Estonia’s tax framework is renowned for its simplicity and growth-friendly incentives.

1. Zero corporate tax on retained earnings

   • Corporate income tax (20 % of the net amount, calculated as 20/80 on the distributed sum) is due only when you pay dividends or treat funds as non-business expenses. Profits that stay in the company can be reinvested tax-free for unlimited periods, accelerating growth and cash-flow planning.

2. Possibility of tax-exempt dividends in group structures

   • Dividends received from an Estonian or foreign subsidiary may be distributed further without additional Estonian tax if participation conditions are met. Likewise, profits allocated to a foreign permanent establishment are generally exempt.

3. No additional personal income tax for Estonian residents

   • If you are an Estonian tax resident, dividends you receive from your company are not subject to extra personal income tax, corporate tax settles the obligation. (Non-residents must follow the rules of their home country.)

4. Flat, transparent rates elsewhere in the system

   • Payroll taxes, VAT, and other levies use uniform rates with straightforward reporting, reducing compliance overhead.

Remember: The company (a legal person) and you (a natural person) are separate taxpayers. Keeping finances distinct avoids misclassification and ensures you benefit fully from Estonia’s business-friendly regime without risking penalties or double taxation abroad.