Estonia has a highly competitive tax system, recognized for its simplicity and efficiency. Corporate income tax is 0% on retained earnings and 22% on distributed profits (22/78 on net amount). The standard VAT rate is 24%, with a reduced rate of 13% for hotel accommodation and 9% for books, periodicals, and pharmaceuticals. Estonia does not impose withholding taxes on dividends, interest, or royalties for residents. Non-residents are subject to a 10% withholding tax on royalties only. The personal income tax rate is 22%, and the social tax rate is 33%. The tax system's neutrality encourages reinvestment and economic growth.
Estonia Tax Brief
Time of Update 4/05/2026
Estonia Corporate Income Tax (CIT)
General CIT Rate:
Estonia does not tax retained earnings. Distributed profits are taxed at a rate of 20%. A reduced rate of 14% applies to regularly distributed dividends. From 2025, the general rate for distributed profits will increase to 22%.
CIT Return Due Date:
Corporate income tax is assessed and declared monthly.
CIT Payment Due Date:
CIT on distributed profits is payable upon distribution.
CIT Estimated Payment Due Date:
Not applicable as tax is only due on distribution.
Estonia Withholding Tax (WHT)
Resident Withholding Tax (Dividend/Interest/Royalty):
0/0/0
None-Resident Withholding Tax (Dividend/Interest/Royalty):
0/0/10
Estonia Value-Added Tax (VAT)
General VAT Rate:
24
Learn More
Estonia Capital Gain Tax (CGT)
General Capital Gain Tax Rate:
Estonia does not have a separate capital gains tax; gains are taxed as regular income at the corporate rate when distributed.
Estonia Effective Tax Rate (ETR)
Composite Effective Average Tax Rate:
17.0%
Composite Effective Marginal Tax Rate:
0.0%
Additional info
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TKEG Expat Estonia Corporate Tax Guide
Estonia corporate income tax
Estonia VAT
Estonia Labor Tax
Estonia import and export duties
Payroll taxes
1.
Estonia corporate income tax
Standard Corporate Income Tax Rate:
In Estonia, resident enterprises are taxed on profits derived from global income distributions, while non-resident fixed institutions are taxed only on profits derived from Estonia income distributions.
The company's undistributed profits are exempt from tax. Such exemptions include both active (e.g., trading) and passive (e.g., dividends, interest, royalties). It also includes capital gains from the sale of various assets including stocks, securities, and real estate. Distributed profits are generally subject to corporate income tax at 22% of the net profit distribution (22/78 on the net amount).
Starting in 2018, companies that distribute profits on a regular basis are taxed at a reduced rate of 14% if the amount of dividends is less than or equal to the taxable dividends paid in the previous three years.
The company's undistributed profits are exempt from tax. Such exemptions include both active (e.g., trading) and passive (e.g., dividends, interest, royalties). It also includes capital gains from the sale of various assets including stocks, securities, and real estate. Distributed profits are generally subject to corporate income tax at 22% of the net profit distribution (22/78 on the net amount).
Starting in 2018, companies that distribute profits on a regular basis are taxed at a reduced rate of 14% if the amount of dividends is less than or equal to the taxable dividends paid in the previous three years.
2.
Estonia VAT
Overview of VAT in Estonia:
The following transactions are subject to Estonia VAT:
Certain services, such as health care, education, insurance, certain financial, and securities transactions, are exempt from tax. Real estate transactions are generally exempt from VAT, but taxpayers can elect to add VAT if certain conditions are met.
- provision of taxable goods and services in Estonia;
- import of dutiable goods;
- intra-Community acquisitions of goods;
Certain services, such as health care, education, insurance, certain financial, and securities transactions, are exempt from tax. Real estate transactions are generally exempt from VAT, but taxpayers can elect to add VAT if certain conditions are met.
3.
Estonia Labor Tax
Payroll Tax:
In addition to paying social tax, unemployment insurance, and mandatory cumulative retirement benefits, employers are required to deduct personal income tax, mandatory cumulative retirement schemes, and personal income tax at a rate of 22%.
Social security insurance:
Employers operating in Estonia must contribute to social security insurance at a rate of 33% (20% for pension insurance and 13% for health insurance). There is no upper limit on the amount you can contribute.
In addition to social taxes, unemployment insurance premiums are also paid. The employer must pay 1.4% on the basis of the employee's salary, and the employee must pay 1.6% (to be paid in advance by the employer).
Mandatory Accumulation Pension Scheme
If an employee joins a pension scheme, the employer must contribute 2% to the mandatory Accrued Pension Scheme. Under the Mandatory Cumulative Pension Scheme, resident employees born after December 31, 1982 must participate in the scheme. Resident employees born before this date can voluntarily join the program, but cannot withdraw from the program after joining.
Social security insurance:
Employers operating in Estonia must contribute to social security insurance at a rate of 33% (20% for pension insurance and 13% for health insurance). There is no upper limit on the amount you can contribute.
In addition to social taxes, unemployment insurance premiums are also paid. The employer must pay 1.4% on the basis of the employee's salary, and the employee must pay 1.6% (to be paid in advance by the employer).
Mandatory Accumulation Pension Scheme
If an employee joins a pension scheme, the employer must contribute 2% to the mandatory Accrued Pension Scheme. Under the Mandatory Cumulative Pension Scheme, resident employees born after December 31, 1982 must participate in the scheme. Resident employees born before this date can voluntarily join the program, but cannot withdraw from the program after joining.
References
- https://taxsummaries.pwc.com/estonia/corporate/other-taxes
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