Estonia Country Profile

Estonia Country Profile

Key tax factors for efficient cross-border business and investment involving Estonia.

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EU Member State

Yes.

Double Tax Treaties

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Forms of doing business

  • Public limited company (aktsiaselts, AS)
  • Private limited company (osaühing, OÜ)

Legal entity capital requirements

  • Minimum share capital of a public limited liability company is EUR 25,000
  • Minimum share capital of a private limited liability company is EUR 2,500

Residence and tax system

A legal person is a resident if it is established pursuant to Estonian law. Resident companies are taxed on their worldwide income when distributed (not taxable as long as it is retained in the company), and non-resident companies on Estonian source business income when distributed.

Compliance requirements for CIT purposes

Form TSD (a combined tax return for CIT and payroll taxes) should be filed when profits are distributed or payments treated as profit distributions are made.

Tax rate

The standard corporate income tax rate is 20 percent.

Withholding tax rates

On dividends paid to non-resident companies

No withholding tax.

On interest paid to non-resident companies

No withholding tax.

On patent royalties and certain copyright royalties paid to non-resident companies

A rate of 0 percent is applied if royalties are at arm's length and between affiliated companies established in the EU, under certain conditions. In all other cases: 10 percent (unless DTT provides a more favourable rate).

On fees for technical services

No, but WHT is applicable on payments to a non-resident for services provided in Estonia (can be reduced under DTT).

On other payments

No withholding tax.

Branch withholding taxes

No withholding tax.   

Holding rules

Dividend received from resident/non-resident subsidiaries

Corporate income tax is not applied on redistributed dividends if the recipient is a company holding 10 percent or more of the share capital of the company distributing the dividends, and either the latter is resident in Estonia, the EEA or Switzerland, or the underlying profit has been subject to foreign tax, or the dividend received has been subject to foreign withholding tax. If the holding rules are not fulfilled, the credit method is generally applied.

Capital gains obtained from resident/non-resident subsidiaries

Capital gains are exempt until a distribution is made.

Tax losses

No.

Tax consolidation rules/Group relief rules

No.

Registration duties

Minimal.

Transfer duties

On the transfer of shares

Minimal

On the transfer of land and buildings

Minimal.

Stamp duties

Minimal.

Real estate taxes

The only property tax imposed in Estonia is a land tax.

Controlled Foreign Company rules

Yes. However, as companies are tax exempt on retained income, the income of Controlled Foreign Companies can only be attributed to resident individuals.

Transfer pricing rules

General transfer pricing rules

Yes.

Documentation requirement

Yes.

Thin capitalization rules

No.

General Anti-Avoidance rules (GAAR)

Yes.

Specific Anti-Avoidance rules/Anti Treaty Shopping Provisions

No.

Advance Ruling system

Yes.

IP / R&D incentives

No.

Other incentives

No.

VAT

The standard rate is 20 percent, and the reduced rates are 9 and 0 percent.
 

Other relevant points of attention

No.

Contact us

Joel Zernask 

KPMG in Estonia

T: +372 6 268 700

E: jzernask@kpmg.com

EU Tax Centre

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