax or other forms of 
taxation in Estonia?

3. Belize is listed in Annex II of the EU — the list of jurisdictions that 
cooperate with the EU but have pending commitments in the area of tax 
regulation. Does this mean Belize is currently considered an offshore or 
high-risk jurisdiction by Estonian tax authorities? If so, what are the 
implications for the deductibility of such expenses?

4. Would the principle of "substance over form" (as stated in § 84 of the 
Estonian Taxation Act) be applicable in such transactions?

5. What additional documentation or justification would be required from our 
side to prove the economic substance and commercial rationale behind these 
payments?

We look forward to your response and are open to further instructions or 
documentation you may require.

Kind regards,

Daryna