Virtual Office FAQ
A natural person is a resident if one of the following conditions is met:
Taxation requirements also apply according to residency status.
Corporate tax status is determined by where the turnover is generated, where the profits are distributed, and where the employee is resident in the country.
Applicants must have access to “Submit a VAT registration application”.
In order to grant access, the authorized person must enter the e-MTA as a representative and select “Settings”> “Access Rights”> “Representative Access Rights”.
On the Access Rights Administration page, you must enter the user ID of the user to be authorized and select “Access to VAT registration” under the “Individual rights” section.
Residents pay tax on their worldwide income. Taxable income includes, in particular, income from employment (salaries, wages, bonuses and other remuneration); business income; interest, royalties, rental income; capital gains; pensions and scholarships (except scholarships financed from the state budget or paid on the basis of law). Taxable income does not include dividends paid by Estonian or foreign companies when the underlying profits have already been taxed.
The personal income tax is withheld from the employees’ gross salary every month and paid by the employer.
Non-residents pay personal income tax only on their income received from Estonian sources. Taxable income in Estonia includes:
The rate of social tax is 33% (20% for social security and 13% for health insurance). Besides the social tax, unemployment insurance tax at a rate of 0.8% must be paid on the gross salary (an additional 1.6% is withheld from the employees’ salary).
Employers registered in Estonia (including the permanent establishments of foreign entities) must pay social tax on all payments made to employees, except on those specifically exempted by law.
An e-resident is a non-resident according to Estonian tax legislation.
Only income derived in Estonia is taxed in Estonia.
If there is no activity or income derived from Estonia, taxes should be paid in the country where the service is provided or activity is done or income is derived from, the pure e-residency alone does not influence the foreign or Estonian taxation.
The Estonian e-residency does not automatically exempt from taxation elsewhere.
An Estonian company established by an e-resident is an Estonian tax resident.
There is no corporate income tax on retained and reinvested profits.
Tax on distributed profits is 14-20%.
Distributed profits include:
Dividends paid to non-residents are no longer subject to withholding tax, irrespective of participation in the share capital of the distributing Estonian company. However, various withholding taxes may still apply to other payments to non-residents if they do not have a permanent establishment in Estonia or unless the tax treaties otherwise provide.
As the tax period for corporate entities is a month, income tax must be returned and paid monthly by the 10th day of the following month.
It is possible to run your company without any corporate income taxation at all.