Frequently Asked Questions

In 2025, there is no corporate income tax in Estonia, meaning the tax rate is 0%. The moment of corporate income taxation is shifted until the distribution of profits, for example, in the form of dividends.

However, distributed dividends are subject to corporate income tax. The tax rate is 22/78 (28.20%). The tax must be paid in the month following the dividend payment.

Example 1 Dividend Payment

In January 2025, the company paid dividends amounting to €10,000.
Tax on dividends: €2,820.
Tax payment deadline: February 10, 2025.

Example 2 No Dividend Payment

The company ended the financial year with a profit of €100,000.
No dividends were paid.
No tax liability arises.

Learn more about dividend taxation from January 1, 2025, HERE.

New Security Tax (2026–2028)

From 2026 to 2028, a security tax of 2% will be introduced in Estonia.
This tax will apply to pre-tax profits.

Rates of taxation as of January 1, 2025

1. Taxes on wages

1.1 Taxes withheld from gross remuneration for work of an employee

• Income tax is 22%
• Unemployment insurance is 1.6%
• Pension insurance is 2%, 4% or 6%
• Total tax burden withheld from wages is 25.6%, 27,6% or 29,60%

1.2 Taxes charged (“on top of”) gross remuneration for an employee’s labor

• Unemployment insurance is 0.8%
• Social tax is 33%
• The minimum obligation for social tax is EUR 270,60 EUR (820 x 33%) per month (usually applied at one main working place)
• Total amount of taxes charged on top of wages is 33.8%

1.3 Tax benefits to the extent of ​​taxation of wages

Income tax is not suffered

• A non-taxable amount is EUR 0-654 per month and EUR 0-7848 per year (prerequisite – application to an employer, typically filed at one main working place)

Example 1

Gross remuneration for labor is EUR 1,000.
The amount of all taxes (withheld and accrued) is EUR 442,20.
Net wages is EUR 895,80.
Employer’s total costs and the wage fund are EUR 1,338.
Tax burden on wages taking into consideration the non-taxable amount of EUR 654 and pension insurance of 2% is 44,22% of the gross remuneration for labor.

Example 2

In Estonia, the minimum gross remuneration for labor is EUR 886.
The amount of all taxes (withheld and accrued) is EUR 375,39.
Net wages is EUR 810,08.
Employer’s total costs and the wage fund are EUR 1,185,47.
Tax burden on wages taking into consideration the non-taxable amount of EUR 654 and pension insurance of 2% is 42,37% of the gross remuneration for labor.

Example 3

Gross remuneration for labor is EUR 1,500.
The amount of all taxes (withheld and accrued) is EUR 783,20.
Net wages is EUR 1,223,80.
Employer’s total costs and the wage fund are EUR 2,007.
Tax burden on wages taking into consideration the non-taxable amount of EUR 436 and pension insurance of 2% is 52,21% of the gross remuneration for labor.

Example 3

Gross remuneration for labor is EUR 2,100.
The amount of all taxes (withheld and accrued) is EUR 1,230,77.
Net wages is EUR 1,579,03.
Employer’s total costs and the wage fund are EUR 2,809,80.
Tax burden on wages taking into consideration the non-taxable amount of EUR 0 and pension insurance of 2% is 58,61% of the gross remuneration for labor.

• We will be helpful in draft contracts, employment applications, applications for the use of non-taxable amoint in Estonian.
• We will make an entry in the employment register.
• We will run payroll calculations.
• We will send you a payroll with the amounts of wages due and payable to employees.
• We will complete and submit TSD return on wages and all requisite attachments to the return.
• We will tell you the amount, term and details for payment of taxes.
• We will keep you informed of changes in taxation.
• We will be helpful in resolving labor disputes with employees (if any), representing you in court and in the Labor Disputes Commission.
• We will assist with obtaining a work permit and a residence permit for your employees.
• We will consult which form of labor relations is suitable for your company.
• We will prepare a set of documents on labor safety on site.

Minimum gross wage as of January 1, 2025

• EUR 886 per month
• EUR 5,31 per hour

Example of Payroll Preparation

• The amount of all taxes is EUR 375,39
• Net wages is EUR 810,08
• Employer’s expense is EUR 1185,47

There are 4 rates of value added tax in Estonia: 22% (standard), 13%, 9% and 0%.

The value added tax from the purchased goods and services is deductible from the value added tax payable. The prerequisite for the value added tax deduction is that the goods and services purchased are related to the taxable sales of a company (including 0% rate of value added tax), or required for the production of goods and services of the company.

The due date for filing a tax return and payment is the 20th day of the month following the reporting period. For example, the due date for payment of the value added tax for January is February 20th.

From July 1, 2025, the standard VAT rate will increase to 24%.

The cost of accounting services is based on

• The number of postings (i.e the number of documents, banking transactions, employees);
• Specific nature of the company’s activities;
• Time spent on studying documents supporting economic transactions;
• The most accurate way to determine the cost of accounting services is by meeting and reviewing the number of documents.

Below are the approximate costs of packages of accounting services for you to get a clue.

Package 1: Monthly Accounting Services

• Carrying out of up to 100 accounting postings per month;
• Maintaining of payroll accounting records for up to 3 employees;
• Monthly preparation and submission of tax returns;
• Advice on taxes and accounting up to 2 hours;
• Document archiving and storage up to 2 years;
• The fee for the accounting software.

To whom does Package 1 apply?

Companies having a duty to submit monthly returns to the Tax and Customs Board.

Price:

EUR 165 / 1 company / 1 month

Package 2: Accounting Services Annually

• Carrying out of up to 250 accounting postings per year;
• Preparation and submission of annual financial statements to the e-Commercial register;
• Document archiving and storage up to 2 years;
• The fee for the accounting software.

To whom does Package 2 apply?

Companies having no duty to submit monthly returns to the Tax and Customs Board.

Price:

EUR 350 / 1 company / once a year

Package 3: Accounting Services Annually for Companies That Did Not Have Business Activities

• Preparation and submission of annual financial statements to the e-Commercial register;

To whom does Package 3 apply?

Companies having no duty to submit monthly returns to the Tax and Customs Board, and did not carry business activities.

Price:

EUR 150 / 1 company / once a year

A full price list of accounting services can be found here

The most common business forms in Estonia are

• a private limited company (OÜ),
• a joint-stock company (AS)
• and a sole proprietor (FIE).

OÜ

Set up: At the notary or online.
Founders: One or several persons, both legal entities and individuals, including residents of foreign countries.
The amount of set up state fee: EUR 350 or 250.
Articles of association: Required.
Liability: Limited, shareholders incur liabilities of the company within their contributions to the share capital (but not less then 2500 euro).
Share capital: EUR 0,01 and above.
Duty to make capital contribution immediately upon set up: Available.
Accounting procedures: Accounting records should be maintained under the principle of accrual method, that recognizes income when it is earned (for example, when the terms of a contract are fulfilled) and expenses when they are incurred. There is need in organizing the accounting procedures.
Annual financial statements: Annual report for the business year.
Performance results: In 2025, company profits are not subject to taxation, meaning the tax rate is 0%. Distributed dividends are taxed at a rate of 28.20% (22/78). Between 2026 and 2028, a 2% security tax will be introduced, which will be levied on profits before taxation.

FIE

Set up: At the notary or online.
Founder: Resident individual of Estonia.
The amount of set up state fee: EUR 50.
Articles of association:  None.
Liability: Unlimited liability within their personal property.
Share capital: No capital.
Duty to make capital contribution immediately upon set up: No capital.
Accounting procedures: There is no need for accounting procedures pending receipt of VAT (KMKR) number and prior to employment. Accounting  may be maintained by cash-basis method, that recognizes income when it is received and expenses when they are paid for.
Annual financial statements: Costs and revenues return once a year.
Performance results: The result of entrepreneurship is subject to taxes at rates of 33% and 22%. If the second pension pillar is activated, contributions to the pension fund amount to 2%, 4%, or 6%. Between 2026 and 2028, a 2% security tax will be introduced.

AS

Set up: At the notary.
Founders: One or several persons, both legal entities and individuals, including residents of foreign countries.
The amount of set up state fee: EUR 250.
Articles of association: Required.
Liability: Shareholders incur liabilities of the company within their contributions to the authorized capital.
Share capital: EUR 25,000 and above, with shares registered in the Estonian Central Register of Securities.
Duty to make capital contribution immediately upon set up: Available.
Accounting procedures: Accounting records should be maintained under the principle of accrual method, that recognizes income when it is earned (for example, when the terms of a contract are fulfilled) and expenses when they are incurred. There is need in organizing the accounting procedures.
Annual financial statements: Annual statements for the business year, the audit is mandatory for joint-stock companies (AS), which have more than two shareholders.
Performance results: In 2025, company profits are not subject to taxation, meaning the tax rate is 0%. Distributed dividends are taxed at a rate of 28.20% (22/78). Between 2026 and 2028, a 2% security tax will be introduced, which will be levied on profits before taxation.

Can you not decide which business form to choose? Come to us for a consultation!

Foreign nationals having no e-resident card and Estonian citizens having no ID card shall submit an application for registration in the Commercial Register through a notary in Estonia. Set up of the company at a notary office is also possible without the personal presence of the founders under a notarized and legalized power of attorney. Registration process usually takes 5 business days.

With an ID card or e-resident card, the company can be set up online through the e-Commercial register site in 48 hours.

Punamoon Õigusbüroo OÜ staff can organize company registration both at the notary and online, as well as prepare all requisite documents for registration in Estonian.

No. Contribution to share capital should be made at once. The minimum requirement to share capital is 0,01 euro.

No, you cannot. The law requires appointing a contact person if the legal entity’s address is in a foreign country.

If you do not have your own office or a permanent residence in Estonia to list as the company’s legal address, you can purchase a legal address and contact person service. By obtaining this service from Punamoon Pluss OÜ, the legal address of your company will be Mooni 18-60, Tallinn 10613. The details of Punamoon Pluss OÜ will be added to your company’s B-card. We will forward any mail received in your company’s name to you in a way that suits you. Not every Estonian company can act as a contact person in Estonia. We have the necessary license to provide contact person services in Estonia.

Our license:

• Punamoon Pluss OÜ, license number FIU000023, issued on October 8, 2008, valid indefinitely, confirmed on January 3, 2018.

You can view the licenses on the online page of the Register of Economic Activities.

You can find our service prices HERE.

Some areas of activity require registration in the Register of Business Activities or an activity permit. Such activities are, for example, sale of alcohol, tobacco, fuels, international transport, waste collection, financial activities, insurance, construction activities, etc.

Punamoon OÜ staff will help you determine whether registration in the Register of Business Activities is required for your company, and also will prepare and submit the required set of documents, if necessary.

Opening of a non-resident company bank account has the following stages:

1. Company establishment in Estonia.
2. Obtaining the company’s B-card: the company is registered in the Commercial Register.
3. The company’s board member visits one or more banks and completes a questionnaire about the company’s planned activities. The questionnaire is mandatory for all entrepreneurs in Estonia, both residents and non-residents.
4. Each bank conducts a review of non-resident board members. The bank’s decision largely depends on your company’s plans in Estonia. The review process may take up to 30 business days.
5. The bank provides its decision.
6. The company’s board member returns to the bank (or banks) to finalize the account opening process.
7. Don’t worry if you are denied by a local bank. An alternative could be an account in a payment system (e.g., Revolut, Wise, Paysera) or a bank in any European Union country (for example, in Poland or the country of residence of a non-resident if they are an EU citizen).

The prerequisite for registration as a person liable to value-added-tax  in Estonia (KMKR, VAT number) is the availability of active business in Estonia or the European Union.

Punamoon OÜ staff will be helpful in preparing the requisite set of documents for obtaining VAT numbers in Estonia or Finland, justify your desire to register as a person liable to value-added-tax, as well as assist in negotiations with the Tax and Customs Board.

It is impossible to sell a partnership share with an ID card. The sale of a share and re-execution of the company to another owner is carried out at the notary. The only exception is the company shares registered in the Estonian Central Register of Securities. In this case, the share sale is carried out through the bank.

Registration of a transaction at a notary office requires personal presence of all parties to said transaction. The sale of a share is also possible by a notarized power of attorney.

Should the seller of the share be married at the time of acquiring the share, and should spouses have co-property, then consent (in person or by power of attorney) of the spouse is required. The seller shall have a marriage certificate on hand during the transaction. If marriage was registered in Estonia, the notary will take the register data themselves. Should the seller of the share not be married at the time of acquiring the share, the spouse’s participation is not required.

• Company set up online in 48 hours, without the need to visit a notary.
• Changes to B card and articles of association online in 48 hours, without the need to visit a notary.
• Electronic signature affixed to annual statements of the company and other documents.
• Possibility to issue a power of attorney in electronic systems of various public agencies.
• Ability to access all electronic systems of state departments using an e-resident card (Tax and Customs Board, Commercial Register, Statistics Department, etc.).
• Ability to log in and perform transactions via an e-bank using the e-resident card instead of a password card or a pin calculator.

Punamoon OÜ staff will be helpful in both giving advice and registering the e-resident status.

You may also be interested in the following information on our website:

• Migration Services
• Temporary Residence Permit
• Work Visa D

All entrepreneurs registered in Estonia are required to prepare and submit an annual report for the financial year. Submission of the company’s annual report to the Commercial Register is mandatory, even if the company had no economic activity during the year.

The deadline for submitting the annual report for the financial year is six months after the end of the financial year. For example, if the company’s financial year is from January 1 to December 31, the deadline for submitting the annual report is June 30. The financial year of a company is typically 12 months, but exceptions may apply in cases of company establishment or liquidation. However, the reporting period cannot exceed 18 months.

Also read:

• Prices for Accounting Services by Punamoon OÜ

The audit of the annual accounting report is mandatory,

if two indicators out of three are exceeded as of reporting date:

(1) Sales revenue is EUR 5 000 000

(2) Assets is EUR 2 500 000

(3) Average number of employees is 50 employees

OR

If at least one indicator is exceeded:

(1) Sales revenue is EUR 15 000 000

(2) Assets is EUR 7 500 000

(3) Average number of employees is 180 employees

The audit of the annual accounting report is also mandatory for each joint-stock company (AS), which have more than two shareholders, public agency or local government.

That is, the audit is mandatory for joint-stock companies (AS), which have more than two shareholders, regardless of the performance.

The obligation to stand an audit review arises

if two indicators out of three be exceeded:

(1) Sales revenue is EUR 2 000 000

(2) Assets is EUR 1 000 000

(3) Average number of employees is 24 employees

OR

If at least one indicator is exceeded:

(1) Sales revenue is EUR 6 000 000

(2) Assets is EUR 3 000 000

(3) Average number of employees is 72 employees.

Punamoon OÜ cooperates with the leading auditors in Estonia. We undertake liaison with an auditor, as well as assist in preparing documentation for the auditor. Our accounting firm has its own in-house quality control system, which will definitely be to the liking of your auditor, if any

No, ignoring the requirements of the Statistics Department to submit a company’s statistical report is not allowed. Submission of statistical data is mandatory for all companies in Estonia in accordance with the State Statistics Act (Riikliku statistika seadus). In case of failure to submit the report or providing false data, a representative of the Department may issue a directive. Failure to comply with the directive may result in a fine of up to 2,000 euros.

The Statistics Department independently determines which companies are required to submit statistical reports and informs entrepreneurs. You can also check whether your company has mandatory reports and their types without waiting for a letter from the Department. Verification can be performed on the website http://www.stat.ee/76818 by entering the company’s registration code.

If needed, we can assist you in completing and submitting all types of statistical reports, as well as in communication with the Statistics Department. Please note that this service is provided only to our accounting clients.

You can find prices for accounting services and statistical reporting assistance here.

To employ a specialist (e.g., a ship welder, carpenter, plumber, programmer, or IT specialist) from outside the European Union, it is necessary to register short-term employment and apply for a work visa or obtain a temporary residence permit and work authorization.

OÜ Punamoon VNZ provides assistance and consultations on migration matters. We help in obtaining work permits, prepare document packages for submission to the Police and Border Guard Board, and facilitate communication with the authorities.

Learn more about our services:

• Temporary Residence Permit
• Work Visa D
• Migration Services