Demystifying Estonian Tax Rates for E-Resident Founders.
Embarking on a business venture can be intricate, but grasping Estonian tax rates doesn’t have to be.
After perusing this guide, you might find the appeal of relocating here to avail yourself of the favorable Estonian tax rates offered to individuals and companies. The country actively seeks founders and top talent for its technology sector, boasting a thriving startup scene.
Corporate Income Tax Only on Distributed Profits
Estonia stands out among OECD countries by taxing companies solely when profits are disbursed to shareholders, at a rate of 20/80, which is 25% of the dividends paid. This setup encourages reinvestment and growth, aligning seamlessly with Estonia’s entrepreneurial spirit since the unique bill’s introduction in 2000. In simpler terms, for every 80 euros of dividends distributed to shareholders, the company pays 20 euros to the government the following month.
Paying Estonian corporate income tax is a legal obligation when distributing dividends to any shareholder. Keep in mind that your e-resident business may be subject to tax in the country you operate or reside in. The Estonian e-Residency program explains how cross-border taxation works for e-residents in this video.
