How corporate tax works in Estonia
Estonia’s corporate tax system is built around deferral. Undistributed profits are generally tax exempt, which means ordinary trading, service, investment and holding profits can stay inside the company without triggering corporate income tax.
Tax is triggered when profits are distributed as dividends or otherwise deemed distributed, including certain fringe benefits, gifts, donations, entertainment costs and non-business expenses. From 2025, the standard rate is 22/78 and the old regular-dividend relief and 7% dividend withholding rules no longer apply.
The return cycle is monthly for taxable distributions. Companies generally declare and pay the tax by the 10th day of the month following the taxable payment. VAT at 24% and employer payroll charges still need separate planning.
Tax rates at a glance
- Corporate profits tax
- 22/78On distribution
- Standard company tax
- 22/78
- Undistributed profits
- 0%
- Dividend withholding tax
- 0%
- DMTT
- N/A
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
FoundersHolding companiesInvestorsSaaS businessesE-commerce businesses
Watch out for
- Estonia’s zero-tax retention model is powerful, but it does not remove VAT, payroll tax, accounting, annual reporting or transfer-pricing discipline.
- The company-level tax is not a permanent exemption. If you want cash out, expect 22/78 tax on the distribution.
- Old pre-2025 dividend balances can still create transitional complexity, so historical bookkeeping matters.
Frequently asked questions
Does Estonia have corporate income tax?
Yes, but only when profits are distributed or otherwise deemed distributed. Retained profits are generally not taxed.
What is the corporate tax rate in Estonia?
The standard corporate distribution tax is 22/78 on the net amount distributed.
Is Estonia good for holding companies?
Often yes, because retained profits are tax exempt. It is less attractive if you need to distribute profits often, because the 22/78 tax applies when cash leaves the company.