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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 11 years
    Tax Competitiveness Index

    Deferred tax system

    Estonia's tax system supports growth of small businesses, with most taxes being deferred until profits are distributed.

    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 22% (since 1 January 2025). 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
    • 22% Personal Income Tax (1)
    • 33% Social Tax
    • 22% Personal Income Tax (1)
    • 33% Social Tax
    • Unemployment Contribution: 1.6% withheld by company, 0.8% applied to gross salary
    • No Personal Income Tax or Social Tax payable in Estonia
    Resident of EEA or Switzerland *
    • 22% Personal Income Tax (1)
    • 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
    • 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 **
    • 22% Personal Income Tax (1)
    • 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
    • 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 ***
    • 22% Personal Income Tax (1)
    • 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
    • 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
    • 22% Personal Income Tax (1)
    • 33% Social Tax
    Resident of EEA or Switzerland *
    • 22% Personal Income Tax (1)
    • Obtain A1 certificate to avoid Estonian Social Tax
    Resident of treaty countries **
    • 22% Personal Income Tax (1)
    • Present certificate from home tax authority to avoid Estonian Social Tax
    Resident of a third country ***
    • 22% Personal Income Tax (1)
    • 33% Social Tax (declare on TSD Annex 2)

    Salary

    Resident of Estonia
    • 22% Personal Income Tax (1)
    • 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
    • No Personal Income Tax or Social Tax payable in Estonia
    Resident of EEA or Switzerland *
    • 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 **
    • 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 ***
    • 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.

    (1) The personal income tax rate increased from 20% to 22% on 1 January 2025. 

    NB: The 7% withholding Personal Income Tax (PIT) no longer applies since 1 January 2025 (except for any dividends already taxed before 31 December 2024 at the CIT rate of 14/86). This is because the reduced CIT rate of 14/86 has been abolished.

    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. From 1 January 2025, this will be €2,821 (€10,000 x 22/78).

    If the Estonian company pays regular dividends to the shareholder, taxes will be 1,627.91 € (10,000 x 14/86). From 1 January 2025, the reduced rate no longer applies.

    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. For dividends taxed after 1 January 2025, this withholding tax no longer applies as the reduced rate is being abolished.

    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 € (700 € from 1 January 2025)
    Personal income tax: -92,8 (20%) (-58.08 at 22% from 1 January 2025)

    Employee’s net salary: 871,2 € (905.92 € from 1 January 2025)
    ----
    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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