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Information for company owners

Taxation in Estonia

Income taxation and VAT in Estonia as of January 2018:

VAT
General rate 20%
Lowered rate 9%
Books, medical equipment and pharmaceutical goods, some printed press and hotel expenses.
Income tax
General rate 20%
Taxation conditions Income of juridical persons is taxed in case of dividend payout, lowering of share capital, buyout of own shares and business liquidation (from the summary above investments in share capital).

Limitations for income distribution

Companies must not pay out dividends if this leads to bankruptcy.

Companies must not pay out dividends if the share capital is not paid.

Taxation of dividends in Estonia

Income tax in amount of 20/80 from the summary of dividends must be paid by Estonian companies.

Salary taxes

Tax Rate Additional information
Income tax 20% Held from salaries and others payouts having excluded non-taxable minimum (based on written application by the employee)
up to 500 EUR in a month and up to 6000 EUR in the year, but decreasing depending on the total income amount. If total amount of all income is 25 200 EUR in a year or more, there is no right to basic excemption at all.
Social tax 33% Paid by the employer
Unemployment tax 1,6%
0,8%
Held from employee salary
Paid by the employer
Funded pension tax 2% Held from employee salary. Applied for all persons who have joined II step of funded pension

Criteria for mandatory audit

Audit check of annual reports by sworn auditors is mandatory for companies who meet at least two of the following criteria

  • Turnover - 4 million euros
  • Balance result - 2 million euros
  • Average employee count - 60

Audit review of annual reports by sworn auditors is mandatory for companies who meet at least two of the following criteria

  • Turnover - 1,6 million euros
  • Balance result - 0,8 million euros
  • Average employee count - 24

Real estate purchase from overseas

In Estonia people from overseas may buy houses and flats without any special limitations (some formalities exist when buying large areas of land).

Short review

General requirements for a company Joint-stock company Limited liability partnership Full and commandite partnership
Business name Estonian-latin letters, mandatory link to form of company
Capital 25 000 EUR 2 500 EUR

Starting with 01.01.2011 it is possible to register new partnership with up to 25 000 euros of planned capital without making payments
Liability Liable with all property of the company Liable with all property of the company

Liable for partnership obligations in the amount of not paid in payment into the capital if the partnership does not posess enough funds to fulfill them
Full partnership - with all property of the shareholders
Commandite partnersip - commandite shareholder is liable in the limits of paid in capital
Board Must have at least one contact address in Estonia None
Represented by each shareholder, for CP - commandite shareholder does not
Council Council must have at least 3 members, residency does not matter. Council is mandatory for LLP only if it is mentioned in partnership regulations None
Auditor Mandatory Mandatory if capital is above 25 000 EUR None
Minimal number of owners 1 1 2
Registered address Address must be registered within Estonia
Annual reports Yes Yes Yes
 

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