FAQ

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Contents:

  1. What are the main tax rates in Estonia in 2016?
  2. When are declarations submitted in Estonia?
  3. When must a company be registered as a VAT payer?
  4. Can a company get a VAT number if the board members are residents of a foreign country?
  5. What is the dividend taxation rate in Estonia?
  6. How is profit taxed in Estonia?

1. What are the main tax rates in Estonia in 2016?

  • Company VAT: 20%
  • Natural person income tax: 20%
  • Corporate income tax (CIT): 20/80 division on distributed profit, effectively 25%.
  • Social tax: 33%
  • Fringe benefits: 33% social tax + 20% income tax
  • Employee basic exemption: €180 per month
  • Unemployment insurance premium for an employee 1.6% and for an employer 0.8%

2. When are declarations submitted in Estonia?

It is mandatory to declare the salaries paid the previous month and pay labour taxes on the 10th date of each month. It is mandatory to declare the VAT of the previous month on the 20th date of each month and pay VAT if necessary.

3. When must a company be registered as a VAT payer?

According to Estonian laws if the taxable annual turnover of your company exceeds 16,000 euros, you are required to register the company with the Tax and Customs Board. In such case the Tax and Customs Board issues a VAT number for you.

If your company´s taxable turnover is below 16,000 euros per annum you are still allowed to apply for the VAT number. For this you have to submit an application and explain why you want to receive a VAT number. Whether the Tax and Customs Board will register your company depends on your business goals and reasoning.

4. Can a company get a VAT number if the board members are residents of a foreign country?

Yes, you can apply for a VAT number. If the owner and board member of a company is a citizen of a foreign state it is likely that the Tax and Customs Board will invite the person for an interview or performs an interview via email.
The purpose of the interview is to ascertain issues concerning the activity of the company. Documents related to business are also required.

5. What is the dividend taxation rate in Estonia?

It is necessary to pay income tax on the profit paid out as dividends. In 2016 the corporate income tax rate is 20%.

6. How is profit taxed in Estonia?

In Estonia income is taxed at the time it is paid out as dividends. Period of taxation for legal entities and non-residents with permanent establishments in Estonia is one calendar month. In that case the tax rate is 20/80.

 

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