The Government of Estonia plans on making a number of tax changes
to encourage investment and reduce the tax burden for lower-earning categories of individuals. The reform includes an important change to the corporate income tax
as well as other taxes but does not change the current VAT value. These tax changes concern all those investors willing to open an Estonian company
Planned tax changes
The new Estonian Government plans to implement a few tax changes, focused on boosting investment in Estonia
and reducing the tax burden for low-earning individuals. An important proposed change for corporations is that the corporate income tax rate for regular dividend payments will be reduced to 14%.
The improvements for individuals will include lower labor taxes
and the reduction of administrative burdens for small businesses in Estonia
. The Government also plans to introduce additional excises, for example on sugared beverages and to increase the existing one on alcohol. The tax changes included an increase of the value-added tax for accommodation services; however, this will not be introduced.
Taxation in Estonia
The current corporate income tax in Estonia
is levied at a rate of 20% of the gross amount of distributed profit. There is no alternative minimum tax and no holding company regime. Estonia has a withholding tax on royalties and other taxed in companies include the technical service fees, real property tax, social security, excise duties (for alcohol, tobacco, electricity, fuel, etc.).
The basis for corporate taxation in Estonia is the residence of the corporation: a legal entity is a resident if it is incorporated in Estonia according to the laws in force. European public limited companies and European associations that have their registered seat in the country are also considered residents.
Our tax calculator
is also available for use as a short guide to the main taxes in Estonia.