National tax rates

If you are doing business in Estonia, you will be responsible for paying taxes in accordance with the tax legislation in force in Estonia. The general rule is that all companies are taxed equally and on the same substantive basis. As to which taxes have to be paid at which rate, this depends on the specific characteristics of your company.

More important taxes are divided into 2 groups:
Taxes resulting from salary (income tax, social tax, unemployment insurance premium, funded pension).
Minimum monthly salary in Estonia is currently 430 euros (2016).
Taxes resulting from business activity (income tax, value added tax, fringe benefit tax, excise duties).
Corporate tax does not apply since 2000.

The tax period shall be one calendar month and the deadline for payment and filing a return to the Tax and Customs Board is the 10th day of the subsequent month (20th day in case of value added tax).

Taxes resulting from salary

Tax name

Tax rate

Paid on what

Personal income tax

20 %

Paid on gross earnings, additional remunerations, bonus pay, holiday pay and other payments that are considered earned income. Tax-free minimum is 144 euros a month

Social tax

33 %

Paid on gross earnings and fringe benefits

Unemployment insurance premium

Employee's payment 1,6%

Employer's payment 0,8%

Paid to the employee on salary and other wages. The aim of the unemployment insurance premium is to insure employees against unemployment, collective termination of employment contracts or the insolvency of the employer

Funded pension

Employee's payment 2%

Employee pays on the gross earnings himself/herself. Joining the funded pension is compulsory for those born in 1983 or later (from the beginning of the following year after reaching the age of 18).

State's payment 4%

The state adds 4% out of the 33% of social tax that is calculated on the employee's salary

Taxes resulting from business activity

Tax name

Tax rate

Paid on what

Corporate tax

0 %

Paid on reinvested income

20/80

Paid on distributed earnings, expenses and payments not related to enterprise and on gifts, donations, costs of entertaining guests

Value added tax (VAT)

20 %

The general VAT rate is 20% of the taxable value of a good or service. An undertaking is required to register as a taxable person if his/her turnover exceeds 16,000 euros in a calendar year.

9 %

Paid on books (including textbooks and workbooks), periodicals, accommodation services and some medicines, health and hygiene products and medical equipment for personal use by disabled persons

0 %

Paid on exported goods, consultation services provided to VAT payers in another EU member state, services provided outside Estonia, a number of services related to water and air transport and carriage of goods

Fringe benefit tax

20/80 and 33 %

Paid on goods, services or the market price of monetarily appraisable gifts that an employer provides to his/her employee. Granting fringe benefits requires paying income and social tax and it is not possible to apply for a VAT refund on purchases of goods or services granted as fringe benefits

 

Additional information: Estonian Tax and Customs Board (Eesti Maksu- ja Tolliamet) www.emta.ee