The tax system in Estonia is simple and attractive for foreign investors, with a flat corporate income tax rate of 20% and a standard VAT rate of 20%. The Estonian corporate income tax exemption system allows companies to reinvest their profits without paying tax until they distribute dividends. Businesses operating in Estonia should consult the Estonian Tax and Customs Board for detailed information on their tax obligations.
Corporate Income Tax:
The corporate income tax rate in Estonia is a flat rate of 20%. The tax is only paid on distributed profits, meaning that companies can reinvest their profits without paying tax until they distribute dividends. This system is known as the "Estonian corporate income tax exemption system."
Value Added Tax:
The standard rate of Value-Added Tax (VAT) in Estonia is 20%. However, a reduced rate of 9% applies to some goods and services, such as books, newspapers, and hotel accommodation. Some goods and services are exempt from VAT, such as education and healthcare.
There is no separate sales tax in Estonia. Instead, VAT is charged on all sales of goods and services, with certain exemptions.
Estonia is a member of the European Union and, as such, most imports from other EU member states are not subject to customs duties. Imports from countries outside the EU are subject to customs duties, which are based on the type and value of the imported goods. For example, the duty on textiles and clothing ranges from 0% to 12%, while the duty on footwear ranges from 3.5% to 17%.
Estonia does not impose any export duties.