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Dear Sir/Madam,

We have a company in Estonia and we are currently considering entering into royalty or SaaS agreements with a foreign partner company registered in Belize.

Please kindly clarify the following:

1. If our Estonian entity pays royalty fees or SaaS-related compensation to a company in Belize (which does not own intellectual property rights but acts as a distributor), what would be the tax treatment of such payments under Estonian law?

2. Would such payments be subject to withholding tax or other forms of taxation in Estonia?

3. Belize is listed in Annex II of the EU — the list of jurisdictions that cooperate with the EU but have pending commitments in the area of tax regulation. Does this mean Belize is currently considered an offshore or high-risk jurisdiction by Estonian tax authorities? If so, what are the implications for the deductibility of such expenses?

4. Would the principle of "substance over form" (as stated in § 84 of the Estonian Taxation Act) be applicable in such transactions?

5. What additional documentation or justification would be required from our side to prove the economic substance and commercial rationale behind these payments?

We look forward to your response and are open to further instructions or documentation you may require.

Kind regards,

Daryna