When thinking about investing in dividend stocks in Estonia, it is important to firstly understand what dividends are.
Dividends represent a portion of the earnings of a company which is paid to its shareholders. Most of the times, the dividends are paid in cash, representing a small percentage of its income which is sent to the owner of each company share. Our Estonian company formation advisors can offer more details on this matter.
Therefore, investing in dividend stocks in Estonia can provide a continuous flow of cash sent to the investor. This type of investment can prove to be effective for decades to come and represents a passive form of investing in which the shares are held for the long term without being sold.
Reasons for which a company can offer dividends in Estonia
Generally, dividends are paid by companies that are stable and already settled into the market, even though they do not register a great growth. However, dividends can also be offered by young and small companies.
The reason these companies offer to pay their shareholders dividends is to keep them happy. The businesses that offer them generally have surpassed the initial business growth stage, meaning they cannot keep up with the growth rate usually required by the stock market anymore.
When a business cannot benefit enough through reinvesting its earnings, it generally chooses to pay them to its shareholders. Therefore, the regular dividends are offered in order to make the stock more attractive to investors. Our company formation professionals in Estonia can provide you with more information regarding this subject.
General data on dividend investments in Estonia
Generally, foreign investors are attracted to dividend investments in Estonia because of the Estonian tax law. According to this legislation, when an Estonian business offers dividends, it has to pay a dividend withholding tax, currently set at 20/80%. Our company registration experts in Estonia can further explain what this taxation consists of.
After this tax is acquitted, the cash coming from dividends in this country are entirely free of taxes for the private investor. So, you can use this cash for you daily living expenses without paying one more dime on taxations!
If you decide to invest in foreign dividend stocks and you are a resident or citizen of Estonia, then the cash paid by them is taxed with a 15% rate, which is also very reasonable and enables you to spend the profits resulting from investing in dividend stocks in Estonia for your daily living expenditures.
If you need further details about the benefits of dividend investing in Estonia, or require assistance to open an Estonian company, we kindly invite you to contact our team.