In case you’re planning to register company in Estonia and to do business in Estonia, then you must be prepared to be responsible for paying taxes in accordance with the tax legislation force. You must be aware that benefits, property and income are all taxable. One of the general rules is that all companies must be taxed equally on the same substantive basis.
Why to register company in Estonia – State and local taxes
The local taxes can be established by the local government for example on the use of resources and infrastructure in a certain region. Some of the state taxes are heavy good vehicle tax, excise duties, customs duty, value added tax, gambling tax, land tax, social tax and income tax.
Direct and indirect taxes
When it comes to direct tax, your company bear all the tax obligation. This applied to heavy goods vehicle tax, land tax and income tax.
Indirect tax – The end consumer will be responsible for paying tax, which can be reflected in form of increased price of goods and services. Some of the indirect texas are customs duty, excise duties and value- added tax.
When it comes to taxes which must be paid and their rate, this will vary on the specific features of your company.
- Taxes payable in case of cross-border operations;
- Environmental charges;
- Unemployment insurance premium;
- Excise duties and customs tax;
- Social tax;
- Value-added tax;
- Income tax;
- Tax on dividends
All the taxes are enforced, assessed, collected and reviewed by the local government. In case the taxes are not paid in time or are totally not paid, then fines, interests and penalties will be imposed on you for the delay. All companies are expected to keep accurate file statements, tax records, accounting records and submit all tax declarations as required. If asked, the government and Tax and Customs board must receive an answer within a reasonable amount of time a summary of transactions conducted by a company as well as major related aspects such as liabilities, assets, income and expenses.
In full it’s known as a value-added tax. It’s levied in goods and services sold in any business, imported good from the non-EU countries and acquisition of goods from the EU countries. This type of tax is paid by the end consumer of the goods.
- What’s the VAT payer required to do:
- Calculate and pay the VAT amount;
- Keep accounting for VAT;
- Adding VAT to the selling price when offering services or selling goods
You can decide to deduct from the taxable supply VAT which is paid upon acquiring a service or good used for taxable supply.
Value added tax rates
The general VAT rate which is passed by the Estonian government for the taxable value of service or good is 20%. Apart from this, a tax rate of 9 % usually applies to some services and goods. Such type of goods and services include medical equipment for use by disabled persons. Hygiene and health products which are specified by the ministry of social affairs, medicines, accommodation services, periodicals, workbooks and textbooks.
Declaration and payment of VAT
The taxation timeline for the VAT is a calendar month, whereby you’re required to file the VAT return and pay this tax to the Tax and Customs board by 20 day of every month subsequent to the taxation period. You can file your VAT return by contacting the Tax and Customs Board’s regional tax centre or by using the electronic Tax and Customs board.
Before you register company in Estonia we would recommend to talk to accountant or Tax and Customs board to identify what taxes would you need to pay doing certain business in Estonia. Here you can read tax law of Estonia. If you would like to register company in Estonia straightaway, please contact our specialists.