An Estonian company with a France-resident owner

Are you French tax resident?

Under article 4 B of the CGI, the French tax code, you are French tax resident if any of these is in France:

• your home or main residence,
• your main professional activity,
• the centre of your economic interests.

Where is the company taxed?

An OÜ, the Estonian private limited company, can be taxed in France if it is actually run from France. Article 209 of the CGI applies French corporate tax (impôt sur les sociétés, IS) to the profits of businesses operated in France, and the Estonian register does not change that.

The place of effective management (siège de direction effective) is where the day-to-day and strategic decisions are actually taken. The typical case where the French tax authority places it in France is a sole director who lives in France and decides from home. The facts that count are those of real management:

• Where do the directors live and work, and where are the meetings held?
• Does the company have staff, premises and customers in Estonia?
• Who negotiates and signs the contracts, and from which country?

What does the tax convention between France and Estonia say?

Where a company could be resident in both countries, the tax convention between France and Estonia looks at where it is actually managed. It was signed in Paris on 28 October 1997 and has been in force since 1 May 2001.

For a company run from France, the convention therefore leads back to the same question as article 209.

What is a permanent establishment?

A permanent establishment (établissement stable) is a fixed place of business in France, or a dependent agent who habitually concludes contracts there for the foreign company. It is a second question, separate from where the company is managed.

The Conseil d'État, France's highest administrative court, looked at the role actually played in France in concluding contracts (decision of 11 December 2020, n° 420174, Valueclick). If you sign the company's contracts from France, ask your adviser about it.

What does article 155 A mean for a consultant?

Article 155 A covers amounts paid to a foreign entity for services rendered by a person in France. These amounts can be taxed in that person's name, in particular where the person controls the entity.

French courts have applied it where the foreign company existed mainly to receive the fees. If you are a consultant working from France and your clients pay your OÜ, this is one of the first questions to ask.

What do the rules on low-taxed entities say?

They deal with foreign entities under a privileged tax regime, and for an Estonian company with a real activity they are usually not the main question.

Article 238 A defines that regime: the entity is not taxed, or its tax on profits is 40% or more lower than the French tax it would have paid. In 2026 French IS is 25%. A reduced rate of 15% applies to the first 42,500 EUR of profit, for companies with revenue up to 10 million EUR.

Article 209 B covers a French company subject to IS that holds more than 50% of such an entity. For an entity in another EU member state, such as Estonia, it applies only to artificial arrangements set up to avoid French tax (montage artificiel).

Article 123 bis covers a French resident individual holding at least 10% of such an entity, who can be taxed on its profits, distributed or not. It is aimed at entities whose assets are mainly financial. Within the EU, the taxpayer can escape it by showing there is no artificial arrangement.

Which questions should you ask, rule by rule?

The table sets each rule against what it looks at and the question to put to your expert-comptable or avocat fiscaliste.

What does the company owe in Estonia?

Whatever the answer in France, the Estonian company has these duties in Estonia:

• Corporate income tax: 0% on retained and reinvested profit and 22% on distributed profit, worked out as 22/78 of the net amount.
• VAT: 24% since 1 July 2025, with a registration threshold of 40,000 EUR.
• VAT return (KMD): by the 20th of the following month.
• Annual report: by 30 June.

We keep the monthly books and prepare the annual report, which the company's management board approves and signs.