Starting a business in
šŖšŖEstonia
Checked November 4, 2026 Ā· How we score
Corporate tax
22%
Top income tax
22%
Setup from
$700
all-in, first year
Time to form
3 days
can be done remotely
Taxes in Estonia
| Corporate income tax | 22% 0% on retained and reinvested profit. 22% applies only on distributions (dividends, deemed profit distributions), calculated as 22/78 of the net amount paid out. The increase to 24% planned for 2026 was cancelled in late 2025; the 14/86 reduced rate for regular payers was abolished from 1 Jan 2025. |
|---|---|
| Personal income tax (top) | 22% Flat 22% on residents' income, with a basic allowance of up to EUR 700 a month from 2026. Non-residents are taxed only on Estonian-source income. |
| Tax system | Worldwide income |
| Capital gains tax | 22%Flat 22% on gains for resident individuals; non-residents generally not taxed on gains from shares unless the company is real-estate-rich. |
| Dividend withholding (non-residents) | 0% |
| VAT / GST | 24% |
| Social security | Employers pay 33% social tax plus 0.8% unemployment insurance on salaries; employees pay 1.6% unemployment and 2% funded pension. VAT rose to 24% on 1 July 2025. |
Forming a company in Estonia
| Usual entity | OĆ (private limited company) |
|---|---|
| Minimum capital | None |
| Setup cost (all-in) | $700ā$2,200 |
| Annual running cost | $1,200ā$3,600 |
| Time to incorporate | 3 days |
| Form remotely as a foreigner | Yes |
| Local director required | No |
| Local address required | Yes |
| Owners on public register | Yes |
| Statutory audit for small companies | No |
| Business banking for non-residents | Moderate |
Residency and visas
e-Residency (about EUR 120 state fee) gives a digital ID to run an Estonian company remotely but is NOT tax or immigration residency. Moving to Estonia requires a business, startup or digital nomad permit (nomad visa: gross income about EUR 4,500/month).
| Digital nomad visa | Digital Nomad Visa, $5,200/month income |
|---|---|
| Golden visa | No |
| Ease of residency for founders | 3/5 (1 = easiest) |
Special tax regimes
Estonian distributed-profit corporate tax
Companies pay no corporate income tax until profit is paid out, so reinvested profits compound untaxed.
e-Residency
Government-issued digital identity that lets non-residents found, manage and sign for an Estonian company entirely online.
Startup Visa / Digital Nomad Visa
Residence routes for founders of scalable startups and for remote workers earning roughly EUR 4,500 gross per month.
Pros and cons
Why founders pick Estonia
- 0% tax on reinvested profit ā tax is deferred until you distribute
- Whole lifecycle online: formation, filing, signing and tax returns
- Strong reputation with EU payment providers and investors
- No minimum share capital (EUR 0.01 per share)
Watch out for
- 22% on distribution plus personal tax rules in your home country can erase the benefit
- Traditional Estonian banks are hard for e-residents; most use fintech (Wise, Payoneer, Holvi)
- Needs a local address and contact person (service provider EUR 200ā500/year)
- VAT is 24% and employer social tax is 33%
- Shareholders are listed on the public business register
Best for: SaaS and online founders who plan to reinvest profits Ā· Non-EU founders wanting an EU company without moving Ā· Startups raising from European investors
Estonia: common questions
Is Estonia e-Residency worth it?
It is worth it if you want an EU-based company, SEPA banking-like access via fintechs and fully online administration. It is not a tax-saving tool by itself: you still pay tax in your country of residence, and 0% on retained profit helps mainly if you reinvest in the company.
How much tax does an Estonian company pay?
Nothing on retained profit. When you distribute dividends the company pays 22% of the gross distribution (22/78 of the net dividend). The previously announced increase to 24% for 2026 was cancelled.
Can a foreigner open a company in Estonia without living there?
Yes. An e-resident can register an OĆ online, typically in under a day once the e-Residency card is issued (the card takes about 2ā4 weeks). You need an Estonian legal address and, in some cases, a contact person from a service provider.
Does e-Residency make me a tax resident of Estonia?
No. e-Residency gives no residence permit and no tax residency. If your company's management is in Estonia, or you are physically in Estonia 183+ days, you may create tax obligations there; otherwise you remain taxed where you live.
How much does it cost to run an Estonian OĆ?
Expect roughly USD 1,200ā3,600 per year: an accountant (EUR 50ā200/month), registered address and contact person (EUR 200ā500/year) and bank/payment fees. The state fee to register the company online is about EUR 265.
Sources
Compare Estonia
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Not tax or legal advice. Rates and rules change; we check official sources and update every page, but verify with a licensed adviser in the country before acting. Spotted something out of date? Use the correction form below.