Q: If a foreign-based company I own earns income but does not pay any dividends back to me, do I still owe US taxes on it?
I am a US citizen (in the state of Virginia) considering opening a business in Estonia, since I was approved as an Estonian e-resident recently. In Estonia, profit retained within a company for re-investment is taxed at 0% and is only taxed at the normal Estonian corporate tax rate when dividends are paid out. Assuming I wanted to just keep re-investing profits and I do not take any distributions of profit/dividends in 2017, would I owe any US taxes on the profits retained within my foreign-based company?
A: Definitely find a lawyer who specializes in this area. You don't want to try to guess with taxes. If you need a referral, feel free to contact me. Also, I found this white paper which you may find helpful in understanding the issues from a broad view: https://fas.org/sgp/crs/misc/R40623.pdf
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