Tax changes effective from January 1, 2025

Corporate Income Tax and taxation

• Corporate income tax increases from 20% (20/80) to 22% (22/78).
• The taxable amounts for car fringe benefits and other specific taxable benefits will increase.

Taxation of Dividends

• Until December 31, 2024: 20/80.
• From January 1, 2025: 22/78.
• The lower tax rate for regularly paid dividends (14/86) will be eliminated.
  o Example 1:
  Dividends of €10,000 paid in December 2024.
  Income tax: €10,000 * 20/80 = €2,500 (to be paid on January 10, 2025).
  o Example 2:
  Dividends of €10,000 paid in January 2025.
  Income tax: €10,000 * 22/78 = €2,820.51 (to be paid on February 10, 2025).

Salaries and Taxes

• Income tax: 22%.
• Unemployment insurance contributions: 1.6% for employees, 0.8% for employers.
• Pension contributions: 2%, 4%, or 6% (application must be submitted by November 30 to take effect from the start of the next year).
• Social tax: 33%.
  o Minimum monthly salary: €820.
  o Minimum social tax amount: €270.60 for health insurance to remain valid.
• Tax-free income: Up to €654 per month or up to €7,848 annually, depending on the individual’s annual gross income.
• Minimum wage:
  o Full-time: €886 per month or €5.31 per hour.

Tax-Free Reimbursements

Daily Allowance

• Foreign travel allowance: €75 for the first 15 days of a business trip, up to 15 days per month.
• €40 for additional days.

Mileage Reimbursement for Personal Vehicle Use

• Work-related travel based on a mileage log: €0.50/km.
• Maximum: €550/month.

Employee Health Promotion Expenses

• €400 per year, which can be used for:
  • Sports expenses, health insurance, massages, or healthcare services.
  • Massages to prevent or alleviate minor ailments, including device-assisted massages (e.g., roller massage or LPG massage).
  • Healthcare services, regardless of the medical field (e.g., dentist, dental hygienist, ophthalmologist, or optometrist).
• Note: The service provider must be registered in the healthcare information system as a healthcare worker or a specialist practicing their profession.
• Any reimbursement exceeding the tax-free limit is taxed as a fringe benefit with income and social tax.

Vehicle Taxes

Motor Vehicle Tax

• Paid annually.
• The tax is the responsibility of the car owner or responsible user.
• Managed by the Tax and Customs Board (Maksu- ja Tolliamet).

Registration Tax

• Paid upon the initial registration of a vehicle.
• Paid when a previously registered vehicle changes ownership for the first time (if no registration fee has been paid earlier).
• The person registering the vehicle is responsible for payment.
• Managed by the Transport Administration (Transpordiamet).
• Calculator for vehicle tax: https://avalik.emta.ee/mootorsoidukimaks/calc.
• More information: https://www.emta.ee/en/private-client/taxes-and-payment/other-taxes/motor-vehicle-tax .

Value-Added Tax (VAT)

• From January 1, 2025, VAT rates will change:
  • Accommodation and accommodation with breakfast: 9% → 13%.
  • Periodicals: 5% → 9%.
• More information: https://www.emta.ee/uudised/ulevaade-aastatel-2025-2026-kehtima-hakkavatest-maksumuudatustest-toos-olevate-eelnoude .

Planned Changes (Parliamentary Review)

Value-Added Tax

• General VAT rate: 22% → 24% (effective from July 1, 2025, until December 31, 2028).
• The option for 20% VAT agreements signed before May 1, 2023, will be removed.

Security Tax

• Temporary tax from January 1. 2026, to December 31. 2028.
  • 2% on employees’ gross salaries.
  • 2% on companies’ pre-tax profits.
• Note: Further details will be clarified upon the law’s implementation.