In September 2024, Estonia’s Ministry of Finance announced a temporary 2% corporate tax rate for tax resident companies and permanent establishments of non-resident companies.
The draft bill is undergoing the second of three readings in the Estonian Parliament.
The law will take effect on 1 January 2026 and remain in force until 31 December 2028.
Estonian companies benefit from a deferred corporate income tax (CIT) rate of 20%, which is proposed to increase to 22% in 2025. This tax is only payable when profits are distributed, or equivalent payments or arrangements are made. The same rules apply to permanent establishments, such as branches and construction sites, of non-resident companies conducting business in Estonia.
As of 1 January 2019, the reduced corporate income tax rate of 14% applies to regular profit distributions.
Earlier, Estonia’s government introduced a security tax on 22 July 2024 that will be in effect until 31 December 2028. For companies, the security tax will be 2% on company turnovers starting 1 July 2025 and 2% on company profits starting 1 January 2026.
