The information provided below is a simplified overview and should not be considered as tax advice. We are currently developing a comprehensive tax guideline that will be released in the near future. It is highly recommended to consult with your tax advisor before making any investments.
For Investors:
When you're investing through an Estonian SPV, in general, you are not required to file and pay taxes in Estonia, unless you are a tax resident of Estonia — you only file and pay taxes in the country of your tax residence. If you are a tax resident of Estonia, you pay 20% income tax on capital gains through investing via Uniborn.
VAT considerations for Lead Investors and Fee Recepients:
Entry fee:
The entry fee is a one-off payment made by the SPV to the Lead Investor and other parties designated by the Lead Investor. It is deemed a reimbursement of relevant expenses for provided services and, therefore, is subject to VAT.
However, since the SPVs are not taxable (do not have VAT numbers), the only case when the VAT will be included in the entry fee distribution is when the fee recipient is a European legal entity with a VAT number. In all other cases VAT is not applicable.
Carry:
According to the Estonian Value-Added Tax Act (§ 16, 2.2) the “Value added tax shall NOT be imposed on the supply of the following financial services: “borrowing and lending operations, including consumer credit, mortgage credit and other transactions for financing business transactions”.
We consider carry as advanced profit (as opposed to services) for the parties involved, which is articulated in the provision 5.3 of the Loan Agreement and Lead Investors Loan Agreement.
Therefore, in the event of a successful exit with carry designated to the parties, VAT is not imposed on the proceeds distributed by the SPV.
NB: Please consult with your homeland tax department, on whether you have to pay income tax or capital gain tax from Estonia-based company in your resident country or not.