Incorporate in Estonia
Corporate Taxation Advantages
Taxation in Estonia is characterized by its business-friendly approach, allowing foreign companies to effectively manage their tax costs. The Estonian tax system is structured to encourage investment and reinvestment, offering unique advantages for businesses. Here is an overview of the key aspects of taxation in Estonia:
Corporate Income Taxes
- Income Tax: Corporate income tax is not applicable to profits retained and reinvested within the company.
- Value Added Tax (VAT): A standard VAT rate of 20% is applied to companies that qualify as VAT payers.
- Tax on Dividends: A 25% tax is imposed on dividends payable from the net profit.
Taxation of Corporate Income
A noteworthy feature of corporate income tax in Estonia is that it primarily applies to the distribution of profits in the form of dividends or wages (ranging from 14-20%). Profits and funds held and reinvested within the company are not subject to taxation. Particularly advantageous is the exemption from taxation for distributed profits originating from dividends received from a foreign subsidiary or a permanent establishment in another country. This tax structure is particularly beneficial for enterprises seeking rapid global expansion, enabling them to allocate resources to innovation rather than government taxes.
Payment of Dividends (23% – 25%)
Dividend tax rates vary, with a 20/80 tax on dividends paid regularly and a lower rate of 14/86. In cases of paying dividends to an individual, either resident or non-resident in Estonia, a reduced tax rate of 7% is withheld.
The tax period follows the calendar month, and the income tax return (TSD) must be submitted to the Tax and Customs Board by the 10th day of the following month. The declaration can be submitted electronically through the e-Tax and Customs Board (e-MTA) or by contacting the regional tax office of the Tax and Customs Board.
Value Added Tax (VAT) – 20%
VAT, or “moms” in Danish, is an indirect tax collected from customers and remitted to the tax office. VAT-registered companies can also recover VAT (25%) on expenses with VAT invoices.
Registration as a VAT Payer
Companies with an annual turnover exceeding 40,000 EUR in Estonia must register with the Tax and Customs Board as VAT payers. Registration is not required for companies with turnovers below this limit.
VAT payers are responsible for adding VAT to the price of goods or services, maintaining VAT records, calculating and paying the VAT amount, and retaining transaction-related documents and issuing invoices as needed. It’s possible to deduct input VAT paid on goods or services used for business.
- General VAT rate: 20%.
- Reduced rate: 9% (applies to specific goods and services).
- 0% rate (applies to exported goods, consulting services to VAT payers in another EU Member State, certain services outside Estonia, and more).
Declaration and Payment of VAT
VAT declarations and payments are made on a monthly basis, with the deadline on the 20th of the month following the taxation period. Submission can be done electronically through the e-Tax and Customs Board (e-MTA) or by contacting the regional tax center of the Tax and Customs Board.
In addition to company formation services, we offer various corporate services, including registered office address, contact person, company secretary, sworn apostilled translation of corporate documents, and nominee shareholder and director services in Estonia.
To ensure originality, here’s a rephrased version of the text about corporate additional services:
Supplementary Corporate Services
In addition to facilitating company establishment in Estonia, we extend our offerings to encompass the following supplementary services:
Provision of a registered office address in Estonia, including mailing services and an exclusive telephone line.
Appointment of a contact person, as mandated by legal requirements.
Company secretary services.
Sworn apostilled translation of corporate documents.
Nominee shareholder and director services.
Our company licensing services
— What we do and do not do
Our company is EXCLUSIVELY engaged in assisting worldwide clients, either individuals or corporate entities, to get duly and properly licensed with local Regulators and Financial Authorities to get respective official licenses to legally carry out their cryptocurrency or financial related business activities.
TBA & Associates Tax Business Advisors does not provide or carry out any sort of Cryptocurrency or Financial services!
Disclaimer: While TBA & Associates strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact TBA Customer Services for advice on your specific cases.