As far as the field of company Bookkeeping is concerned, one topic that must absolutely not be neglected is the way taxation works Estonia. Tax bills are constantly augmented and the tax system in our country continues to ever improve.
Let’s read a summary of the type of taxes that exist in Estonia along with the rates that apply to them.
| Corporate tax | Turnover tax in Estonia and in other countries is referred to as VAT – Value Added Tax |
| A company that is registered on the territory of Estonia is not required to pay a tax (it is equal to 0%). The event in which taxes are required to be paid is when the company becomes allocated. In the case of repeated investment of the income or its use for the company’s business, the income tax is withdrawn. If a decision is made to allocate the income between founders as well, a 25% income tax on dividends will be applied. All companies conducting business on the territory of Estonia pay corporate tax. The income tax rate for the company is 20/80. Furthermore, expenses not related to a company’s business, as well as representation, gifts, and donations, are subject to this tax. | Subject to turnover tax includes the sale of all goods and services and the import of goods from countries not part of the EU. The Rate of Turnover Tax in Estonia is 20%. Books, magazines, newspapers, medicine, and hotel services are subject to a reduced turnover tax (9%). Items not subject to turnover tax (0%), on the other hand, include the export of goods and services, medical services, postal services, insurance, and international transport operations. |
| Individual Income tax | Social tax |
| The rate for individual income tax in Estonia is 20%. The minimal amount not subject to income tax in the year 2016 is 170 euros per month. The minimum gross salary in Estonia is 430 euros. An individual obtain an Residence Permit and become a Tax Resident in Estonia, if he lives here for at least 183 days over the period of 12 consecutive calendar months. | The rate of social tax in Estonia is set at 33%. Social tax is subject to payment if your income or other payments are accrued. Social tax for a company employee is paid by the employer. Social tax in 2015 is 128.70 euros with a minimal monthly salary of 390 euros. |
| Land tax | Unemployment insurance |
| The rate of land tax is 0.1–2.5% per year, depending on the cost of the land. The person or entity subject to the Land tax is the owner of the land. | The rate of payment for unemployment insurance is: 1.6% for the worker and 0.8 % for the employer. |
| Required Pension Saving | |
| Required pension saving, step II, serves as a compliment to government pension. The rate of payment for required pension saving is 2% or possibly 3% (on the basis of a heightened rate statement). | |
Finbalt Consulting experts are always well aware of any recent changes in the Tax sphere.