Since January 1, 2015, the new reduced Income Tax has to be applied. The rate dropped from 21% to 20%. Estonian companies do not have to pay Income Tax until the profit is distributed as dividends.
In addition, non-taxed part of the wage paid by Estonian company has been increased up to 10 euros, which makes now 154 euros per month.
The new rate of Income Tax for legal entities is now 25% (20/80), which is lower than last year – 26.6% (21/79). It means that if owners of Estonian companies pay themselves dividends or special benefits to their employees, they will have to apply new Income Tax rate.