Estonia: Domestic Corporate Taxation
For resident companies, tax is collected by way of withholding tax at a rate of 21%. Withholding tax on dividends was abolished in 2009. The rate for royalties and fees for entertainers and sports people was reduced to 10% in 2009. Payments to non-residents for services provided within Estonia are also subject to the 10% rate. Withheld taxes must be reported and paid by the 10th of the month following the withholding of the tax. Withholding taxes may be reduced where there are double taxation treaties.
Where a resident of Estonia pays interest to a non-resident or legal person, this is not subject to withholding tax. This tax could be levied if the rate paid were to exceed the average rate one might expect to pay elsewhere in the financial markets. However, Estonia was expected to abolish this provision in 2013 following a European Court of Justice ruling.
Non-residents must pay tax on profits from a commercial lease relating to property located in Estonia. Income tax is imposed on royalties from the use of intellectual rights. Royalties paid by a resident of Estonia are not liable to withholding tax if the owner is a company incorporated within the EU. This exemption requires that the owner should have a minimum holding of 25% of the capital of the resident.