Domestic demerger escapes immediate CIT if assets stay in Estonian business

Estonian groups planning a domestic division by distribution get a detailed non-taxation path. In the 2024 II kvartal summary the applicant plans a resident-company split where the company ends and is deleted from the commercial registerEmta, about half of its assets going to each of two existing legal persons. No assets leave Estonia in the distributionEmta, and the assets stay in Estonian business use by the acquiring companiesEmta. The applicant asks for confirmation that the distribution on those terms is not charged to income tax.

Maksu- ja Tolliamet takes the view that the second sentence of TuMS § 50 lõige 22 exempts the case when its conditions are metRiigiteataja: the dividing company is deleted from the register without liquidation proceedingsEmta; the deleted company's assets stay in Estonian business use in another company or in a permanent establishment of a non-resident companyEmta; and the transaction or series does not conflict with the general anti-abuse rule in TuMS § 51Emta. The applicant is a resident divider deleted without liquidationEmta, the acquirers are resident legal personsEmta, nothing leaves EstoniaEmta, and the reorganisation is not cross-borderEmta. For the exemption the parties must also meet all distribution features, including the Commercial Code distribution requirements, with the distribution following each shareholder's participation size and actual value in the applicant.Emta On these facts no prohibited tax advantage as the sole or main purpose under TuMS § 51 lõige 1 is seenEmta and the planned division is an actual transaction. When the second-sentence conditions hold and the series does not breach anti-abuse, there is no taxation under the first sentence of § 50 lõige 22.Emta Taxation then happens later at the acquirer level in the ordinary course, including on dividends or equity payouts from the received assets to its own shareholders.Emta

A second 2024 III kvartal summary moves a foreign-tax exemption remainder across a mergerEmta. The applicant sold Spanish real estate, earned a gain, paid income tax in SpainEmta, and declared the paid amount as an exemption right under TuMS § 54 lõige 5 in part Ib of annex 7 to the TSDEmta. After the sale it repaid project loans and distributed dividends to its sole shareholder, with most of the cash staying on its account. The sole shareholder now wants to merge the applicant into another real-estate company so the applicant ends, concentrating assets under one developer. The question is whether the exemption right passes to the acquiring company for future tax-free payouts such as dividends or equity payments.

Maksu- ja Tolliamet agrees that the exemption right from the Spanish-paid tax passes on mergerEmta and the acquirer may later use it to reduce income-tax on dividend or equity payouts through the § 54 lõige 5 offset, provided the Spanish payment was mandatoryEmta. Because the applicant's TSDs show part of the real-estate exemption already usedEmta, only the remainder passesEmta.

Both summaries bind the administration only for the asked operation as described and performed, with deviations in material facts ending binding effect and with later law changes applying as in force at performance. The general ruling conditions, time limits and refusal grounds continue to govern new requests.

The relief follows the second sentence of TuMS § 50 lõige 22 with the TuMS § 51 anti-abuse test and Commercial Code distribution features, and the transfer follows the TuMS § 54 lõige 5 offset with mandatory foreign payment and TSD tracking.