Corporate Withholding Taxes in Estonia

Corporate Withholding Taxes in Estonia

Updated on Friday 21st April 2017

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Estonia does not impose a withholding tax on dividends, thus offering to investors an attractive economic climate for their commercial activity. Other categories of income though remain subject to withholding taxes in Estonia, but the rates which apply are in most cases low. Our Estonian law firm can provide you with updated information regarding the tax rates which might apply to your business in Estonia. 

Regulations related to the Estonian withholding tax  

If you open a company in Estonia, you should know that both resident and non-resident companies are subject to withholding taxes though the regulations might differ according to each category. Our Estonian lawyers can explain you in detail which provisions apply to your particular situation.
According to the Estonian law, those economic agents who conduct business in Estonia, but who are not Estonian residents, are not taxed on their income from interest payments. However, their revenues from royalties are taxed at a rate of 10%. The corporate withholding tax rate in this case might suffer some modifications and reductions in view of the double taxation treaties signed between Estonia and other states.  
Special withholding tax regulations apply as well to associated companies from the EU and Switzerland, which might, in certain conditions, benefit from complete exemption. 
Our Estonian lawyers can help you determine which tax rate of the withholding tax applies to your revenues and can help you see whether you qualify for a tax reduction or exemption, according to the Estonian legislation. 

Categories of income subject to Estonian withholding tax 

Apart from interests and royalties which represent one of the most frequent categories of revenues which fall under the corporate withholding tax, there are as well other categories of payments on which this tax is levied. The non-resident investors in Estonia which gain from rental payments are charged with 20% withholding tax in Estonia.
The non-resident companies which sell services in Estonia, such as management or consultancy, are charged with 10% withholding tax from their income, according to the local taxation system
Several types of individual fees such as salaries, directors’ fees, pensions and insurance benefits are also subject to 20% withholding tax in Estonia.  
Please contact our attorneys in Estonia for a more detailed presentation on the taxes which might apply to your Estonian company.