Estonia Tax Laws and Regulations
Estonia Tax Laws
Our experience at Bradford Jacobs is essential for international companies expanding their operations into the Republic of Estonia, a developing and go-ahead economy in the Baltic States that plays an increasingly impressive role among European nations despite a population of just 1.3 million.
Estonia’s personal and corporate taxation rates are among Europe’s most competitive, but there are still challenges that must be met to guarantee a smooth transition.
Bradford Jacobs’ dedicated specialists remove the burden of worrying about any complications while you focus on building your business in a new territory
Overview of Taxes in Estonia
* Estonia is in the Eurozone and uses the euro as its currency
Personal Income Tax (PIT): There is a flat proportional rate of 20%.
Social Insurance Taxes: Employers contribute a total of 33%, 20% of which goes to public pension funds and 13% to public health insurance. The percentage paid is usually based on salaries, directors’ fees, and service fees and is paid monthly on tax return Form TSD. Employers pay unemployment contributions of 0.8% with employees paying 1.6% of their salaries.
Corporate Income Tax (CIT): The standard rate is 20%. All undistributed, reinvested profits are tax exempt.
Value Added Tax (VAT): The headline rate is 20%. Categories such as books, periodicals, hotel accommodation and some pharmaceuticals have 9% tax. Zero-rate applies to such as exported goods and services, health care, insurance, and some financial services.
Estonia Individual Tax – Single, Married
The tax year runs from January 1 until December 31. Married couples can file separately or jointly, with returns submitted by April 30 of the following year and due taxes paid by October 1 to the Tax and Customs Board. Individuals are taxed on salaries, business earnings and other remunerations as ‘active’ income. Capital gains, rents and royalties, for example, are taxed as ‘passive’ income. Tax residents are those with a permanent residence in Estonia or those exceeding 183 days in the country in any 12-month period. Once 183 days is reached, they are considered to have been tax residents from the start of the 183-day period.
* Estonia is a member of the European Union and uses the euro (€) as its currency.
Personal Income Tax (PIT): There is a flat rate of 20% applying to income.
Up to €6,000 (US$6,500) is tax free, with the amount decreasing according to income. Tax-free income of €500 (US$540) per month decreases per €500 until for an income of €2,100 (US$2,275) per month there is no allowance.
Social Insurance Taxes: Employees contribute 1.6% of their salaries to the unemployment fund, which is withheld by their employer and remitted to the authorities