Taxes in Europe Database v2
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.
Average depreciation rate
3.00 – 4.00 %
10.00 – 30.00 %
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.
The taxable amount (net dividend) is divided by 0.80 before it is multiplied by the tax rate.
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.
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.
The tax is collected by the Tax and Customs Board.
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:
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:
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.