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Date when measure came into force
CIT tax rate decrease to 20% 2015/01/01
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Generic Tax Name Corporate income tax
Tax name in the national language Ettevõtte tulumaks
Tax name in English Corporate income tax
Member State EE-Estonia
Tax in force since 2000/01/01
If abolished, date on which the tax ceases to apply
Business version date 2015/01/01
Version date 2015/02/17
This file was last updated on

Type of tax
Direct taxes Personal income tax
Corporate income tax
Other

Indirect taxes VAT
Excise duty (EU harmonised)
Alcoholic beverages
Energy products and electricity
Manufactured tobacco
Other

Social security contribution Employers
Employees
Other
 
Legal base

Income Tax Act, current law entered into force 01.01.2000 (State Gazette 1999, 101, 903).
Last amended 18.12.2014 (State Gazette I, 23.12.2014, 4), entered into force 01.01.2015.

 
Who sets
The tax rate is set by




The tax base is set by




The reliefs are set by




Comments
 
Beneficiary





Comments

 
Geographical Scope Estonia.
 
Taxpayers
Domestic-source income of non-resident entities is Taxed
Not Taxed
Comments
 
Tax object and basis of assessment
As general rule, taxable income under corporate income tax includes also








Comments

Income considered Domestic income
Worldwide income (subject to double-tax relief)
Comments

Comments

 

 
Deductions, Allowances, Credits, Exemptions
Valuation of inventory
System First-in first-out (FIFO)
Last-in first-out (LIFO)
Average cost
Specific identification (unit method)

Comments

Depreciation rules
 
Buildings
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Average depreciation rate

3.00 – 4.00  %

Average depreciation period
Average depreciation rate
 
Movable (tangible) assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments

Average depreciation rate

10.00 – 30.00  %

Average depreciation period
Average depreciation rate
 
Movable fixed assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Intangible assets
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate
 
Land (if any)
System Straight-line method
Declining balance
Production method
Combination of above
Other
Not-depreciable

Comments
Average depreciation period
Average depreciation rate


Comments

Since Estonia applies corporate income tax only to distributed profits, the questions concerning the valuation of inventory and depreciation rules are irrelevant. They do not have a special meaning in the corporate income tax regulation; they are regulated by accounting principles.


Are there limits to interest deductions? Yes No
If yes:
Definition of deduction limit

Comments

Is there an Allowance for Corporate Equity? Yes No
If yes:
Notional rate applied for allowance

Comments

Losses
Loss carry-forward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No
If yes:
Time limit: Indefinite
 
Size limit:
 

Comments


Comments

 

 
Rate(s) Structure
Nominal corporate income tax rate Rate: 20.00 %

Central government surcharge Rate: 20.00 %
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate: 20.00 %


Comments

The taxable amount (net dividend) is divided by 0.80 before it is multiplied by the tax rate.


Special tax rate for SMEs
Special tax rates apply to SMEs: Yes No
If yes:
Nominal corporate income tax rate Rate:
Central government surcharge Rate:
Regional government surcharge Rate:
Local government surcharge Rate:
Combined rate (all-in rate) Rate:


Comments
 
International aspects
Treaty countries Non-treaty countries
 
Repatriated profits are taxed according to the following system Exemption system Exemption system
Tax credit Tax credit
Deduction Deduction
 
Interest received is taxed Yes No Yes No
Tax rate on interest received 20.00 % 20.00 %
Outgoing dividends withholding tax 0.00 % 0.00 %
Outgoing interest payments withholding tax 0.00 % 0.00 %
 
Foreign losses can be set-off Yes No Yes No
If yes:
Minimum direct or indirect shareholding to qualify loss-offset (if applicable)
 
Loss carry-forward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Loss carry-backward exists? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Controlled foreign company (CFC-)rules exist? Yes No Yes No
If yes:
Time limit: Indefinite
 
Indefinite
 
Size limit:
 
Threshold for capital or voting power held directly or indirectly by resident in non-resident company
CFC-rules apply if foreign tax rate is lower than
CFC-rules apply for passive income only? Yes No Yes No

Comments   Treaty countries

Since Estonia applies corporate income tax only to distributed profits, the possibility to carry losses forward is irrelevant.

Foreign losses can be set off within the legal person; consolidation of the legal person’s tax base is not allowed.

Estonian CFC rules apply only to natural persons.


Comments   Non-treaty countries

Since Estonia applies corporate income tax only to distributed profits, the possibility to carry losses forward is irrelevant.

Foreign losses can be set off within the legal person; consolidation of the legal person’s tax base is not allowed.

Estonian CFC rules apply only to natural persons.

 
Measures against profit shifting
 
Do Thin Capitalization (TC) rules exist? Yes No
If yes:
Date of first introduction
Introduced as Explicit TC law
Part of CIT law
Test for TC Ratio
Arm's length
If ratio
Value of numerical ratio:
Definition numerator
Definition denominator
 
Debt considered for test Internal
Internal and external
TC depends on shareholding? Yes No
Substantial shareholding threshold
 
Type of shareholding Direct
Indirect
Automatic remedy Yes No
Remedy Non-deductibility of interest
Reclassification as dividend
 
Rules apply to All companies
Foreign companies
Non-EU companies
Transfer pricing rules exists? Yes No
If yes:
Arm’s length principle applied? Yes No
 
Remedy Fee
Tax base increase
 
Tax due date

The taxable period is one calendar month. The tax return must be submitted and the income tax payable must be transferred to the Tax and Customs Board by the 10th day of the calendar month following the period of taxation.

 
Tax collector

The tax is collected by the Tax and Customs Board.

 
Special features

Income tax is not imposed on profit.

Income tax is not charged on profit distributed by way of a bonus issues.

Income tax is imposed only on distributed profit, fringe benefits granted to a natural person, gifts, donations and costs of entertaining guests as well as expenses and payments not related to business, made by a resident legal person.

Income tax is also imposed on fringe benefits granted by a non-resident legal person and on gifts, donations and costs of entertaining guests, profit distributions as well as expenses and payments not related to business, made by a non-resident through a permanent establishment.

Income tax is not charged on dividends if:

  1. the resident company paying the dividend derived the dividend which is the basis for the payment from a resident company of a Contracting State or the Swiss Confederation taxable with income tax (except for companies located within a low tax rate territory) and at least 10 % of such company''s shares or votes belonged to the company at the time of deriving the dividend;
  2. the dividend is paid out of profit attributed to a resident company''s permanent establishment located in a Contracting State or Swiss Confederation;
  3. the company paying the dividend derived the dividend which is the basis for payment from a company of a foreign state not specified in clause (1) (except for a company located within a low tax rate territory) and at the time of deriving the dividend, the company owned at least 10 % of the shares or votes of such company, and income tax has been withheld from the dividend or income tax has been charged on the share of profit on which is the basis thereof;
  4. the dividend is paid out of the profit attributed to foreign permanent establishment of a resident company and such profit is subject to income tax.

 

Gifts, donations and costs of entertaining guests:

Income tax is not charged on gifts and donations made to non-profit associations and foundations benefiting from income tax incentives and to religious associations in a total amount not exceeding one of the following limit values:

  • 3 % of the amount of the payments subject to social tax made by the taxpayer during the same calendar year;
  • 10 % of the profits for the last financial year of a taxpayer dissolved as of 1 January of a calendar year, calculated pursuant to the legislation regulating accounting.

Tax changes

On 01/01/2015 (approved 18/12/2013) came into effect the change in fringe benefits - abolition of compensation of a car without logbook. Estimated cash based revenue increase in 2014-2017 is ca 1.5 mil € each year. This measure is a part of a wider overhaul of company car taxation with the aim of reducing inefficiencies in tax expenditure and thereby increasing tax revenues.

 
Economic function







Comments
 
Environmental taxes



Comments
 
Tax revenue
ESA95 code d51oa

Year
Annual tax revenue (millions)
Currency
Tax revenue as % of GDP
Tax revenue as % of total tax revenue
2012 252.40 EUR 1.40
2011 201.10 EUR 1.21
2010 193.80 EUR 1.32
2009 256.30 EUR 1.81
2008 266.30 EUR 1.61
2007 261.00 EUR 1.61
2006 199.60 EUR 1.48
2005 159.50 EUR 1.42
2004 161.20 EUR 1.66
2003 137.80 EUR 1.58
2002 86.20 EUR 1.11
2001 47.80 EUR 0.69
2000 54.60 EUR 0.89
1999 104.50 EUR 1.94
1998 122.30 EUR 2.44
1997 78.50 EUR 1.75
1996 56.90 EUR 1.52
1995 67.10 EUR 2.31

Comments