Estonian Company Run from Germany: Tax Residence

Many German entrepreneurs, often e-residents, form or buy an Estonian private limited company (OÜ) and run it from home. That works, but German tax law looks at where a company is managed, not only where it is registered: a company whose management is in Germany is fully liable to German corporation tax. This guide sets out the rules of both countries with their sources, what they mean for an owner and director living in Germany, and what we do on the Estonian side.

The guide is general information, not tax advice. Whether your company is taxed in Germany depends on the facts of your case; ask a German tax adviser (Steuerberater) before you form or buy the company. The German acts were read on gesetze-im-internet.de, the official portal of the Federal Ministry of Justice, on 16 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 Germany: where the company is managed

The rule. Corporations, including limited companies, that have their place of management (Geschäftsleitung) or their seat in Germany are fully liable to German corporation tax (Körperschaftsteuergesetz § 1(1) no. 1), and that liability covers all of their income (§ 1(2)).
Where management is. The place of management is the centre of the company's top-level business direction (Abgabenordnung § 10) — in practice, where the decisions that direct the company's day-to-day business are actually made.
A permanent establishment. A fixed place of business or facility that serves the company's activity is a permanent establishment (Betriebsstätte); the place of management, a branch and an office are named examples (Abgabenordnung § 12).
German income. A company with neither its management nor its seat in Germany is still liable to German corporation tax on its German income (Körperschaftsteuergesetz § 2 no. 1).

An OÜ whose only board member lives in Germany and runs the business from there is therefore exactly the case these rules look at. Whether the company is in fact managed from Germany is a question of fact, assessed by the German tax office (Finanzamt).

When both countries count the company as resident

If the company is resident under Estonian law and liable to German tax as a resident at the same time, the double taxation agreement between Germany and Estonia of 29 November 1996 (German law gazette BGBl. 1998 II p. 547) decides how it is treated. How the agreement settles a particular company's case is a question for the two tax administrations and for your German tax adviser — we do not give that ruling.

What to decide before you form or buy the company

Who manages the company, and where. The board's composition and where its decisions are actually made are the facts the German rule looks at.
Where the work is done. An office or other fixed place of business in Germany can be a permanent establishment.
Ask first. A German tax adviser can assess your plan before you start.

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. German tax returns and German tax advice are not included. The same question for owners in other countries: Finland, Poland, Spain, Italy.

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; German 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 Germany if I run it from Germany?

It can be. A company whose place of management (Geschäftsleitung) is in Germany is fully liable to German corporation tax on all its income (Körperschaftsteuergesetz § 1); the place of management is the centre of the company's top-level business direction (Abgabenordnung § 10). In Estonia the company stays resident because it was established under Estonian law (Income Tax Act § 6). When both countries count it as resident, the Germany–Estonia double taxation agreement decides. Ask a German tax adviser before you form or buy the company; we handle the Estonian side, not German taxes.

Estonian company run from Germany: where it is taxed