Overview of Procedures for Filing Personal and Corporate Taxes in Estonia

Personal Taxes

1. Tax Residency:

   • Individuals are considered tax residents if they spend more than 183 days in Estonia within 12 months or have a permanent home in the country.

2. Income Tax:

   • The personal income tax rate is a flat 20% on all taxable income.

   • Taxable income includes salaries, business income, and other sources.

3. Filing Process:

   • Pre-filled Tax Returns: The Estonian Tax and Customs Board (ETCB) provides pre-filled tax returns based on data from employers and financial institutions.

   • Submission: Tax returns can be submitted electronically via the ETCB’s e-service portal or in paper form.

   • Deadline: The deadline for filing personal income tax returns is usually March 31 of the following year.

4. Tax Deductions:

   • Deductions may apply for expenses such as educational costs, medical expenses, and donations to charities.

5. Payment:

   • Taxes owed must be paid by the deadline specified in the tax return (as a rule 30.09).

Corporate Taxes

1. Tax Residency:

   • Corporations are considered tax residents if they are registered in Estonia or have their management located in the country.

2. Corporate Income Tax:

   • Estonia employs a unique system where corporate income tax is only paid on distributed profits at a rate of 20%.

   • Retained earnings are not taxed, promoting reinvestment.

3. Filing Process:

   • Corporations must file an annual report.

   • Returns can be submitted electronically through the ETCB’s e-service portal.

   • Deadline: The deadline for the annual report is typically June 30 of the following year.

4. Record Keeping:

   • Companies are required to maintain accurate accounting records and documentation to support their tax filings.

5. Payment:

   • Taxes must be paid by the 10th date of next month after distributions are made.

Additional Considerations

• E-Residency: Estonia offers an e-residency program allowing non-residents to establish and manage companies online, simplifying the tax filing process for foreign entrepreneurs.

• International Agreements: Estonia has tax treaties with various countries to prevent double taxation and facilitate international business operations.

By following these procedures, individuals and corporations can effectively navigate the tax system in Estonia, ensuring compliance and optimizing their tax obligations.