Income tax rate
- Income of the year 2018 – 20%
- Income of the year 2017 – 20%
- Income of the year 2016 – 20%
- Income of the year 2015 – 20%
- Income of the year 2014 – 21%
- Income of the year 2013 – 21%
- Income of the year 2012 – 21%
- Income of the year 2011 – 21%
- Income of the year 2010 – 21%
- Income of the year 2009 – 21%
- Income of the year 2008 – 21%
- Income of the year 2007 – 22%
- Income of the year 2006 – 23%
- Income of the year 2005 – 24%
- From the year 2000 until 2004 – 26%
Period of taxation for natural persons is a calendar year.
Tax-free amount as basic exemption applies to all kinds of income together. In order to the basic exemption to be applied by the payer (to be deducted from taxable payment before withholding income tax from payment to resident natural person), application has to be submitted to only one payer at once by the resident natural person recipient. The amount of basic exemption to be deducted may be chosen by recipient, if smaller than the amount allowed by law. The latter is recommended if a person is not sure of the total income of the year to be earned, as some additional amount to be earned later during the year may reduce the maximum amount allowed to be deducted. Too much deduction during a year may result in obligation to pay additional income tax amount according to the annual tax return next year. Please be informed that in case of total amount of all income exceeding 25 200 EUR in a year, including dividends (exempted from income tax in Estonia) and income from abroad, there is no right to the deduction of basic exemption to be applied at all.
In Estonia, annual basic exemption (non-taxable amount) per year is:
- Income of the year 2018 –
up to 500 EUR in a month and
up to 6000 EUR in the year, but decreasing depending on the total income amount.
If total amount of all income is
25 200 EUR in a year or more, there is no right to basic exemption at all.
- Income of the year 2017 – 2160 EUR
- Income of the year 2016 – 2040 EUR
- Income of the year 2015 – 1848 EUR
- Income of the year 2014 – 1728 EUR
- Income of the year 2013 – 1728 EUR
- Income of the year 2012 – 1728 EUR
- Income of the year 2011 – 1728 EUR
- Income of the year 2010 – 27 000 EEK
- Income of the year 2009 – 27 000 EEK
- Income of the year 2008 – 27 000 EEK
- Income of the year 2007 – 24 000 EEK
- Income of the year 2006 – 24 000 EEK
- Income of the year 2005 – 20 400 EEK
- Income of the year 2004 – 16 800 EEK
- Income of the year 2003 – 12 000 EEK
- Income of the year 2002 – 12 000 EEK
- Income of the year 2001 – 12 000 EEK
- Income of the year 2000 – 9600 EEK
The moment of corporate income taxation is shifted until the distribution of profits in Estonia. Period of taxation for legal entities and non-residents with permanent establishments in Estonia is one calendar month.
Corporate income tax rate in Estonia
- Distribution in the year 2018 – 20/80
- Distribution in the year 2017 – 20/80
- Distribution in the year 2016 – 20/80
- Distribution in the year 2015 – 20/80
- Distribution in the year 2014 – 21/79
- Distribution in the year 2013 – 21/79
- Distribution in the year 2012 – 21/79
- Distribution in the year 2011 –21/79
- Distribution in the year 2010 – 21/79
- Distribution in the year 2009 – 21/79
- Distribution in the year 2008 – 21/79
- Distribution in the year 2007 – 22/78
- Distribution in the year 2006 – 23/77
- Distribution in the year 2005 – 24/76
- From the year 2000 until 2004 – 26/74 of the net amount (equals to 26% of gross profit)
…of the net amount.
Unemployment insurance premiums
In 2018, an unemployment insurance premium to be withheld is 1,6% of the gross salary of an employee.
In addition to this, employers pay the unemployment insurance premium at a rate of 0,8% of the amount of gross salaries monthly.
In case of recipient who has become in the age of old page pension, unemployment insurance premium (1,6%) will not be withheld any more, although the part of the employer (0,8%) is still payable.
Funded pension payment
From 2012, a rate of a funded pension payment is 2% of the gross salary of a resident employee.
Not all persons have joined the funded pension pillar. In order to get to know, if the recipient is the one who has joined, to be sure the funded pension payment has to be withheld, the payer has the opportunity to test either by entering the persons ID-code or by Mass query here http://www.pensionikeskus.ee/en/ii-pillar/for-employer/subscription-queries/. Please be informed that funded pension payment is not to be withheld from payment made to a non-resident, but the query above does not take the tax residency into account upon issuing the result.
The same address has to be used in order to get to know, if the end date of the obligation to withhold funded pension payment has reached in case of elderly persons, who have already started to get payments out of the pension fund. In case the funded pension payments have started from the fund, for example, in June 2018, the funded pension payment into the fund will continue until December 2018. Thus, the withholding of the funded pension payment will not end just because of the old age of the recipient, but because of the taking payments out.
From 2014 until 2017, a rate of funded pension payment withheld might be 3%, if the person has submitted such application.
In 2011, a rate of a funded pension payment depended on the employee´s decision in 2010. If an employee had decided to continue making payments in 2010, funded pension payments were withheld at a rate of 2% in 2011. In all other cases, funded pension payments were withheld at a rate of 1% of the gross salary of the resident employee in 2011.
From 1 January 2010 until 31 December 2010, a funded pension payment was withheld only if an employee had submitted an application for continuation of making payments in 2010.
Funded pension payments were not withheld from payments made from 1 June 2009 until 31 December 2009.
You can find further information about the Estonian system of pension payments on the website of AS Eesti Pensionikeskus (Estonian CSD) http://www.pensionikeskus.ee/.
Social tax is paid by employer in full and a general rate is 33% in 2018 of the gross payment.
There is always a minimum obligation for social tax to be paid, in 2018, it is 155.10 EUR monthly, even if there were no payments for salaried work for each employee.
In Estonia, there is a cash-based calculation of taxes. If payment of wages for December is paid out in January, the tax rates applicable in 2018 will be used. If December wages are paid out in December, the tax rates of 2017 are applicable.