Tax advice
International companies should be aware of taxation and laws in the countries of their activity.
Overview
• Corporate tax — 0% on retained profits
• 14–20% tax rate on distributed profits
• Distribution in the year 2021 is 20/80
Distributed profits are:
• corporate profits distributed in the tax period
• expenses not associated with business
• transferred assets
• donations
• Dividend tax — 25%
• VAT — 20%, if the company is VAT number holder — VAT is required when the turnover threshold reaches 40,000 EUR
According to 2021, the tax period is a month.
If the company has employees:
• Minimum salary in 2021–584 EUR per month brutto
• The tax-free minimum in Estonia is 500 EUR
• Income tax for private person — 20%
• Social tax — 33%, with a minimum obligation in 2021–192.72 EUR
Social tax revenues are used to fund public health care and pension insurance. Social tax is paid by the employer for the employee. The social tax rate is 33% of the employee’s gross income.
The tax period is a calendar month: by the 10th day of the following month, the tax is declared in a tax return (TSD) and paid to the Tax and Customs Board. The declaration can be submitted electronically at the e-Tax and Customs Board (e-MTA) or by contacting the regional tax office of the Tax and Customs Board.
• From 2012, a rate of a funded pension payment is 2% of the gross salary
• Unemployment insurance — 1.6% paid by the employee and 0.8% paid by the employer — 2.4% in total
Unemployment tax aims to insure employees against unemployment, collective termination of employment contracts or insolvency of the employer.
Unemployment insurance must be paid on the salary and other remuneration of the employee and the compensation paid to the natural person under the contract. The obligation to pay is shared between the insured employee — employee (employee unemployment insurance payment) and the employer (employer’s unemployment insurance payment).
Old age retirees and members of the company’s governing body are not required to pay unemployment insurance premiums. The employer is required to pay unemployment insurance for all employees.
You can find more details on Tax and Customs Board website.
e-Tax
e-Tax is a government online tax filling system where are made almost every tax declaration in Estonia. It is available for residents or e-Resident card owners.
By signing in to the system, an individual can:
• Make declarations
• Request a company’s declarations for income, social, unemployment taxes and pension fund
• Request VAT-returns
• Register personal income tax declarations
Non-residents should request professional help and choose a tax representative. The tax representative of a non-resident is a person who has obtained an activity license to represent the non-resident for the performance of obligations arising in Estonia.
Company in Estonia OÜ will be happy to advise you on issues related to taxation, tax agreements, and potential risks that may arise during your company’s operation.
Some potential issues that may be addressed:
• Taxation of an Estonian company
• Tax agreements between Estonia and other countries
• Analysis of the identification of potential operational risks
• Taxation of dividends and other income
• Cross-border VAT rules
• Taxes arising in different countries
Advice is provided to give an overview of taxation in case of international transactions arising in your Estonian company’s activity. The exact scope and cost of advice depend on your query.
