Legal persons (companies, non-profit associations, foundations, legal persons in public law and profit-making state agencies) pay income tax on fringe benefits, gifts and donations, costs of entertaining guests, distributed profit (dividends) and payments from the equity capital. All payments are taxed at the same rate of 20/80. In addition to income tax, fringe benefits are also taxed with social tax.
It is unique in the Estonian income tax system that tax liabilities of a company arise at the distribution of profit (at dividend payment). If the company does not distribute profit but invests it in the company, there is no tax liability. Dividends are taxed at a 20/80 rate, while regularly paid dividends are taxed at a reduced rate of 14/86.
You can find more details in the explanations below.
Last updated: 01.10.2021