Estonia business corporation

Taxation in Estonia, Taxes for companies in Estonia.

The Estonian tax system consists of national taxes and local taxes. Taxes are collected through local governments and include income tax, social tax, land tax, gambling tax, value-added tax, some other taxes.

Estonian resident companies and permanent establishments of the foreign entities (including branches) are subject to income tax only in respect of all distributed profits (both actual and deemed), including:

  • corporate profits distributed in the tax period;
  • gifts, donations and representation expenses;
  • expenses and payments not related to business.

From 1 January 2009, dividends paid to non-residents are no longer subject to withholding tax at the general rate of 21%, irrespective of participation in the share capital of the distributing Estonian company. However, various withholding taxes may still apply to other payments to non-residents if they do not have a permanent establishment in Estonia or unless the tax treaties otherwise provide.

VAT is charged on supplies of goods and services in the course of business and also for self use. A taxable person is an individual engaged in business who is registered as taxable person. A taxable person shall add of the amount of VAT to the taxable value of the goods transferred or services provided, calculate the amount of VAT due to pay, pay VAT, preserve documents, maintain records and issue invoices in accordance with requirements.

The threshold for obligatory registration as a taxable person is EUR 16,000. The threshold for taxable person with limited liability in case of acquisition of goods is EUR 10,000. There is no threshold in case of acquisition of services.

The taxable period is one calendar month and VAT returns shall be submitted to the tax authority by the 20th day of the month following the taxable period.

If you have questions about Estonia, do not hesitate to contact us.