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    taxes in estonia

    Discover convenient features of Estonia's tax system, the most competitive in the world. Discover Estonia's low tax rates, simple regulations, and easy digital filing procedures.

    #1 in Tax Competitiveness in the OECD

    Estonia has been #1 on the Tax Competitiveness Index for the last 9 years
    Tax Competitiveness Index

    0% tax on reinvested profits

    Estonia's tax system supports growth of small businesses, with 0% taxes on annual income and reinvested profits.

    No need to register for payroll

    No need to register employees/directors for payroll in Estonia until your company can pay dividends/salaries.

    Declare and pay taxes completely online

    Declare and pay any payroll, corporate or sales taxes you may owe in Estonia 100% online on the e-MTA portal.
    How it works

    Disclaimer: e-Residency is not a tax residency for you or your company. Consider whether you have foreign tax liabilities in another country (e.g. where you live) due to permanent establishment or dual tax residency.

    Corporate Income Taxes in Estonia

    The Standard Corporate Income Tax (CIT) rate is 20%. A reduced CIT rate of 14% is applied if dividend payments are regular. CIT is payable on distributed profits (e.g. dividends, fringe benefits, gifts, donations) and taxable expenses. Assess and declare monthly at the online tax portal e-MTA.

    Payroll Taxes in Estonia

    Once you do decide to distribute profits, your role in the company (active employee/director vs passive shareholder), should be analyzed to make sure that each role you carry out is compensated and taxed appropriately:

    • directors’ fee
    • employee salary
    • dividend to shareholder

    Tax rates payable in Estonia by a person receiving income from an Estonian company

    Director’s fee

    Salary

    Dividends

    Resident of Estonia
    • 20% Personal Income Tax
    • 33% Social Tax
    • 20% Personal Income Tax
    • 33% Social Tax
    • Unemployment Contribution: 1.6% withheld by company, 0.8% applied to gross salary
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax
    Resident of EEA or Switzerland *
    • 20% Personal Income Tax
    • Obtain A1 certificate to avoid Estonian Social Tax
    • No Personal Income Tax and Social Tax payable in Estonia
    • Personal Income Tax and Social Tax payable in home country
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax on dividends in Estonia
    • Declare in home country and also pay Personal Income Tax or withholding tax there
    Resident of treaty countries **
    • 20% Personal Income Tax
    • Present certificate from home tax authority to avoid Estonian Social Tax
    • No Personal Income Tax and Social Tax payable in Estonia
    • Personal Income Tax and Social Tax payable in home country
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax on dividends in Estonia
    • Declare in home country and also pay Personal Income Tax or withholding tax there
    Resident of a third country ***
    • 20% Personal Income Tax
    • 33% Social Tax (declare on TSD Annex 2)
    • No Personal Income Tax and Social Tax payable in Estonia
    • Personal Income Tax and Social Tax payable in home country
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax on dividends in Estonia
    • Declare in home country and also pay Personal Income Tax or withholding tax there

    Director’s fee

    Resident of Estonia
    • 20% Personal Income Tax
    • 33% Social Tax
    Resident of EEA or Switzerland *
    • 20% Personal Income Tax
    • Obtain A1 certificate to avoid Estonian Social Tax
    Resident of treaty countries **
    • 20% Personal Income Tax
    • Present certificate from home tax authority to avoid Estonian Social Tax
    Resident of a third country ***
    • 20% Personal Income Tax
    • 33% Social Tax (declare on TSD Annex 2)

    Salary

    Resident of Estonia
    • 20% Personal Income Tax
    • 33% Social Tax
    • Unemployment Contribution: 1.6% withheld by company, 0.8% applied to gross salary
    Resident of EEA or Switzerland *
    • No Personal Income Tax and Social Tax payable in Estonia
    • Personal Income Tax and Social Tax payable in home country
    Resident of treaty countries **
    • No Personal Income Tax and Social Tax payable in Estonia
    • Personal Income Tax and Social Tax payable in home country
    Resident of a third country ***
    • No Personal Income Tax and Social Tax payable in Estonia
    • Personal Income Tax and Social Tax payable in home country

    Dividends

    Resident of Estonia
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax
    Resident of EEA or Switzerland *
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax on dividends in Estonia
    • Declare in home country and also pay Personal Income Tax or withholding tax there
    Resident of treaty countries **
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax on dividends in Estonia
    • Declare in home country and also pay Personal Income Tax or withholding tax there
    Resident of a third country ***
    • 7% Personal Income Tax (if Corporate Income Tax paid at 14% reduced rate)
    • Otherwise no Personal Income Tax or Social Tax on dividends in Estonia
    • Declare in home country and also pay Personal Income Tax or withholding tax there

    * Resident of EEA or Switzerland: Applies only to persons insured for social benefits in their country of residence.

    ** Resident of treaty countries: Applies only to persons insured for social benefits in countries with a treaty for social security with Estonia (e.g. Australia, Ukraine, Canada).

    *** Resident of a third country: Applies to persons who are resident in third countries, or uninsured for social benefits in EEA, Switzerland or treaty countries.

    Example: How to calculate taxes when paying out dividends

    Say an Estonian company pays a dividend of 10,000 € to a shareholder.

    2,500 € (10,000 x 20/80) in taxes must be declared and paid by the Estonian company to the Estonian Tax & Customs Board.

    If the Estonian company pays regular dividends to the shareholder, taxes will be 1,627.91 € (10,000 x 14/86).

    If the shareholder is a natural person (either resident or non-resident) and receives a dividend taxed at the reduced rate, additional personal income tax of 7% (700 €) is withheld.

    See more examples

    Example: How to calculate salary costs

    Say you’re employing an Estonian tax resident with a gross salary of 1000 €.

    Employee’s unemployment insurance contribution: -16 € (1,6%)
    Mandatory funded pension contribution: -20 € (2%)
    Monthly tax-free income: 500 €
    Personal income tax: -92,8 (20%)

    Employee’s net salary: 871,2 €
    ----
    Social tax on top of the gross salary payable by employer: 330 €
    Employer’s unemployment insurance contribution: 8 €

    Total cost for the employer: 1338 €

    Try the salary calculator

    Understanding cross-border taxes

    Wondering where to pay corporate taxes? Or how to take advantage of Estonia’s competitive tax system? Read our overview.
    About cross-border taxes

    Business presence in Estonia

    E-⁠residents should consider how to increase their business presence here for tax residency and other advantages.
    About relocating

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