🇪🇪 Tax Overview — Estonia

Private Limited Company (OÜ)

Estonia uses a unique deferred corporate income tax system. Retained and reinvested profits are taxed at 0%. Corporate income tax of 20% (calculated as 20/80 on the net distribution amount, effectively 25% gross-up) is charged only when profits are distributed as dividends. Regular dividend distributions qualify for a reduced rate of 14% (14/86). VAT at 22% applies to most goods and services. Employers must pay social tax of 33% on gross salaries. The company is also responsible for withholding employee income tax (20%) and funded pension contributions (2%) from wages.