The Estonian government is planning to cancel the 2% security tax on company profits, which was part of the Security Tax Act (512 SE) passed in December 2024.
While the company tax may be canceled, it is still unclear what will happen with other parts of the law. These include a 2% tax on personal income starting in 2026 and a 2% increase in VAT from July 2025.
The government has not yet decided if these changes will remain.
Earlier, the Estonian Parliament (Riigikogu) approved a new Security Tax Act (512 SE), designed to enhance the country’s defense capabilities through increased tax measures.
The legislation introduces three key changes: A 2% increase in the value-added tax (VAT) starting mid-2025, a 2% rise in personal income tax, and the introduction of a 2% corporate profit tax, both effective from 2026.
With the VAT rate set to 24% in July 2025 and the personal income tax to match that rate the following year, the Estonian Ministry of Finance projects the measures will generate an additional EUR 113 million in 2025 and EUR 751 million in 2026.
The collected funds will be allocated to defense investments, with specifics outlined in the upcoming state budget and 2025-2028 fiscal strategy.
