The paper reviewed the incomes of management of bigger law firms (turnover more than EEK 5 mln, 31 bureaus). Their annual reports show that holders pay themselves wages as small as possible.
49 members of Estonian bigger law firms, who all also are holders, paid themselves an average of EEK 154,143 a month (net amount) as dividends, at the same time their average monthly salary was EEK 15,911 a month (gross), which slightly exceeds the average salary.
Law firms management earns less than the average gross salary – EEK 28,460. The management board’s salaries are also so low because about one half of bigger bureaus didn’t pay them at all.
There’s nothing illegal in taking dividends, but the question is whether it is salary. Tax and Customs Board (MTA), bigger law and auditor companies currently are discussing the question.
MTA may take dividends as tax evasion if there’s enough proof, according to the ruling by the Circuit Court in the spring.
“I don’t see it as a problem, when the company is earning profit and holders divide it. I don’t know such business model where profit is taken out only as dividends,” Aivar Pilv, the chairperson of the advocacy said. He gets EEK 440,627 a month as dividends and gross salary of EEK 51,667.
Leon Glikman, partner at Glikman & Partners said that holders get enough income, which is taxed by social tax, from the law firm and other sources. He earned EEK 222,908 a month as dividends and EEK 0 for being in the management.
Glikman’s law firm paid 38 pct of turnover or more than EEK 12 mln as taxes. Glikman said that, considering world practices, it’s unreasonably much.
Where is the justice ? And Estonia is looking for cash to make both ends meet ... !