Estonian Company Run from Australia: Tax Residence

Many Australian entrepreneurs form or buy an Estonian private limited company (OÜ), often as e-residents, and run it from Australia. That works, but Australian tax law does not look only at where a company is registered: a company incorporated abroad can be an Australian resident if it carries on business in Australia and either is managed and controlled there or is controlled by Australian-resident shareholders. Australia's controlled foreign company (CFC) rules can also tax an Australian owner on part of the company's income. And there is no tax treaty between Estonia and Australia to settle a conflict. This guide sets out these rules with the official texts, and what we do on the Estonian side.

The guide is general information, not tax advice. How your company and you are taxed depends on the facts of your case; ask an Australian tax adviser before you form or buy the company. We read the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 in their compilations of 1 October 2026 on the Federal Register of Legislation, and the list of Estonia's tax treaties published by the Estonian Ministry of Finance, on 21 October 2026.

In Estonia: an Estonian company is Estonian

A company established under Estonian law is resident in Estonia for tax purposes (Income Tax Act § 6). Its profit is taxed when it is distributed, not while it stays in the company — the guide how Estonia taxes company profit explains the rule. The company keeps its Estonian duties wherever its owners live: accounts, an annual report to the commercial register and, if its address is abroad, a contact person in Estonia.

In Australia: three ways to be a resident company

The definition. A resident company is one incorporated in Australia, or one which, not being incorporated in Australia, carries on business in Australia and has either its central management and control in Australia or its voting power controlled by shareholders who are residents of Australia (Income Tax Assessment Act 1936, section 6(1), definition of "resident or resident of Australia", paragraph (b)).
What that means for an OÜ. An Estonian company is not incorporated in Australia. But if it carries on business in Australia, it is an Australian resident when it is managed and controlled from Australia — and also when Australian residents control its voting power, even if it is managed elsewhere.
What a resident pays tax on. An Australian resident's assessable income includes its ordinary income from all sources, whether in or out of Australia; a foreign resident's includes its ordinary income from Australian sources (Income Tax Assessment Act 1997, section 6-5(2) and (3)).

No tax treaty between Estonia and Australia

Australia is not on the list of Estonia's tax treaties published by the Estonian Ministry of Finance. So no treaty decides which country a company resident in both is resident of, and no treaty limits the tax either country charges on dividends or directors' fees. Each country applies its own law. Whether and how double taxation is relieved then depends on each country's domestic rules — a question for your Australian tax adviser; we do not give that ruling.

In Australia: the CFC rules for Australian owners

When a foreign company is a CFC. A company resident abroad is a CFC if a group of 5 or fewer Australian entities, each holding at least 1%, together hold at least 50%; or a single Australian entity holds at least 40% and the company is not controlled by others; or 5 or fewer Australian entities control it (Income Tax Assessment Act 1936, section 340).
Who is caught. An Australian entity whose interest in the CFC, counted together with its associates, is at least 10% is an attributable taxpayer (section 361(1)). An Australian entity includes an Australian-resident individual: an entity means any company, partnership, trustee or other person (section 336 and the definitions of Part X).
What is caught. The attributable taxpayer's share of the CFC's attributable income is included in the taxpayer's assessable income (section 456(1)). A company passes the active income test — among other conditions, it carries on business through a permanent establishment in its country and its tainted income ratio is less than 0.05 (section 432(1)).

An Estonian company wholly owned by one Australian resident therefore meets the control tests of section 340, and its owner holds far more than 10%. Whether it is a CFC in your case also depends on where Part X treats it as resident, and how much of its income is attributed depends on what it earns and on further rules of Part X. Your Australian tax adviser answers that with your figures.

What to decide before you form or buy the company

Where the company is managed and controlled. Where the decisions that direct the company are in fact taken is one of the facts the Australian definition looks at.
Who controls the votes. With Australian-resident shareholders in control, an OÜ that carries on business in Australia is an Australian resident even if managed elsewhere.
What the company earns. Active business income and tainted income are treated differently under the CFC rules.

What we do on the Estonian side

online formation for an e-resident — €950 Registered address and contact person service for one year are included., or formation by power of attorney — €1,250;
a ready-made company bought remotely — €1,200 Registered address and contact person service for one year are included.;
accounting — from €150 / month and the annual report — from €450;
the registered address and contact person after the first 12 months — €350 / year.

Our accounting covers the Estonian company's Estonian obligations. Australian tax returns and Australian tax advice are not included. Owners in other countries: Estonian company run from abroad compares the rules side by side.

Prices exclude VAT. All communication takes place by email.

Ready to start? A new Estonian company — online for e-residents or by power of attorney; Australian tax advice is not included. Order.

Official sources

The laws this article names, by the name of their official text, as read on 9 October 2026. For the Estonian acts we read the English translation in Riigi Teataja; the legally binding text is the Estonian one.

Income Tax Act — Riigi Teataja, English translation

Sources are named in the text, without links. To see which of our services your company needs, open the Business Navigator.

Frequently asked questions

Is my Estonian company taxed in Australia if I run it from Australia?

It can be. A company not incorporated in Australia is an Australian resident if it carries on business in Australia and has either its central management and control in Australia or its voting power controlled by Australian-resident shareholders (Income Tax Assessment Act 1936, section 6(1)); an Australian resident is taxed on its income from all sources (Income Tax Assessment Act 1997, section 6-5(2)). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). There is no tax treaty between Estonia and Australia to settle such a double residence. An Australian owner with 10 percent or more of a controlled foreign company can also be taxed on part of its income (sections 340, 361, 456). Ask an Australian tax adviser before you form or buy the company; we handle the Estonian side.

Estonian company run from Australia: where it is taxed