Estonia

2012 Tax rates of Estonia

Corporate tax

Rate

Estonia applies a distribution tax on the profits of corporations. The tax rate is 21/79 (26,6 %) of the net profit distribution amount. This number corresponds to 21 % tax rate on the gross profit distribution amount.

Taxation of dividends

Estonia applies a distribution tax on the profits of corporations. Profit distributions are either classified as deemed or specific.

Capital gains

Capital gains are considered as ordinarycorporate income and treated in the same manner. Thus, in order for any taxation to take place a profit distribution needs to be present.

Losses

Losses cannot be carried forward or backwards.

Withholding tax

No withholding tax applies to dividends.

Interest is exempt from withholding tax. The exception is if the interest is considerably higher than the going market rate and if the interest is paid to a non-resident company. If that is the case a taxation of 21 % is applied to the difference between that rate and the going market rate.

Royalties to non-residents corporations are subject to a 10% withholding tax. Royalty payments to to qualifying EU companies are exempt if certain requirements are met from the EU interest and royalty directive.

Technical services in Estonia are subject to a 10 % withholding tax. Withholding tax does not apply if a tax treaty is present which prevents it, or if the services are executed outside of Estonia.

 

Individual tax

General

Individuals living or regularly residing in Estonia is considered a resident for tax purpose. Effectively this means that if an individual spends more than 183 days per year in Estonia he or she is considered a resident. Individuals is taxed on their worldwide income. Nonresidents are just taxed on their income from Estonian-sourced work.

Taxable income

Taxable income for an individual is considered to conclude employment, business, capital, rent and royalty income.

There is a list with specific items that applies for nonresidents. This includes items such as work under labour contracts, interest derived from Estonia or income from an Estonian business.

Rates

A flat rate of 21 % currently applies.

Capital Gains

Capital gains in Estonia are considered as ordinary income and treated as such for tax purposes.

Deductions

Up to EUR 1.728 is exempt from tax anually. There are available deductions such as mortgage interest, charity donations and voluntary pension insurancy payments.

Real Estate

Individuals are subject to an annual land tax. The rates are in the area 0,1 % up to 2,5 %. Exemptions can be granted on a case-by-case basis by municipalities.

Net Worth Tax

There exists no net worth tax in Estonia.

Inheritance Tax

There exists no inheritance tax in Estonia.

Social Security

Social security tax is paid in whole by the employer. The total social security (and health insurance) tax corresponds to 33 %.

Employees are required by law to make unemployment insurance payments at 2,8 % of taxale renumeration.

VAT

VAT applies to all sales of goods and services within Estonia and to imports. The VAT is 20%. A lower rate of 9% is taxed for certain goods and services such as medicins, newspapers and books. Some exemptions are present for instance; specific items such as health, postal and social services.

 

Other

Tax year. Calender month, since a distribution tax is employed.

Tax treaties. Estonia currently has 47 tax treaties.

Filing requirements. Filing and payment is required on a monthly basis. Payment is due by the 20th day of the following month.

Registration (for VAT purpose). A threeshold of EUR 16.000 anually applies. Thus any individuial exceeding this amount is required by law to register.

 

Links

Tax authorities. Tax and Customs Board, Ministry of Finance

Consulate

Local Tax Resources

Chamber of commerce

(Online realtor/stock exchange)