Investments & Taxation

Talking briefly about taxation a subject which is quite hard to tackle in general terms. First, it is mainly driven by the country of residence of the investor and then whether he or she holds the assets directly as a private individual and/or in an investment company, trust and the like. How to set this up should be best handled between the investor and the tax advisor involved. We encourage you though to bring the benefits of an Estonian holding company to the attention of your tax advisor.

 

In general terms, one can state that capital gains, in particular long-term, are taxed lower than current dividend and interest income. This corresponds to the prevailing trend of increased share buybacks rather than increased dividends. (For an excellent discussion of the topic in the context of whether Berkshire Hathaway, Warren Buffett’s investment vehicle, should pay a dividend or not, see here). 

 

The Bernstein Value & Income Portfolio (“BVIP”) offers a hybrid approach in this context. Being legally held by Bernstein Trust & Capital Services OÜ any non-distributed profits of any type are subject to a corporate tax rate currently standing at 0%. Only distributed profits are taxed at a rate of 20%. The holders in the BVIP can hence elect between a cash or a non-cash dividend.

 

We are also happy to establish on an individual basis how an investment in the BVIP can be included in any tax-subsidized private investment scheme, such as the 401 (k) in the United States.