Last updated: August 25, 2023
If you own and run an Estonian company while operating and being a registered tax resident in Estonia, the following taxes apply.
- If you don't take any money out from your company, there's no obligation to pay corporate income tax in Estonia. You can keep the earned money on your company's account indefinitely and it won't be subject to income tax. You only need to start paying relevant taxes when you start taking money out from the company, meaning paying yourself a salary, taking out dividends, etc.
- If you receive a salary (board member's remuneration) from your company, personal income tax (20%), local pension insurance (2%, mandatory for persons born in 1983 and later), and social tax (33%) are declared and paid in Estonia on a monthly basis, according to Estonian rules and regulations. The final tax burden depends on the amount which you receive. You can use a standard calculator (tick “Funded pension” if you were born in 1983 or later) to measure the total tax amount your company has to cover, depending on the actual salary payments. We presume that you personally do not use basic tax exemption related to your salary on a regular basis. To clarify, you can still benefit from the basic tax exemption by using such an approach as well. The tax authorities calculate the basic tax exemption from your total income when you submit a personal income tax return once per year.
- If you receive dividends from your company, the corporate income tax is paid in Estonia. The rate is 20%, calculated as 20/80 from the net payment you receive. For example, if you receive €800 net as dividends, the corporate income tax of €200 has to be paid in Estonia. Again, we presume that you personally do not use basic tax exemption related to your salary. The tax authorities calculate the basic tax exemption from your total income when you submit a personal income tax return.
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