How much tax is due on dividends in Estonia?
22/78 — and the preferential rate is gone. In Estonia dividends are taxed at the company level, not the shareholder's: the company pays income tax on the profit distributed at the rate of 22/78. In practice: to pay a shareholder €7,800 net, the tax is €7,800 × 22/78 = €2,200, and the total profit distributed is €10,000. And here is the big change many calculators still ignore: since 1 January 2025 the 14/86 preferential rate on regularly distributed dividends has been abolished, along with the 7% withholding tax on individuals. There is now one rate — 22/78.
📋 The rules
- Rate: 22/78 on distributed profit
- Tax is paid at company level
- The 14/86 discount is gone
- So is the 7% withholding tax
- In force since 1 Jan 2025
🔓 Exceptions
- No further income tax is generally withheld from the shareholder
- Old calculators still show the 14/86 preferential rate
- Payments out of equity follow separate rules
⚠️ Penalties & fines
Waiting for the old discount is the commonest mistake. 14/86 applied to regularly distributed dividends and brought a 7% withholding tax for individuals. Since 2025 both are gone, and a single rate of 22/78 applies. Check what your calculator is computing — plenty of outdated tools are still online. The second key point is timing: tax arises when the distribution is made, not when the profit is earned — the essence of the Estonian system is that retained profit is not taxed. And third: alongside dividends there are salary and board member fees, each with its own tax burden — run the numbers before deciding how to take money out of the company.
📎 Official sources
- Tax and Customs Board · Taxation of dividends →
- Riigi Teataja · Income Tax Act →
- Ministry of Finance · Tax changes →
❓ Frequently asked
What is the dividend tax rate?
Dividends are taxed at company level at 22/78 of the profit distributed, meaning the tax makes up 22 percent and the net dividend 78 percent of the gross amount.
Does the 14/86 discount still apply?
It does not. Since 1 January 2025 the preferential 14/86 rate for regularly distributed dividends has been abolished, along with the 7 percent withholding tax it carried.
Who pays the tax — company or shareholder?
The company. Dividends are taxed at company level in Estonia and no further income tax is generally withheld from the net dividend paid to the shareholder.
When does the tax arise?
When the distribution is made, not when the profit is earned. The point of the Estonian system is that profit left in the company and reinvested is not taxed until it is taken out.
Is a dividend better than salary?
It depends. Salary and board member fees carry their own burden, including social tax, so the options are worth calculating before deciding how to take money out.
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