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Value added tax
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Threshold for VAT registration (calendar year)
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EUR 40,000
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Income tax*
Unlike Latvia, where personal income tax and corporate income tax are governed by two separate pieces of legislation, Estonian law provides for a single income tax system.
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Flat-rate income tax on taxable income of individuals or non-residents
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20%
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Advance income tax payable quarterly by credit institutions
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14%
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Reduced rate of corporate tax on regularly distributed profits*
2018 will be the first year to consider in calculating the average taxed distributed profit of three years. A reduced rate of 14% will apply –
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in 2019 to one third of profit distributed in 2018 taxable at resident entity level;
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in 2020 to one third of profits distributed in 2018 and 2019 taxable at resident entity level.
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14/86
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Income tax on dividend payments to individuals, and to a resident entity subject to a reduced rate of corporate tax at the time of distributing profits
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7%
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Reduced rate of income tax on payments from third-pillar pensions, royalties and service fees to non-residents
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10%
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Standard rate of income tax on taxable payments of entities (dividends, gifts etc)
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20/80
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Monthly exempt personal allowance for resident individuals
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EUR 500 … 0
calculated using the formula:
500 – 500 / 900 × (income – 1,200)
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Annual exempt personal allowance for resident individuals
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EUR 6,000 … 0
6,000 for annual income of up to EUR 14,400
according to the following formula for annual income exceeding EUR 14,400:
6,000 – 6,000 / 10 800 × (income – 14,400)
0 for annual income exceeding EUR 25,200
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Extra annual exempt allowance for a qualifying spouse
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EUR 1,848
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Exempt one-off birth allowance the employer pays to employees
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EUR 2,160
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Combined annual deduction for housing loan interest, education expenses and charitable donations per individual
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EUR 2,500
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Exempt limit of third-pillar contributions
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EUR 1,200 incl. EUR 300 on housing loan interest, capped at 50% of income
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Extra allowance for self-employed on income from sale of agricultural products or timber
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EUR 6,000 capped at 15% of income
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Social tax
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Social tax rate
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33%
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Monthly base for social tax contributions
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EUR 470
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Minimum monthly employer’s social tax liability
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EUR 155.10
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Self-employed individual’s minimum quarterly social tax liability
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EUR 465.30
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Self-employed individual’s minimum annual social tax liability
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EUR 1,861.20
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Self-employed individual’s maximum annual social tax liability
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EUR 19,800
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Social security contributions
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Employer’s unemployment insurance contributions
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0.8%
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Employee’s unemployment insurance contributions (to be withheld)
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1.6%
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Funded pension contributions
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2%
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Funded pension contributions (from 2014 to 2017 if an application was filed)
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–
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Salary
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Minimum monthly salary for full-time work
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EUR 500
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Minimum hourly pay
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EUR 2.97
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Reimbursements and fringe benefits
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Exempt daily allowance on foreign business trips (up to 15 days a month)
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EUR 50
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Exempt daily allowance for self-employed on foreign business trips (up to 15 days a month)
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EUR 50 (documented expenses)
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Exempt compensation for using a private vehicle for business purposes (with a travel diary)
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EUR 0.30/km, capped at EUR 335 per month
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Fringe benefit cost of using an employer car
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EUR 1.96/kW per month, or
for a car more than 5 years old capped at EUR 1.47/kW per month
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Combined income tax and social tax liability on using an employer car (without a travel diary)
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EUR 1.3/kW per month, or for a car more than 5 years old, capped at EUR 0.98/kW per month
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Annual minimum interest rate on loans to employees
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0%
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