The Estonian Foundation – What is Missing for It to Be A Well-Designed Wealth-Management Vehicle for Local and Foreign High-Net-Worth Individuals?
Although Estonia has a foundations regulation that enables establishing private foundations, the local high-net-worth individuals prefer to use schemes and foundations offered by other countries and Estonia’s export of the relevant service is a non-issue today. The article explores why this is so. One of the biggest problems certainly is the current double taxation of private foundations. Another major problem is excessive accountability and publicity: an Estonian foundation is registered in a public register from which the information on that foundation is accessible to everyone. This includes the data on the founder and beneficiaries; the content of the bylaws; and, through annual reports, information on the foundation’s income, wealth, and assets. The authors propose amendments to the current regulation and, to justify the changes, suggest some incentives for encouraging the establishment of private foundations in Estonia.