What are the key taxation changes in Estonia from 01.07.2025

There will be changes to Estonian tax law effective from 1st July 2025 and from 1st January 2026.

Key Changes: 

- VAT Rate Increase: 22% → 24% (Effective from 01.07.2025)

The VAT rate will increase from the current 22% to 24% from 1 July, 2025.

According to the current legislation, this higher rate will apply temporarily until 31 December 2028.

- Income Tax Rate Increase: 22% → 24% (Effective from 01.01.2026)

Initially, the government planned to introduce a 2% corporate profit tax starting 0.1.01.2026 and to begin taxing individuals from the first euro earned.
However, these plans have been canceled.
Instead, a draft amendment submitted to the Riigikogu proposes increasing the income tax rate for both individuals and companies by two percentage points—from 22% to 24%—starting 1 January 2026.
This means that the previously proposed fixed-term security tax will be replaced by a permanent increase in the income tax rate.