Overview of taxes in Estonia

Taxes on salaries

  • 20% withheld personal income tax ;
  • 33% social tax ;
  • 0,8% unemployment insurance tax (employer’s part, changed as of 01.01.2015) ;
  • 1,6% unemployment insurance tax (employee’e part, changed as of 01.01.2015) ;
  • 2,0% pension insurance tax ;
  • As of 01.01.2018 the monthly non-taxable amount is calculated on the basis of person’s yearly revenues (salaries+other revenues from rent, sales etc) and the principles are the following :
    • For the salary/revenues up to 1200 eur per month (14400 eur per year), the non-taxable amount is 500 eur
    • For the salary/revenues between 1200 eur and 2100 eur per month (that is between 14400 eur and 25200 eur per year) the non-taxable amount is calculated as follows : 500 eur – 0,55556* (Salary – 1200 eur).
    • For the salary over 2100 eur the non-taxable amount is 0 eur.

Taxes on turnover

  • Value added tax (VAT) is 20%, excluding exepmtions stated (details stated in Value Added Tax Act Clause 15) , such as
    • VAT on books, medicines and accomodation services is 9% VAT ;
    • VAT on export and turnover within EU countries is 0% ;
    • Postal service, healthcare services, dental services, insurance and other specific services are considered as non-VATable turnover;

Representation expenses and expenses on special benefits

  • Non-taxable amount of representation costs – 32 eur/month +2% from total gross salaries. 32 eur/month is cumulative, i.e. in case 32 eur is not used in January, the limit in February is 64 eur.
  • Taxes on expenses on special benefits (expenses made for company’s employees) are 20% income tax from gross amount (from net amount the income tax is 20/80) +33% social tax ;
    • For example an expense of 100 euros is taxed with income tax of 25.00 eur + social tax of 41.25 eur;

Regulations on company cars

  • In case personal usage of a company car is not allowed, the usage is not taxed. Company has to file the info of the specific car to the databases of Estonian Road Administration (Maanteeamet, www.mnt.ee)
  • In case personal usage is allowed, the usage is taxed as follows :
    • For the car which is new or up to 5 years old, the tax is KW*1,96
    • For the car over 5 years old, the tax is KW*1,47.
  • The non-taxable compensation for the usage of a personal car is 0,3eur/km and upto 335 eur/month.

Dividends

  • Dividends are taxes with income tax of 20% from the gross amount. From net amount the the income tax is 20/80 .
    • For example on a net dividend payment of 10000 eur the income tax is 2500.00 eur;

Taxes on net income

  • For the time being the reinvested company’s profits are not taxed with corporate income tax.

Taxes on penalties, tax intrests and other similar payments

  • Penalties, tax intrests and other similar payments, which have been issued on the basis of the Taxation Act are taxed with income tax of 20%.

Attn ! Taxes stated here in this page are only the most important ones and therefore is by any means final. For additional information please contact us or visit the pages of Estonian Tax Board and “Riigiteataja” (The estonian version contains the full database of Estonian Acts of Law, English version contains the translations of the most important ones).