Taxes in Estonia
Introduction to the tax system in Estonia
Taxes
Estonia has a unique corporate taxation system, which makes it one of the most attractive countries for businesses. The primary advantage of Estonia as pertains to taxation is the absence of undistributed profits tax. Thus, only the dividends paid to shareholders and interest holders are taxed.
Tax rates in Estonia
Apart from that, according to the 2014 International Tax Competitiveness Index, Estonia has the most competitive fiscal system amidst the developed countries. Such success was achieved thanks to a comparatively low corporate tax rate and the implementation of a neutral system that encourages reinvestment and capital accumulation.
General taxes in Estonia
| VAT for transactions within Estonia | 22% |
| VAT for transactions in the EU and export | 0% |
| Corporate income tax | 0% |
| Dividends tax | 20% |
In case the profit is gained by means of dividends of a subsidiary company or the company’s foreign branch office, the dividends paid to shareholders are exempted from taxation.
Property tax
There is no real property tax in Estonia. Instead, there is a tax on land lots, with annual rate of 0.1% – 2.5% of the cadastral value of the land, depending on the region.
Payroll taxes
| Personal income tax | 20% |
| Social tax | 33% |
| Unemployment allowance contribution | 4,2% |
Taxation