How to distribute profits from an Estonian company
Before distributing dividends, the company's share capital must be paid in. According to the Commercial Code, profits cannot be distributed if the company is created without the contribution of share capital, and the corresponding registration process is completed in the Commercial Register.
Profit Distribution:
If the conditions mentioned above are met, the company can pay out all the profits earned, including those from the last fiscal year, with the submitted annual report. The company must deduct the current applicable corporate income tax and ensure that the company’s owner’s equity and reserves (if required) are covered. Dividends are usually paid to the shareholders' bank accounts with the description "profit distribution" or “dividend” or similar.
Payment of Corporate Income Tax:
In Estonia, dividend payments are not taxed. However, at the moment of profit distribution, the company must pay the currently applicable corporate income tax, which must be done by the 10th of the month after profit distribution.
If you distribute 8000 EUR to shareholders in 2024, you must pay 2000 EUR corporate income tax, which is 20% of the gross or 25% of the net amount (what you paid as profit distribution).
By paying out dividends, the current corporate income tax is applicable. Even if the profit is earned in earlier years when the corporate income tax was different, you must pay taxes based on today’s tax rate.
Tax Returns:
The company distributing profit must submit corresponding tax returns by the 10th of the month after profit distribution. Your accountant should take care of this, as it is considered too complicated to do without assistance for practical reasons.
Tax payment details
Without the correct reference number (related to your company), tax payments will not be counted as paid. You can find all the information to pay taxes at the links below.
EMTA banking details for tax payments link
EMTA tax payments reference numbers link
Tax payment description is not mandatory, but you can write: "corporate income tax."
Sample
If you distribute 8000 EUR to shareholders, you must pay 2000 EUR corporate income tax, which is 20% of the gross amount or 25% of the net amount (what you paid out as profit distribution).