Taxes in Estonia for individuals and legal entities

What taxes shall be paid by individual and legal entities in Estonia: specific features of taxation, taxes for population, deductions to be paid by companies, experts services.
What taxes are paid in Estonia?
The Republic of Estonia is known for its loyal fiscal mode that is why entrepreneurs seek to transfer their international business here. But firstly, you should study in detail what taxes are due for individuals and corporations in Estonia.
Specific features of the tax policy
The authorities of the country intend to attract foreign capital. Such intention results in the fact that businessman operating at the local market get a huge number of privileges.

For the population, the fiscal burden is also reduced to the minimum that seems to be extremely attractive for non-residents who plan to move here for permanent residence.

The residence principle is considered to be the basis for payments calculation in the Republic:

· the inspection authorities charge interest on the income of residents irrespective of their source;
· entrants make deductions only in case they are employed within the Republic.

The status of a resident including all the related liabilities can be obtained by foreigners after they live for six months in the country without leaving it.
Deductions imposed on legal entities
The income tax in Estonia is calculated as per fixed rate. It amounts to 20% for any amount of incomes. However, the legislation sets the minimum that shall be exempt from recording – Euro 180 per month.

Additionally, the population of Estonia has several types of deductions to be paid to the budget of the country:

· for dividends obtained – 20%;
· to the pension fund – 20%;
· for the medical care insurance – 13%;
· for compulsory insurance – 1.4% of the average monthly salary (effective for people who are employed);
· land value taxes – to be calculated individually and paid on the annual basis;
· motor vehicle tax – depending on the engine volume and capacity, as well as on the year the vehicle manufacture.

Real estate tax is paid when purchasing a house or an apartment. The list of expenses for transaction conclusion comprises only payment for notary office services and state duty for registering a facility.

In case of purchasing real estate as a way of profitable investment, you will have to obtain a special permit. Such permits cost Euro 100.
Companies fees
There are official taxes for legal entities in Estonia; however, as a matter of practice, firms have to pay the minimum amount for the accumulated funds to the budget.

The zero rate is applicable for the income tax as well as for the following payments:

· VAT – unless a legal entity is engaged in trade and services rendering within the Republic without a VAT number;
· from the source – considering the refusal to redistribute the profit;
· to the insurance funds – if the firm does not employ Estonians.

However, enterprises still have to pay some deductions:

· for the turnover – 20%;
· dividends – 20-80%;
· due to unemployment – 0.8%;
· VAT –9-20%, as an average;
· excise tax – the amount may vary;
· royalty – 10%;
· stamp duty – 0.04%.

If you still have any questions pending on taxes in Estonia please contact our experts. They can consult you on any issues free of charge as well as can help you purchase a shelf company by offering an attractive option form the update register.

You will gain profit from your business with our support!
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